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• Significant economic spin-off benefits will occur in Canada from the construction and operation of a world-class KAON Factory including: • New products and markets for construction and operations suppliers • Establishment of new ventures • Attraction of new companies to Canada • Industrial diversification • Direct sales from the KAON Factory itself • Commercialization of KAON research • Scientific tourism and conferences • Increased university enrollment in the sciences • Research evidence from other world scale scientific research facilities such as CERN, ESA and NASA confirms that such opportunities and benefits take one or two decades to completely unfold. • Very preliminary estimates show that in the order of $485 million of economic spin-off benefits will occur over a period of 15 years from expenditures on medium to high technology products and services for a KAON Factory. • It also appears that the magnitude of KAON related opportunities can be increased and the timing of their occurrence can be accelerated with an overall impact in the range of $48 million through the application of appropriate strategies, plans and programs. • A clear message from study research is that the mandate of a KAON Factory must include the maximization of local, regional and national economic opportunities resulting from the construction and operation of the facility. It is projected that over the ten years commencing with its construction, the KAON Factory will consume over $900 million of goods and services. It has been demonstrated by other international research programs/facilities that the creation of this market for sophisticated products and services possibly supported by other government expenditures and programs (e.g. defense spending, health care research, funding of other scientific research, etc.), is a very effective strategy for fostering industrial growth, innovation, and international competitiveness. • In fact two results may be achieved with each dollar of expenditure: new scientific research and innovation is funded, and a new industrial sector is created and fostered through its critical phase. • With respect to supplier risk, it has been shown that companies supplying scientific research facilities with "never before seen" products and services generally receive strong support from scientist-clients to work out problems and deliver the required results. • Accordingly, companies (particularly those that in their formative stages) are able to share product development and/or reduce their rate failure through this assistance process. are small or just the risk of new of technological • In addition, the multi disciplinary scientific infrastructure of a research facility such as a KAON Factory has proven to be a strong catalyst for technological innovation and commercial product development. • In summary, on the basis of our limited research, a KAON Factory appears to offer good potential to achieve desirable economic objectives for Canada.
INDUSTRIAL OPPORTUNITIES OF A CANADIAN KAON FACTORY OCTOBER 1986 ~, . -. This study was funded by TRIUMF and the governments of Canada and British Columbia under the Opportunity Identification and Assessment Program of the Canada-British Columbia Subsidiary Agreement on Industrial Development. INDUSTRIAL OPPORTUNITIES OF A CANADIAN KAON FACTORY CONTENTS EXECUTIVE SUMMARY INTRODUCTION WHAT IS A KAON FACTORY STUDY OBJECTIVES AND SCOPE STUDY APPROACH RESEARCH LIMITATIONS FINDINGS THE CASE FOR RESEARCH SPIN-OFFS SUPPLIER ESTIMATES OF SPIN-OFF BENEFITS CANADIAN CONTENT OF A KAON FACTORY QUANTITATIVE ESTIMATES OF THE SPIN-OFF BENEFITS OF THE KAON FACTORY OTHER ISSUES AREAS FOR FURTHER RESEARCH CONCLUSION • Page 1 3 4 5 7 8 17 21 25 26 27 30 EXHIBITS INDUSTRIAL OPPORTUNITIES OF A CANADIAN KAON FACTORY CONTENTS (continued) A. KAON Factory Spin-offs B. Data Collection Sources and Techniques C. TRIUMF Research Spin-offs - Medical Applications D. TRIUMF Research Spin-offs - Non-medical Applications E. Technology Transfer - People Transfer Experience F. Utility Ratios • G. Estimate of Potential Economic Benefits from the Construction and Operation of the KAON Factory APPENDICES 1. Case Studies of Industrial Impacts of Scientific Research 2. Case Studies of Spin-offs from TRIUMF Research 3. List of Canadian Suppliers, by Component 4. Contact List of Canadian Suppliers 5. Estimate of Spin-off Benefits INTRODUCTION What is a KAON Factory? Study Objectives and Scope Study Approach Research Limitations This section of the report describes what a KAON Factory is and why it is important to Canada. It then outlines study objectives; the research methodology used in carrying out this project; and factors which have tended to limit the study findings. • • EXECUTIVE SUMMARY Significant economic spin-off benefits will occur in Canada from the construction and operation of a world-class KAON Factory including: • New products and markets for construction and operations suppliers • Establishment of new ventures • Attraction of new companies to Canada • Industrial diversification • Direct sales from the KAON Factory itself • Commercialization of KAON research • Scientific tourism and conferences • Increased university enrollment in the sciences • Research evidence from other world scale scientific research facilities such as CERN, ESA and NASA confirms that such opportunities and benefits take one or two decades to completely unfold. • Very preliminary estimates show that in the order of $485 million of economic spin-off benefits will occur over a period of 15 years from expenditures on medium to high technology products and services for a KAON Factory. • It also appears that the magnitude of KAON related opportunities can be increased and the timing of their occurrence can be accelerated with an overall impact in the range of $48 million through the application of appropriate strategies, plans and programs. • A clear message from study research is that the mandate of a KAON Factory must include the maximization of local, regional and national economic opportunities resulting from the construction and operation of the facility. It is projected that over the ten years commencing with its construction, the KAON Factory will consume over $900 million of goods and services. It has been demonstrated by other · • 2 international research programs/facilities that the creation of this market for sophisticated products and services possibly supported by other government expenditures and programs (e.g. defense spending, health care research, funding of other scientific research, etc.), is a very effective strategy for fostering industrial growth, innovation, and international competitiveness. In fact two results may be achieved with each dollar of expenditure: new scientific research and innovation is funded, and a new industrial sector is created and fostered through its critical phase. • With respect to supplier risk, it has been shown that companies supplying scientific research facHi ties with "never before · seen" products and services generally receive strong support from scientist-clients to work out problems and deliver the required results. • Accordingly, companies (particularly those that in their formative stages) are able to share product development and/or reduce their rate failure through this assistance process. are small or just the risk of new of technological • In addition, the multi disciplinary scientific infrastructure of a research facility such as a KAON Factory has proven to be a strong catalyst for technological innovation and commercial product development. • In summary, on the basis of our limi ted research, a KAON Fac tory appears to offer good potential to achieve desirable economic objectives for Canada. • • • 3 WHAT IS A KAON FACTORY? • The word KAON is an acronym for Kaons, Antiprotons, Other hadrons and Neutrinos which are all sub-atomic particles. • The proposed KAON Factory will be a large world-scale experimental facility utilizing particle accelerators designed to enable scien-tists to further investigate the nature of sub-atomic particles. • The main components of the particle accelerators are: radio frequency systems, resonant cavities, magnets and vacuum systems. The components require power supplies and control systems to allow the particle acceleration process to be precisely controlled and monitored. • The general specifications of the proposed KAON Factory are: - A sixtyfold increase in final particle energy over the capabilities of the present meson facility at D.B.C.; - construction cost of about $530 million; - construction schedule of approximately five years; - an annual operating budget of some $90 million; - a design based on expansion of the present facilities and utilization of the existing TRIUMF cyclotron; and - a system of five accelerator rings located in two tunnels, the largest being about 340 metres in diameter, encircling (underground) the present buildings and parking lot, and a new experimental hall. • A KAON Factory is important to British Columbia and Canada because: it promises Canada a leadership role in particle research and will attract preeminent scientists to investigate and push back frontiers in basic physics; - at higher energies, sub-atomic particles will be proouced at unprecedented intensities, leading to new fields of discovery; - it will provide a world-class research es tablishment, which will lead to innovations in health care, medicine, computer technology, electronics, and other unanticipated areas; - it will foster the development of Canada's industrial capability to produce new goods and services for use in Canada and abroad; and - it will likely be the only facility of its kind in the world and will attract international attention to Canada and its scientists. EXHIBIT A KAON FACTORY SPIN-oFFS DIRECT SPIN-OFFS INDIRECT SPIN-OFFS I Construction employment In ~ -t Mu I tip Iler emp loyment from ~J Canada construction and supplier activit I Supp Iler employment In Canada I I Multiplier related t ex revenues I CONSTRUCT! ON I Federal, provincial, municipal ~ -t2 . Construction supp l ier SPin-off; tax revenues (Canada & Foreign) I Foreign employment and tex t- -t 3. Spin-offs from construction I revenues Infrastructure -t Mu Itlp Iler foreign employment and I tex revenues KAON FACTORY L Operations employment I If Multiplier employment from I operations end supplier ectlvlty I Supplier employment I I Multiplier releted tax revenues I I Federal, provincial, municipal ~ tax revenues f- OPERATIONS '--r1 4. Operations supp Iler sp In-offs I (Cenada & ForeIgn) I 1 • KAON Factory seles I H 5. Spin-offs from operations I I Foreign employment end tex ~ Infrestructure revenues I 6. Commercialization of reseerch I I 7. Estab I I shment of new c~mpanlesl He. Attraction of new compan I es to I Cenede H 9. Scientific tourism & I conferences I 10. Increesed science enro I I ment I I 11. Industrlel diversification I H Multiplier foreign employment end I tex revenues H Access to foreign research I fecilities end findings N.B. The numbered spin-offs ere within the scope of this report. • 4 STUDY OBJECTIVES AND SCOPE • The objectives of this study are to: - identify, describe and quantify the industrial opportunities and spin-off benefits arising in Canada from the construction and operation of a KAON Factory; - examine factors which may enhance or detract from the industrial benefits of the proposed KAON Factory; and - recommend strategies and approaches to enhance the industrial impacts of the facility. • In order to initiate our research, we first identified all of the possible economic spin-off benefits from a KAON Factory. These spin-off benefits are noted in Exhibit A, opposite. • These benefits have been divided into two major categories. Direct benefits are those that result from expenditures on or revenues received by a KAON Factory. Indirect spin-offs are those opportunities and benefits which result from or are triggered by a KAON Factory but which are not directly financed from KAON expenditures and/or revenues. • The focus of this study is on the spin-offs numbered 1 to 11 in Exhibit A. • Factors related to potential foreign suppliers to the KAON Factory and industrial impacts outside Canada are not included in our analysis. • EXHIBIT B DATA COLLECTION SOURCES AND TECHNIQUES RESEARCH SPIN-OFFS • Interviews with nine TRIUMF scientists and several companies, public organizations and knowledgeable outsiders on existing and potential research applications. • Interviews with seven ex-TRIUMF scientists who have moved into the private sector on technological knowledge transfer. • Review of documented spin-offs of NASA, CERN, and ESA. • Development of case studies based on the above. BENEFITS TO SUPPLIERS • Review of the CERN report on "economic utility". • Questionnaire survey of 63 past and potential suppliers to TRIUMF. • Personal interviews with ten of the above suppliers in eastern and western Canada to confirm consistent interpretation of the questions and to obtain additional, more qualitative input. • Telephone interviews of varying length and effectiveness with a similar number of other suppliers. CANADIAN CONTENT • Review of the Coopers and Lybrand report on "economic impacts". • Examination of questionnaire survey and interview program results as described above. • 5 STUDY APPROACH • To achieve the study objectives, the consultants concentrated on: - identifying the research spin-offs (application of research results or innovations in conducting experiments) of TRIUMF and other reseach facilities; - examining the nature of supplied TRIUMF and other - determining the extent Factory. benefits to companies facilities; and of Canadian content of which have the KAON Our approach to collecting data in each of these areas of research is described in Exhibit B, opposite. • We have assumed that the TRIUMF example is the most comparable with the KAON Factory, and that it is therefore logical to examine the 8 TRIUMF experience in order to project outcomes and opportunities of the KAON Factory. We have also assumed that the experiences of other research facilities which utilize large-scale, complex equipment are also relevant to the future KAON Factory. • A detailed breakdown of construction purchases was prepared and a list of suppliers developed for each maj or product or service. This analysis is summarized in Appendix 3. • This list of suppliers was used for the questionnaire survey. In addition, a number of companies were either visited or telephoned to secure supplemental data of their interest and ability in supplying the KAON Factory. These companies are noted in Appendix 4. • In conducting this study, we concentrated on surveying medium to high technology companies (rather than low tech where the impacts of KAON contracts would be relatively small), and those companies with past experience with TRIUMF. • From preliminary enquiries, we found that many of the companies had little knowledge of the KAON Factory proposal and the goods and services that would be required. A general information package was therefore sent to all companies, and specific information packages containing technical details and quantities for magnets, RF • 6 systems, vacuum systems or power supplies were directed to those companies that were classified as specialist suppliers in these areas • • TRIUMF provided lists of existing and potential research applications and the names of people who had transferred into the private sector. These lists were used to design our interview programs on research spin-offs. FINDINGS The Case for Research Spin-offs Supplier Estimates of Spin-off Benefits Canadian Content of a KAON Factory In this section of the demonstrate primarily examination of TRIUMF, that commercial spin-offs do scientific research. We the magnitude of these suppliers of TRIUMF. report, we through significant occur from then identify benefits for Finally, we examine the likely Canadian content of the KAON Factory and factors affecting the Canadian sourcing of the project. • THE CASE FOR RESEARCH SPIN-OFFS SUMMARY NOTES • Research spin-offs occur when technologies are transferred to Canadian industrial firms for commercial application, or to institutions for the public good. • Such research spin-offs take many years before they bear economic fruit. • TRIUMF has established a growing track record of such transfers through: - Medical spin-offs; - Non-medical spin-offs; - Transfer of people to the private sector; and - Utilization of the TRIUMF infrastructure. • A mandate to create significant effect on spin-offs in the future. research spin-offs will the frequency and timing have a of such • 7 RESEARCH LIMITATIONS BUDGET AND TIMING • This study has been completed in ten weeks from initial planning to submission of a draft report. Our fieldwork has included an extensive interview program conducted in B.C. and Ontario and a national mail questionnaire survey of past and potential suppliers to TRIUMF. However, budget and time constraints have precluded us from following up in all cases to ensure the completeness and accuracy of data. MEMORY EFFECT BIAS • To gather data on research spin-offs and impacts on suppliers, we have interviewed people in person and by telephone, and conducted a questionnaire survey. However, unless information is associated with major incidents, there is a tendency for it to be lost. Either people involved in the work have left the organization, or those who remain have limited recall about facts and figures from long ago. Accordingly, information supplied to us is likely only "part of the story" when it comes to assessing the commercial benefits of scientific research. • Our questionnaire survey results are likely biased by the motivation of individual respondents and their views on the benefits of a KAON Factory. As a result, some companies' survey data may not be completely accurate in certain areas. QUANTIFICATION OF SPIN-OFF BENEFITS • While quantitative estimates of spin-off benefits have been included in this report, it should be noted that they are based on secondary research and are very preliminary in nature. • 8 THE CASE FOR RESEARCH SPIN-OFFS NATURE OF RESEARCH SPIN-OFFS • Technology transfer occurs when research results, or solutions to the problems inherent in developing a facility such as a KAON Factory, are used by a commercial organization (or public institution) for conversion to practical applications. The means can be through either key research people leaving to join a company, or the sale or licensing of the technology to the acquiring organization. The commercialization process typically requires further development by the recipient organization including prototype development, production engineering, and market research • • In any technology transfer arrangements, investment expenditures are required to make the transfer successful. The distribution of these costs between the research organization and the recipient company/public institution is an important issue that affects the transfer potential. • Research spin-offs also include a more general contribution to the economy. Some of these general benefits are: - A country gains access to the international pool of research in that subject area, based on having "something to trade"; - An influx of international and national scientists occurs Which is paid from foreign or out-of-province scientific research budgets. Their presence also generates more potential for generating industrial spin-offs; - There is an enhancement of capabilities through the training and teaching roles of research facilities; and - There is a contribution to the general image of the region or country as being "high technology", with ripple effects in terms of the location and investment decisions of private firms and entrepreneurs. EXHIBIT C TRIUMF RESEARCH SPIN-OFPS - MEDICAL APPLICATIONS -Medical BC Cancer research Research r-at TRIUMF Centre --------1-[------Commercialization New companie1 of products e.g.Combitec ~ • .[._ QMIP~ _ _ _ _ ____ _ - pion cancer therapy_ Production of Vancouver -isotopes General - medical Hospital research Production of AECL International ,..-- i--isotopes manufacturing sales - radiopharma-ceuticals (iodine 123) r------J-[-----PET Whole body L ~anufa~ture KET ~o..!.._ --------1 Sales to clinica facili ties --------[-----HJ-----] Small participant cyclotron co: AECL m~nufacture 0E..£.t.!!.er _ _________________ actual spin-offs potential spin-offs • 9 MEDICAL SPIN-OFFS • The most widely known TRIUMF spin-offs lie in the medical field, and result from the longstanding medical research interests at TRIUMF and B.C. cancer research institutions and hospitals. Early research in pion cancer therapy and the production of isotopes from the TRIUMF accelerator triggered research interest in this field in B.C. Exhibit C, opposite, graphically depicts the medical experience to date and the future development prospects. detailed case studies are presented in Appendix 2. • The spin-off results so far have been: (a) cancer research; (b) radio isotopes; and (c) new product development. (a) Cancer Research More • Pion cancer therapy at TRIUMF was the catalyst for the development of the B.C. Cancer Research Centre. The Centre now has some 135 permanent staff and an annual budget of $7.7 million, growing from an initial $1 million grant in 1972. Half the Centre's scientists have been directly or indirectly involved with TRIUMF in the past. • The Centre continues to expand its work in other project areas, drawing on private and public research funding. The Centre's research activities have established Vancouver as an important centre of cancer research. TRIUMF has therefore made a maj or contribution toward Vancouver's rising eminence in this field. • There has already been a specific product emerging from the B.C. Cancer Research Centre. The product is called a Dynamic Microscope Image Processing Scanner (DMIPS) Cell Analyzer. DMIPS is a research tool device that can monitor live cells to determine the effects of low-dose radiation. Prototypes are now in operation, and plans are to market the device internationally through a separately incorporated company called Combitech. It was devel~ped by three scientists who originally came to Vancouver because of the pion therapy research at TRIUMF. • 10 (b) Radio Isotopes • The capability to produce raw isotopes for medical research purposes led to commercial arrangements with AECL's Radiochemicals Division. TRIUMF facilities filled a need perceived by AECL several years ago for production of isotopes for processing into radiopharmaceuticals. To provide the required frequency of isotope -production, a separate 42 MeV cyclotron was built. The isotope production service currently employs 27 people (17 by AECL and 10 by TRIUMF), and earned $1.8 million in revenue in 1985/86. AECL anticipates that business will expand to require a doubling in capacity in two to three years time. This means another cyclotron, but only a few extra staff may be needed. The technical expertise resident at TRIUMF is less important in future isotope production for AECL than it was at the outset. However, the operation remains an industrial spin-off of the TRIUMF facility, and one that will expand. (c) New Product Development • A byproduct of the medical research cited above is the development potential for manufacturing sophisticated medical equipment, namely: -a Positron Emitting Tomography (PET) machine for medical research institutions, for the purpose of measuring the brain's functions, using a new design for a gamma ray detector developed and tested at TRIUMF; and - a small scale, automated isotope cyclotron, which would be an on-site source of positron-rich isotopes needed for the operation of the PET machine. • The two products could be developed and marketed as a package for medical research purposes. In the opinion of some experts, automated isotope production via an on-site small cyclotron is even more essential to greater use of PET scanners than improved versions of PET itself. TRIUHF RESEARCH SPIN-OFFS - NON MEDICAL APPLICATIONS Neutron activation analysis I--Chemex Materials damage analysis Gas CCD's Robotics I Computer software ----------------I fusion I --I~_~e_n~e.;;..r~gy,,--......j -------------1 Los Alamosl disabled work ----------[C~n~d!a; ~o~p~n!e~ stations -~ business I ----------1 Response Services I Technical/ ---------~c~n~dian ~omp~nie~ Scientific actual spin-offs potential spin-offs EXHIBIT 0 • 11 • A large market could be created if all hospitals practicing nuclear medicine became potential buyers. This would extend the market beyond the research application to actual clinical use. It is estimated that 500 to 1000 units that could be sold to a market of some 2500 out of 6500 hospitals in North America involved in nuclear medicine. (The total hospital market in North America is estimated at 6500 hospitals.) This market would require an automated cyclotron selling at about $250,000, or a total cyclotron/PET package of under $1 million. NON-MEDICAL SPIN-OFFS • The non-medical applications of TRIUMF research could be termed a second generation of potential spin-off benefits. They are largely future possibilities, although in several cases preparation for the commercial phase has advanced considerably. Exhibit D; opposite, presents a graphical representation of the potential technology transfer process. Appendix 2. More detailed case studies are presented in • As opposed to medical applications, this category of applications consists primarily of technology transfer to high technology companies aiming at specialized industrial and/or space markets. The technology transfer opportunities require sophisticated private sector partners who are capable of converting complex, advanced technologies to commercial products. The development investment to achieve such technology transfer is generally quite large. (a) Current Applications • There are two cases which demonstrate concrete practical applications for the use of TRIUMF technology and its facilities, namely: - neutron activation analysis, currently used for geological assaying and potentially for broader applications; and - materials damage analysis, which utilizes TRIUMF's facilities to test properties of new composite materials. • In the neutron activation analysis case, TRIUMF acted as a catalyst in the growth of Chemex, a British Columbia company which uses neutrons for assaying purposes. The original application for heavy uranium exploration has largely been replaced by gold exploration. • 12 An industrial facility has been constructed adjacent to TRIUMF to conduct the neutron activation analysis. While it was not confirmed, there is an alleged interest by other organizations in related applications, including terrorist detection and the analysis of the protein content of grain by the Canadian Wheat Board. • The materials damage analysis activity includes on-site studies by a Los Alamos team of scientists. The interest is primarily in evaluating materials for fusion reactors as alternative energy sources. Al though there is potential for materials testing by Canadian firms, this opportunity requires very sophisticated organizations with highly specialized needs. No such Canadian firms have been identified. (b) Applications with Significant Potential • The applications that are perhaps the most exciting from an industrial perspective are still under development. Two identified are: - Gallium Arsenide (GaAs) Charge Coupled Devices (CCDs), essentially exploiting the greater processing speed of GaAs over the conventionally used silicon; and - robotics applications, derived from TRIUMF's extensive use of robotics for materials handling under radioactive conditions. • Gallium Arsenide use in chip manufacturing is expected to have many applications in industrial and consumer product areas in view of its greater speed for information/data processing. TRIUMF has used GaAs technology to speed up the processing of data from decaying atomic particles. This technology has a potential for certain specialized industrial purposes. • The TRIUMF GaAs technology is suitable for fast transient analysis in radar imaging, useful for industrial ends (e.g. measuring the health of trees in forestry surveys) and for certain defense applications (e.g. vehicle identification through detection of exhaust). After exposing the technology to several companies with the assistance of NRC's industrial development group, at least one company, Canadian Astronautics Ltd. (CAL), an Ottawa-based firm in the space and radar field, appears ready to undertake the development of this technology. • 13 • TRIUMF's use of robotics technology is of potential interest to Canada's community of firms involved with robotics (estimated at 20 companies). However» . a high inves tment is required to achieve commercialization. • The robotic applications pursued so far at TRIUMF involve work stations for the disabled. However» product development for the disabled market is constrained by the restricted market size. • Of promise» at least as expressed by TRIUMF» is potential development of control systems for the resource sectors. As yet there is no explicit interest» but there is a growing recognition of TRIUMF's overall capabilities in robotics. (c) Computer Software Development Applications • Software development is another interesting area subject to third party commercialization of advances achieved by TRIUMF. The two broad categories are: - technical software» developed for data display (including graphics)>> manipulation and complex calculations; and - business software» although this has low significance. • Using DEC Vax systems» TRIUMF has developed scientific software for possible application to other industrial and public research establishments. In fact» four specific packages have already been passed on (free of charge) to over 20 large commercial and research organizations in Canada and abroad. While no specific effort has been made to commercialize this software» the potential exists as new software is developed to meet scientific needs. • With respect to business software» a specific software supplier was engaged to assist in developing the major accounting software required to manage TRIUMF. Through joint development efforts» the needed software package was created and implemented. The supplier company is now using the software package as its "centrepiece" in marketing its services. • Expertise Area Have you carried expertise into the private sector? MICROTEL Controls & instrumentation 25% to private sector; Higher benefits to BCIT students where he lectures; Other BCIT lecturer spent sabat tical year at TRIUHF How was TRIUHF Indirect & can't be expertise quantified commercialized and how did TRIUHF research contribute to the application? UNIVERSAL DYNAMICS Electrical engineering consulting 25% knowledge gained at TRIUHF carried into private sector None TECHNOLOGY TRARS~R - PEOPLE TRARS~R EXPERIENCE HIlA Diagnostic. & probes Mechanical engineering 50% gained at TRIUHF carried into private sector Digital film re-corders for commercial products and specifications design components Expertise gained used in sale of commercial products Annual sale s of digital film recorders now @ $10 - 15mm Satisfactory sales performance because of TRIUHF experience -!oIllA Digital hardware Electronics Control systems Initially 50% when involved in hardware systems. but moved into software and sale. area which is not applicable Transferring technology into software systems Merging of hardware & software systems TRIUHF initially contribute~ to digital electronics applications DECAnE INnUSTRIES Beam line injection systems Mechanical engineers 10% of expertise carried into private sector Since joining Oecade, it has become a re~ular supplier of small heam components with sales of $20K/year and only provides hardware to TRIUHl' DYNAI'RO INC. Engineer/physicist with Rll Group Controls Section No expertise carried into private sector None, no direct spin-off MOBILE DATA INTERNATIONAL Controls group - computers - engineering physicist 10% None t>:I !ii H td H 1-3 t>:I 14 • PEOPLE TRANSFER TO THE PRIVATE SECTOR • An important technology transfer mechanism is people transfer. This occurs when expertise gained from TRIUMF is transferred into the private sector by individuals who enter industry. • The study team conducted seven telephone interviews with people who have past TRIUMF research experience and have carried their expertise into private industry. Their experience is summarized in Exhibit E, opposite. • The "people transfer" of technology to the private sector have helped to develop industry expertise in the areas of: - instrumentation & controls (radio frequency, computer); - electrical engineering & consulting (design process); - diagnostic probes (PET and other medical applications); - digital hardware electronics and software; and - beam line injection systems. • It is apparent from our interviews that the TRIUMF experience had a varying degree of impact on subsequent product development by companies that employed ex-TRIUMF scientists. For one or two, the experience was direct, that is, they were engaged in product developments that related to the research activity undertaken while at TRIUMF. For most, the TRIUMF experience was indirect, as might be expected, where the individuals were assigned to areas of technical development that related to the companies needs. Nevertheless, there are four cases where the linkages between the company's product interest and the individuals TRIUMF experience is evident. Briefly, the cases are described below: - the British Columbia Institute of Technology (BCIT) has benefitted through faculty members spending research sabatticals at TRIUMF to learn more about nuclear sub-atomic physics. In exchange, these individuals return to lecture to students on their research expertise from TRIUMF; - at McDonald Dettwiler & Associates (MDA) , expertise gained at TRIUMF was applied to development of a diagnostic probe digital film recorder which is approaching a successful performance level in the commercial market with annual sales of $10 to 15 million; - within another division of MDA, the TRIUMF expertise has helped to transfer technology into software control systems as well as • 15 to merge digital hardware electronics and software systems; and - in part as a result of people transfer, Decade Industries, a manufacturer of beam line injection systems, has become a regular supplier to TRIUMF of small beam components. IMPROVING SPIN-OFF BENEFITS • The technology transfer process at TRIUMF is occurring in several ways, for example: - on-si te use of TRIUMF f acili ties as part of the production process (e.g. isotope production); - on-site research and even clinical activity - together with an outside organization (e.g. pion cancer therapy); - use of TRIUMF scientists to help design and construct a prototype (e.g. the PET machine); - scientists, brought together by TRIUMF, setting up their own product company (e.g. DMIPS); transfer of technology developed by TRIUMF to private companies to be commercialized (e.g. Gas CCD's, robotics); and - TRIUMF scientists being hired by existing companies and using their TRIUMF expertise to develop new products (e.g. digital film recorders at MDA). • In the context of today's research environment, there are certain strategies which could be utilized to enhance the stimulation of research spinoffs at TRIUMF (and by projection, the KAON Factory) • • First, commercializing the technology developed at the TRIUMF or KAON Factory facilities requires recipient organizations to be quite sophisticated technically and willing to commit substantial investment in the commercialization process. Strengthening and diversifying the Canadian industrial infrastructure would increase the number of Canadian firms potentially capable of exploiting TRIUMF and KAON technology. • Second, unlike NRC laboratories, TRIUMF was not set up wi th a combined research/industrial development mandate. Therefore, it is in effect competing with government laboratories and university research groups which have had to adapt themselves, or indeed • establish themselves at the outset, to industrial development. The company/research TRIUMF is now being more aggressively pursued • 16 the imperatives of organization link at through a variety of financial incentives and institutional mechanisms. • Survey participants with the help of budget • felt that this link would be further improved an applications director and a development • Given an environment where the basic research orientation at TRIUMF/KAON Factory is complemented by an industrial application thrust, the result would be a better record of research spin-offs. While comparable European and American facilities have different approaches to this issue, the Canadian industrial infras tructure likely requires more of an outreach orientation to capture the industrial benefits of research spin-offs. • • SUPPLIER ESTIMATES OF SPIN-OFF BENEFITS SUMMARY NOTES • 63 companies were surveyed, and 29 have responded. The response was low because of the complex nature of the questionnaire and the limited completion time allowed. • 20 of the 29 companies have supplied TRIUMF in the past (sales of $24 million). • The 20 surveyed suppliers fell into three general categories. The first category, typified by EBCO, produced and exploited new technologies resulting in significant incremental sales attributed to contact with TRIUMF. The second category (eight suppliers) developed limited new technical expertise resulting in an average incremental increase in sales of 49%. The third category (11 suppliers) provided standard products resulting in no incremental sales. • Of the 20 supplier companies, six companies were able to report that they maintained 180 person years of employment which without TRIUMF would not have been maintained. • Only two of the 20 companies reported negative effects from their TRIUMF contact. • We conclude that spin-off benefits from contact with the KAON Factory can accrue to supplier companies, but only to the extent of the effectiveness of their efforts to capitalize on their KAON Factory experience. • 17 SUPPLIER ESTIMATES OF SPIN-OFF BENEFITS • Technological innovations, increased quality and enhanced market reputations emerge from solving the special problems of producing and installing complex, precise, large scale equipment for scientific research. Many of the advantages which occur as a result of these processes accrue to the suppliers of related equipment and services. • NUmerous scientific research projects around the world have demonstrated this condition. In particular, extensive analysis with regard to the CERN facility has shown that for every Swiss Franc spent by CERN on high technology products and services, three Swiss Francs were gained later by the suppliers in contracts outside CERN. • To gain some measure of the impacts on TRIUMF suppliers (past and present, construction and operations), we conducted a questionnaire survey of 63 companies across Canada, which included questions on economic uti Ii ty along the lines of the CERN enquiries. We also asked questions about whether the companies could supply the KAON Factory's construction or operations, and the extent of Canadian content of their products and services (Canadian content is dealt wi th in the next chapter). The companies were therefore selected on the basis that they were either past/present suppliers to TRIUMF, or potential suppliers to the KAON Factory. • By October 16,29 companies had responded, of which 20 companies identified themselves as past/present suppliers to TRIUMF. In several instances, companies' responses. EBCQ's data forms the major portion We have indicated where this is the case. • The 20 companies which supplied TRIUMF reported sales values of: Construction Operations 1968 72 $15,240,873 $ 1973 -77 1,563,333 1978 - 82 3,776,305 1983 - Present 3,393,716 $15,240,873 $8,733,354 of EXHIBIT F UTILITY RATIOS Incremental Sales Level of Sales to Attributable ComEan~ Technolog~ TRIUMF to TRIUMF Ratio ($000) ($000) 1 M $ 5 $ 0:1 2 M 700 0: 1 3 M 74 0: 1 4 M 50 0: 1 5 M 375 250 0.67:1 6 M 200 5 0.03:1 7 M 10,500 0: 1 8 M 748 219 0.29:1 9 M 184 68 0.37:1 lO H 5,000 0: 1 11 H 2,900 87,800 30.3:1 12 H 200 0: 1 13 H 100 40 0.4:1 14 H 25 0: 1 15 H 84 13 0.15:1 16 H 500 502 1: 1 17 L 760 349 0.46 : 1 18 H 1,500 0: 1 19 H 20 M 69 0 : 1 $23,974 $89,246 3.7:1 • 18 • In order to supply TRIUMF, ten of the 20 companies reported spend-ing about $2.8 million on new production capacity, technology, etc. The largest amount by far ($2 million) was spent by EBCO to increase production capacity and upgrade technological capability. • To pay for these investments, these 10 companies raised capital by various means: Internal Funding New Equity Capital New Loan Capital Government Assistance $ 903,500 150,000 1,500,000 291,500 $2,845,000 • Of the 20 companies which reported supplying TRIUMF, nine companies identified incremental sales, other than to TRIUMF, attributable in a significant way to their contact with TRIUMF, as follows: 1968 - 72 1973 - 77 1978 - 82 1983 - Present $ 684,000 1,496,000 17,140,000 71,578,000 $90,898,000 Of this total of almost $91 million, EBCO claimed incremental sales of $87.8 million attributed 100% to contact with TRIUMF. Most of these additional EBCO sales ($70 million) have been made since 1982. The other eight companies reported incremental sales of close to $3 million of Which $1.4 million, or 49% was attributed to contact with TRIUMF. Total incremental sales attributed to contact with TRIUMF was therefore $89.2 million. Unfortunately, this figure cannot be realistically compared with sales to TRIUMF of $24 mil- lion to arrive at a so-called "utility ratio" of 3.7: 1 because : - sales to TRIUMF of $24 million represent something less than 25% of the $100 miliion i spent between 1969 and 1984 on construction and operations excluding salaries; and - Exhibit F, opposite, shows the wide divergence of utility ratios reported. 1 In current dollars for each year, not adjusted for inflation into present dollars. • 19 • EBeo reported that 80% of the incremental sales were due to a greater ability to produce higher quality projects (because TRIUMF demanded higher quality products than the company previously produced). The remaining 20% of sales were due equally to new know-how developed for TRIUMF contracts and an increase in credibility gained from supplying TRIUMF. • The "gross" incremental sales of $91 million include export sales of: 1968 - 72 1973 - 77 1978 - 82 1983 - Present Total $ 664,000 1,419,000 14,436,000 52,936,000 $69,455,000 Most of these exports were EBeO's sales $67.6 million. which totalled • The value added1 in the "gross" incremental sales of $91 million was estimated by the nine companies to be $60 million. Again, this estimate is principally comprised of EBeO's data ($58 million). • To mee t contracts with TRIUMF worth $5.5 million in sales, six companies utilized about 180 person-years of employment which without TRIUMF would not have been maintained • . EBeO's portion was about 110 person-years for $2.9 million in sales. • Eight companies (three included above) also reported that as suppliers to TRIUMF, they were able to take advantage of unused capacity, thus preserving jobs. 1 Value added Sales value - [Material cost + Profit] • 20 • Of the 20 companies which reported supplying TRIUMF, only two companies reported negative effects from their contracts: - The first respondent stated that due to the uniqueness and relatively small size of the TRIUMF orders, the company has been unable to market the technologies elsewhere. The respon-dent said that the "aura" of TRIUMF work had helped to misdirect the company's long term manufacturing strategy. - The second respondent (EBCO) stated that 32 specially trained welders could not be fully utilized, but their skill remained useful to some extent. In summary, based on published research on the economic spin-off opportunities created by major scientific research facilities and our survey of TRIUMF suppliers, we found that significant economic benefi ts can accrue to companies providing goods and services. However, the size and timing of these benefits depend on the effectiveness of company efforts to capitalize on such experience. CANADIAN CONTENT OF A KAON FACTORY SUMMARY NOTES • All 29 companies which responded to our survey expressed their willingness to bid on KAON Factory contracts. • 14 of the 29 companies stated they WDuld be limited in some way in their ability to supply the KAON Factory, but several companies identified practical steps to remove the constraints. • A more extensive and detailed survey of more Canadian companies may have to be conducted to properly verify the Canadian sourcing of a KAON Factory. • Canadian content WDuld likely be affected by international collaboration on a Canadian KAON Factory. • 21 CANADIAN CONTENT OF A KAON FACTORY • The extent of benefits and opportunities of a KAON Factory in Canada is dependent on the degree of construction and operations sourced in Canada. • The ultimate effect of Canadian sourcing is a complex issue because: - only medium and high significant downstream and tech sourcing is economic benefits likely to create and opportunities; - the majority of KAON products and services are relatively unique and are not part of most potential suppliers standard production. • Coopers and Lybrand have indicated in a separate study that in excess of 85% of KAON Factory construction and operations purchases could be provided from within Canada. • In an attempt to gauge the level of Canadian sourcing, the questionnaire survey of 63 companies, described in the previous chapter, covered questions on sourcing. • All 29 responding companies are willing to bid on KAON Factory contracts, as follows: Western Canada Magnets RF Systems Vacuum Systems Power Supplies Computer Hw/Sw Instrumentation Robotics Conventional Construction Operational Supplies (gas, etc.) 6 3 2 1 Various (includes EBCO) 2 Design 15 Eastern Canada 4 1 1 1 2 1 1 2 1 14 • 22 • Of the 29 companies, 14 companies stated they would be limited in supplying the KAON Factory's construction or operations phases by the following number of constraints: Western Canada Eastern Canada which Capacity 5 1 6 identified Technology 4 3 7 constraints People Skills Other 4 1 3 3 7 4 in supplying KAON, • The companies suggested a follows : range of actions to remove the constraints, as Capaci ty - Acquisition of additional premises, equipment and test facilities, depending on the job requirements. Technology - Development of existing facilities and addition of certain components using foreign manufacturing technology. People Skills - Employment personnel. required. Other of additional staff and training Consultants would be utilized to of existing assist when - Possible financial constraint could be addressed once level of additional overheads were known • • A number of companies suggested a range of strategies which would enhance their ability to supply the KAON Factory. The strategy suggested most often was to enter into consortia or joint ventures as methods to share costs and enhance the range of skills offered. Other strategies include j oint venturing with a foreign company, • buying out a foreign manufacturer, and the extensive use sub-contractors for the supply of specific products and services. 23 of • Further strategies that were mentioned to enhance companies' capabilities to penetrate new markets or supply facilities similar to the KAON Factory include: Government Assistance - organization of trade shows and assistance with promotion; - export promotion by use of tax credits; - reduction of paperwork and red tape; - provision of finance for research and development, staff training, ventures in to foreign markets and bridging finance for expansion of existing facilities; - communication of knowledge about shipping costs, financing in a foreign country and generally doing business in a foreign country; and - involvement in foreign facilities where the government may suggest sources of supply of technology. Private Sector Initiatives - use of trade associations and promotional initiatives; and - training of technical export salesman and development of technical agents in a number of overseas markets. • In summary, there appears to be a high degree of interest in supplying the KAON Factory and it appears that a very high proportion of the facility can be sourced in Canada. However, we find that more extensive and detailed discussion with Canadian suppliers will have to be conducted to properly verify that over 85% in value of supplies could be sourced in Canada. • Canadian sourcing of a KAON Factory could also be affected by international collaboration on the project as outlined below. INTERNATIONAL COLLABORATION • The question of international collaboration has been considered by the KAON Factory Technical Panel, and Chapter 5 of their report is QUANTITATIVE ESTIMATES OF THE SPIN-OFF BENEFITS OF THE KAON FACTORY This section of the report provides preliminary estimates of the value of economic spin-off benefits which are likely to arise from a KAON Factory. • QUANTITATIVE ESTIMATES OF THE SPINOFF BENEFITS OF A KAON FACTORY * ($ million) Benefits Estimated Value 1. KAON Factory sales $40.5 sales 2. Spin-offs to KAON Factory construction suppliers 240 sales 3. Spin-offs from KAON Factory construction infrastructure 6 sales 4. Spin-offs to KAON Factory operations suppliers 135 sales 5. Spin-offs from KAON Factory operations infrastructure 5 sales 6. Commercialization of KAON Factory research 21 sales 7. Es tablishment of new companies 25 sales 8. Attraction of new companies to Canada 35-55 people 9. Scientific tourism and conferences 6 transit Strategic Increment $4.1 24 13.5 .5 2.1 2.5 6 expenditure 10. Increased university enrollment 6 student .6 expenditure 11. Industrial diversification $484.5 $47.9 * All amounts are stated in 1986 dollars. EXHIBIT G Total $44.6 264 6 148.5 5.5 23.1 27 .5 6.6 6.6 $532.4 • 24 devoted to this topic. At the moment, KAON factories are being proposed in four regions - Canada, the U. S.A., Europe and Japan. In order of seniority, the Canadian project is the first conceived and the first to be formally reviewed. Because of the proj ect' s size and complexity, however, the Panel feels that probably only one of these projects will be funded and built. The other countries would then send their scientists to perform experiments at this facility, and could reasonably be expected to provide financial support towards its construction • • In this case, contributions tend to be in kind rather than in cash, ensuring maximum technological benefit for the participating nations. For example, Canada is a participant in the HERA project in Germany, with engineering design work being carried out by AECL Chalk River and TRIUMF, and components being manufactured by companies in Ontario, Manitoba and B.C • • The KAON Factory Review Committee suggests that international contributions to a KAON Factory be targeted at $75 million • • Accordingly, international funding "in kind" would likely impact somewhat on the scope and nature of Canadian sourcing of the KAON Factory. QUANTITATIVE ESTIMATES OF THE SPIN-OFF BENEFITS OF THE KAON FACTORY • 25 • Our estimates of spin-off benefits are presented separately from the rest of the findings because they are so imprecise. They do, however, provide an idea of the magnitude of spin-off opportunities and benefits during the construction and early years of the facility's operation. preliminary basis, potential economic benefits are be in the order of $485 to $530 million (in 1986 the first 15 years of the KAON Factory. (Exhibit G • On a very estimated to dollars) over opposite). • The majority of the benefits will accrue to the suppliers of the KAON Factory. These benefits arise primarily from a KAON Factory's requirements for medium to high technology products and services. • The majority of benefits will only occur if some conscious effort, direction and resources are devoted to making them happen. In examining these benefits we have estimated the potential magnification and acceleration impacts of applying effective strategies to each area of opportunity. These incremental impacts are also speculative. • Detailed calculations are described in Appendix 5 where we have: - provided tentative estimates of the order of magnitude of spin-off benefits over the first 15 years of the project; - outlined a series of strategies to magnify the spin-off benefits and/or to accelerate their occurrence during the first 15 years of the project; and - described the source of estimates (which include studies made by other research establishments). OTHER ISSUES AREAS FOR FURTHER RESEARCH CONCLUSIONS In the course of this study, a number of subsidiary issues have been identified along with areas where further research may be necessary. These are outlined on the following sections along with our overall conclusions about likely economic spin-off benefits from a KAON Factory. • I I I I I I I I I I I I I I I I I I • • 26 OTHER ISSUES In the course of this study, a number of peripheral issues were identified which may impact on the viability of a KAON Factory. These are briefly described below. (a) The Advantages of Building the First KAON Factory • Because of the cost and finite need for KAON research, it may be that only one or two such facilities will ever be built. We expect that spin-off benefits and opportunities will be significantly greater for the first facility which is successfully operational. Our analysis assumes that Canada will have the first facility. Accordingly, a number of our estimates of opportunities and impacts could be reduced in the event the Canadian KAON Factory was the second one to be built. (b) Free Trade with the U.S.A. • Free trade with the U. S.A. creates several issues relating to the proposed KAON Factory. First, free trade would likely preclude preferential sourcing of KAON Factory components thereby reducing its Canadian content. • On the other hand, free trade may also increase the U.S. government's interest in joint funding the project. In addition, it is likely that there would be improved access for KAON spin-off products and services in the large U. S. market. Accordingly, we believe that free trade with the U.S. will not significantly impact on the long term viability and Canadian opportunities created by the facility. (c) Implications of not Proceeding with a KAON Factory • A number of scientists and industrial suppliers have advised us that the TRIUMF facility will decline as a major research centre if the KAON Factory is not built. • Accordingly, the long term benefit and opportunities created by the KAON Factory are likely even greater than presented here because we have assumed a "steady state" situation with TRIUMF. If TRIUMF declined in scientific output because the KAON Factory was not built, the actual value of lost benefits and opportunities could be much greater. This is a key dilema of such a significant under-taking namely that once underway, it is difficult not to continue to advance because of the consequences of standing still • • 27 AREAS FOR FURTHER RESEARCH • The decision to proceed with the construction of a KAON Factory is one of great significance. For example, such a decision results in the commitment of a significant flow of funding assistance over the very long term. This decision also requires reduced funding or even elimination of funding for a number of other important research and development alternatives each of which offer promises of benefits to Canada. The decision to proceed with a KAON Factory will not be easy. • While our study findings indicate the many positive features of a Canadian KAON Factory, we recommend that additional works be carried out in many areas to further analyze and assess the viability of the project and its impacts on other scientific research in Canada over the next 10 years. • Our suggestions for more detailed research are outlined below. (a) Canadian Content • Canadian content is easy to say, but hard to measure. A product sourced in Canada can have a range of Canadian content depending on whether it is: - completely manufactured in Canada; - assembled in Canada partially or wholly from foreign parts; or - imported into Canada but sold by a Canadian company. • Because of the complex nature of KAON Factory components and issues such as companies' capacity, financing and willingness to bid on KAON Factory work, we believe required to ensure that to Factory is sourced in Canada. (b) Gaps in Canadian Sourcing further work on Canadian content is the greatest degree possible, the • Where gaps in Canadian sourcing have been identified, further research should be carried out to assess whether Canadian industry can be "created" to fill these needs and the conditions under which such industry would be most viable. • 28 (c) Evaluation of the Practicality/Cost/Effectiveness of Magnification/Acceleration Strategies • In our report, we have identified a number of strategies to either magnify or accelerate the occurrence of economic spin-off benefits from a KAON Factory. The foremost of these strategies was to give the KAON Factory an economic development mandate. • We recommend that a more comprehensive study be carried out in the strategy area in order to ensure that maximum benefits are secured from KAON Factory planning, construction and operations and where possible to weigh the costs of these strategies against their expected results. (d) Direction of the Facility Factory undertakes it is appropriate some form of economic to review whether there Assuming the KAON development mandate, should be any change the new facility. in the direction and reporting structure of (e) Competition from other Mega Projects • In the event any other mega proj ects either of a scientific or industrial nature are initiated in Canada during Factory construction, the availability and pricing of products and services to the KAON facility may be affected. While we are not aware of any such projects at present, we believe it is appropriate to identify any other proj ects which may affect the construction of the KAON Factory. (f) Other Government Investment Alternatives The Federal Government and others involved in the KAON Factory decision obviously have many other investment alternatives to consider. It is likely that other alternatives offer significantly different opportunities and benefits which are very difficult to measure agains t those offered by a KAON Factory. Accordingly, presentation of these alternatives in a common and comparable format may require further research and analysis of the KAON Factory proposal. • 29 (g) International Impacts and Benefits • We have noted in this report that there are several types of opportuni ties and benefits which are expected to accrue outside Canada as a result of expected foreign sourcing of products and services. These impacts should be identified in more detail for use. perhaps, in negotiating possible foreign financial participation in a KAON Factory as well as in Canada's negotiating of international trade laws in high tech goods and services. (h) Further Research on Quantitative Benefits Quantitative estimates in this report are very preliminary in nature and require further research and refinement prior to any decisions on proceeding with the construction of a KAON Factory. • 30 CONCLUSION • There is a great number and breadth of individual spin-off benefits and opportunities that could occur as a result of the construction and operation of a KAON Factory. • These benefits range in terms of: the strength of their causal linkages with a KAON Factory; the ability to describe and measure them in quantitative terms; the degree to which they can be magni-fied and/or accelerated; and the timing and location of their occurrence. • The collective spin-off benefits, in combination with direct and multiplier output and employment effects, make a strong economic case for the development of this project. • The two most important features of a KAON Factory are the need for an economic development mandate for the facility and the recogni-tion of the unique and technological nature of the industrial development stimulation created by such a project. • Specifically, a KAON Factory will only be "productive" in an economic development sense if this becomes one of the important mandates of the facility and its directors. • Further, a KAON Factory creates a large and sustained market for medium to high tech goods and services. This market will continue for a period of years and will provide many other features that will support new product and new venture development. Specifical-ly, the KAON Factory will function as a market driven economic development strategy, which acts to pull firms towards development. • With respect to infrastructure, we have noted at TRIUMF and in our interviews and literature research Factory creates a large varied, resources for applied research and findings to commercial viability. that a proj ect such as a KAON deep and accessible pool of for the conversion of research • An important factor in this infrastructure resource pool non-commercial nature of the transactions. The academic of rigorous analysis, problem solving and co-operative is the values use of • , • • 31 resources combine to provide suppliers with a tremendous system of resources and highly trained people to help them with their commercial problems. • A pure research facility such as KAON Factory always involves a good deal of applied research. New innovative research equipment is needed to conduct pure research which itself creates applied research. Pure research findings lead to new approaches to applied problems. • Accordingly, the KAON Factory should not be viewed as an impractical pure research facility. There will, over time, be numerous applied research results which will contribute to the overall value and viability of the Factory. As demonstrated at other research centres there is a significant mul tiplier effect of high tech industry in the creation of local medium and low tech economic activity. Like water running downhill, high tech industry generates work for lower level feeder industries which in turn require their own suppliers. • This effect is evident in other Canadian, US and foreign high tech centres. Accordingly, high tech industries appear to have a greater industrial multiplier effect than conventional manufacturing industries. • Finally, based on what has happened at TRIUMF, there are nUMerous scientific, medical and health advances that could arise from a KAON Factory for the benefit of Canadians and Canadian industry. • To the best of our knowledge, there are very few parallels in Canadian industrial development history to a KAON Factory. Accordingly, this project requires careful consideration to ensure that all avenues of risk and strategy are thoroughly reviewed as well as to ensure its uniqueness and breadth of economic and non-economic returns are fully understood and valued. * * * * * * • 32 We appreciate the opportunity to contribute to the economic examination of the KAON Factory proposal. In particular, we would like to thank the many engineers, scientists, business representatives and companies who willingly provided time, information and assistance with our research for this important study. Price Waterhouse Fenco Lavalin management consultants engineering consultants Vancouver, B.C. Vancouver, B.C. Nordicity management consultants Ottawa, Ontario APPENDICES 1. Case Studies of Industrial Impacts of Scientific Research 2. Case Studies of Spin-offs from TRIUMF Research 3. List of Canadian Suppliers, by Component 4. Contact List of Canadian Suppliers 5. Estimates of Spin-off Benefits CASE STUDIES OF INDUSTRIAL IMPACTS OF SCIENTIFIC RESEARCH National Aeronautics and Space Administration European Nuclear Research Organization (CERN) European Space Agency (ESA) APPENDIX 1 APPENDIX 1-1 CASE STUDIES OF INDUSTRIAL IMPACTS OF SCIENTIFIC RESEARCH Case Study: National Aeronautics and Space Administration (NASA) Project Description: Over $40 billion was spent by the U.S. Government through NASA from 1963 to 1973 for the purpose of space exploration and putting a man on the moon. Quantitative Industrial Impacts: • $1 in research and development returned over $7 in GNP over the 18 years following expenditure (Midwest Research Institute Study 1971) • • $1 billion in NASA expenditures results in 0.1% increase in national manufacturing output (Chase Economics Associates Report 1975) • NASA's space shuttle program had a 2.8 employment multiplier (Rockwell International Study 1974) Qualitative Industrial Impacts: • Economic impacts of NASA on a locality varied directly with the importance of program employment in the community. • Economic impacts of NASA varied inversely with the strength of the local economy at the inception of the program. • Economic impacts of NASA varied considerably based on local strategies implemented to magnify such impacts. • NASA has had significant social, technological, managerial and educational impacts in the communities Where it is active. • NASA contracts allowed suppliers to fund higher levels of internal R&D expenditures. • Suppliers became more innovative in computer technology. • NASA provided a "demonstration effect" Whereby commercial sales were increased by demonstrating competence in supplying products APPENDIX 1-2 to high standards of performance and reliability. • NASA fostered the development of numerous new and emerging companies including the involuntary provision of manpower to their companies. Implications for KAON Factory Industrial Impacts: • Major industrial impacts generally occur ten to fifteen years after the commencement of research. • Economic impacts can be significantly increased through appropriate strategies and programs. • Non economic impacts (i.e. technology, managerial processes) may be extremely important in the overall economic performance of the community. Sources of Information: Eli Ginzberg, Economic Impact of Large Public Programs: The NASA Experience, Olympus Publishing Company, 1976. * * * * * * Case Study: European Nuclear Research Organization (CERN) Project Description: CERN is a high energy physics research program based in Switzerland, similar to the TRIUMF facility at UBC. Quantitative Industrial Impacts: • $1 of external CERN expenditues betwen 1952 and 1973 generated $3.70 of economic utility based on information provided by a sample of 127 industrial firms and 199 case studies. • $1 of external CERN expenditures between 1973 and 1982 generated $3 of economic utility based on a sample of 160 CERN suppliers. APPENDIX 1-3 Qualitative Industrial Impacts: • The primary areas of economic impact were increases in sales and creation of new products. • CERN was free to purchase goods and services wi thout regard to country of origin. • CERN generally purchased component parts and built its own assemblies. • Economic impacts commenced 2.2 years on average after CERN purchases. • Over 80% of economic spin-offs occurred outside the areas of high energy physics and nuclear research. • Economic utility was particularly high in the fields of computers (18:1), and precision mechanics (29:1). • Smaller firms appeared to have benefitted to a much greater degree than larger suppliers to CERN. • 30% of CERN generated utility has been in the form of exports outside Europe. • Firms with no direct contact with CERN have gained substantial utility from purchases of CERN related products and use of CERN related technologies. Implications for KAON Factory Industrial Impacts: • Economic utili ty should be measured in terms products), increased sales, cost savings, production capacity. of innovation (new and maintenance of • Economic spin-offs continue to occur for many years after associated research expenditures. Sources of Information: Economic Spin-offs from CERN, CERN Courier, January/February 1985. APPENDIX 1-4 Helwig Schmeid, A Study of Economic Utility Resulting from CERN Contracts, CERN, Geneva, 1975. Helwig Schmeid, Results of Attempts to Quantify the Secondary Economic Effects Generated by Big Research Centres, IEEE Transactions on Engineering Management, Vol. EM 29, No.4, November 1982. * * * * * * Case Study: European Space Agency (ESA) Project Description: ESA is a jointly funded agency which pursues space research and related science for a group of European countries. Quantitative Industrial Impacts: • $1 of external ESA erxpenditures between 1964 and 1975 · generated $2.70 of economic utility based on 77 suppliers and 171 case studies. • $1 of external ESA expenditure between 1964 and 1986 generated $2.90 of economic utility based on 128 firms and 306 case studies. • Over five years, ESA related taxes paid by suppliers returned 57% of government expenditures on the facility. • Total ESA expenditures resulted in 1.5 times economic utility to member countries. Qualitative Industrial Impacts: • The primary areas of ESA economic production capacity, increases in products. impacts were maintenance of sales, and creation of new • ESA was required to source goods and purchases for participating countries in proportion to their funding of the centre. • ESA generally ordered complete assemblies rather than parts. APPENDIX 1-5 Implications for KAON Factory Industrial Impacts: • The preferential purchasing policies of ESA are believed to have reduced economic spin-off benefits since suppliers could not claim they were selected on price and performance. Sources of Information: Helwig Schmeid, Results of Attempts to Quantify the Leading Economic Effects Generated by Big Research Centres, IEEE Transactions on Engineering Management, Vol. EM 29, No.4, November 1982. CASE STUDIES OF SPIN-OFFS FROM TRIUMF RESEARCH Medical Applications 1. Pion cancer therapy 2. Cancer research 3. DMIPS automatic cell counter/analyzer 4. Isotope sales - sold for diagnosis 5. PET imaging - radiopharmaceuticals production Non-Medical Applications 6. Neutron activation analysis 7. Gallium arsenide research 8. Computer software APPENDIX 2 MEDICAL APPLICATIONS CASE STUDIES OF SPIN-OFFS FROM TRIUMF RESEARCH Case Study #1 - Pion Cancer Therapy APPENDIX 2-1 Application Area: Operation of the pion cancer therapy treatment centre at TRIUMF. Pion therapy is used mainly for treatment of brain tumors and certain cancers in the pelvic area, mostly cancer of the prostrate. History: The pion therapy cancer treatment project began at TRIUMF in 1972. Experimental treatment of cancer patients was carried out from 1978 to 1982. Since then, the objectives of the project have been to treat patients and to establish what types of cancers and patients are best treated by pion therapy. Ultimately, the TRIUMF facility will only be used to treat those cases. At present, only B.C. patients are treated at TRIUMF. Impact of TRIUMF: This treatment is a direct spin-off of the TRIUMF facility. Future development: Researchers are considering using a proton beam to treat non-malignant tumors of the brain and other neurological diseases, as is currently being done in the U.S. Potential Impact of nON Factory: The upgrading of the facility will provide a pion beam with a higher intensity, thus reducing the duration required for treatment. * * * * * * Case Study #2 - Cancer Research Application Area: B.C. Cancer Research Centre. Various aspects of cancer research exist directly or indirectly because of the expertise at TRIUMF. History: Dr. Lloyd Skarsgaard is the founder of the B.C. Cancer APPENDIX 2-2 Research Centre. He first came to Vancouver from McMaster University in Ontario to become part of the research group established by TRIUMF in 1972 to experiment with pion therapy. At the time t these experiments were funded in the amount of $1 million t half from the B.C. Cancer Foundation t and half from the Federal government. Between 1972 to 1978 t various other scientists were added to the research team. Research on pion therapy was completed in 1982 and the Cancer Research Centre is no longer involved with the TRIUMF pion therapy treatment centre. Currently t about half of the scientists at the Cancer Research Centre have been directly or indirectly involved with TRIUMF. The Centre has an annual budget of $7.7 million t including grants for equipment of $2.7 million. About 60% of the Centre's budget is funded by charitable organizations such as the Terry Fox Foundation t 10% is funded through the u.s. government t and the remaining 30% is funded by the Canadian government. The B.C. Cancer Research Centre has a permanent staff of about 135 which includes approximately 90 scientists, 17 administration staff, and 30 graduate and co-op students. In the summer, the centre typically hires an additional 25 students. Impact of TRIUMF: TRIUMF acted as a catalyst for cancer research in British Columbia. Future development: Much more research will be done over the next years, as the B.C. Research Centre hopes to continue to be a leader in the world. Potential Impact of UON Factory: There is no evidence that the KAON Factory will lead to further applications for cancer research. Neverthe-less, Dr. Skarsgaard is very supportive of the proposal. For example, ten times higher intensities of pions will become available from a KAON Factory thereby making it possible to shorten treatment periods and increase the number of patients treated. Canada, through TRIUMF, has APPENDIX 2-3 become a leader in particle physics and it must continue to invest to remain at the edge of technology. * .. .. .. .. .. Case Study 13 - DMIPS Cell Analyzer AppU ca t ion Area: _D_e_v_e_l_o .... p_m_e_n_t __ o_f_a_...;:D-".yn"--'a_m_i-'c'--..:..;M_i....:,c_r_o_s_c_o-,-p_e_.:;;.Im_ag",,--e_S::..c.;...a....:.n_n_e;;...;;..r (DMIPS) Cell Analyzer Processing. This device recognizes cells and analyzes their movements. The automatic cell counter/analyzer is still at an experimental stage but units have been sold at US $50,000 to the Gray Laboratory in London, England; Medical Research Centre in Rochester, New York; the Donner Laboratory, Berkeley, California; and the Harvard Medical School in Boston, Massachussets. Another analyzer has been completed for the Blood Transfusion Centre of the Canadian Red Cross in Vancouver and is now employed daily for routine experimental work. Other DMIPS units are also being used by various research groups of the B.C. Research Cancer Centre. The B.C. Cancer Research Centre intends to commercialize this unit through an arm's length private venture pending some market research which is currently underway. The inventors believe the DMIPS units will be able to sell as an adjunct to a cell flow cytometry apparatus, of which there are an estimated 8,000 units currently in operation. The Research Centre expects each D~1IPS unit to sell for US $65,000. History: The DMIPS was conceptually designed during the fall of 1983 by: Dr. Branko Palcic, a biophysicist, Mr. Bruno Jaggi, a professional electrical engineer, and Dr. Jan Nordin, an applied physicist. Dr. Paldc and Mr. Jaggi both work at the Cancer Research Centre. In the early spring of 1984, experiments were performed which confirmed that the device could be built so that automatic recognition of cells could be achieved. I.pact of TRIUHF: Dr. Bruno Palvic and Mr. Bruno Jaggi both have been APPENDIX 2-4 involved in the pion cancer therapy treatment centre and at TRIUMF. According to them: • One of the major benefits of TRIUMF is that it allows exchanges among disciplines. Scientists who have been involved in the TRIUMF pion cancer therapy projects include experts in electronics, physicists, engineers, biologists, and medical physicians. The mission-oriented research generated at TRIUMF allows a mix of disciplines which does not occur as freely in a academic setting. • TRIUMF provided training to the scientific community. • The founders of the Cancer Research Centre came to Vancouver because of the pion cancer therapy project at TRIUMF. Without TRIUMF, the Cancer Research Centre, which now employs 135 people, may not have developed. Future development: These researchers plan to continue to develop tools for medical research. Potential Impact of KAON Factory: • There is no foreseeable specific impact on their own project per see • There is a diffusion of expertise through staff turnover at TRIUMF. This should continue with the KAON Factory. • TRIUMF has to either expand and innovate, or it will die. • A KAON Factory may allow the development of materials science (i.e. better conductors, etc.). * * * * * * Case Study 14 - Isotope Sales Application Area: Isotopes produced by TRIUMF are sold world-wide to hospitals conducting nuclear medicine. Radiopharmaceuticals are sold to hospitals throughout Canada. APPENDIX 2-5 History: Many years ago, Dr. Don Lyster and two other scientists began experiments on diagnosing diseases using Iodine 123, a radio nuclide prod~ced at TRIUMF. Once the initial experiments proved successful, about 20 physicians from eight hospitals (including one in Winnipeg, one in Toronto, one in Edmonton, and five in B.C.), got involved in similar experiments using Iodine 123. AECL Radiochemicals Division decided to expand its product base 7-8 years ago and looked for a cyclotron, a necessary component in the manufacturing process. TRIUMF facilities seemed to fit best. AECL now contracts TRIUMF to operate the 42 MeV cyclotron about 105 hours per week. In 1985, the machine was used 90% of the time for radio isotope production for AECL and 10% of the time for producing positron emitters for the PET program at the UBC hospital. TRIUMF employs 10 people for the radio isotope operations, and was paid $1.3 million by AECL for the service in 1984/85. Impact of TRIUMF: AECL would never have started experiments with Iodine 123 if TRIUMF had been charging for the use of the accelerator (i.e. if TRIUMF had been a commercial operation). Basically, doctors could not afford to experiment if they had to pay for the equipment, as the payoffs from the experiments are uncertain. TRIUMF expertise and hardware have made valuable contributions to AECL's radiopharmaceutical and isotope sales, Which reached $1.8 million in the year to March 1986 and which are projected to reach nearly $3 million in 1986/87. The cost of developing pharmaceutical applications depends on the ability to obtain large quanti ties of radio isotopes. able, as a spin-off, to produce these large quantities. TRIUMF is Because of the expertise gained with TRIUMF, AECL now sells proj ect management services to other countries, such as Indonesia. Future development: Medical scientists will continue to experiment on APPENDIX 2-6 diagnosing diseases on virtually every organ, i.e. pancreas, liver, lungs, etc. Until now, experiments have concentrated on cancer, kidney and heart diseases. An additional facility will likely be needed in 2-3 years time to double production capacity. It would make sense to locate associated research at TRIUMF to draw on the resident expertise. Also, more on-site processing of Iodine 123 for western customers would make sense and is being explored. Additional on-site processing will require a $1 million investment. Potential Impact of KAON Factory: A KAON Factory would increase the supply of resident expertise and reinforce continued on-site development of radiochemical production facilities. Also, such a facility would allow the development of better products (i.e. purer forms ... of radio chemical isotopes like Iodine 123). Bow to enhance technology transfer: Allocate more TRIUMF staff to this application area. Often such research is delayed due to lack of staff at TRIUMF (i.e. TRIUMF does not have the staff to assign to the beamline and experiments to develop purer radio isotopes are being slowed down). * * * * * * Case Study #5 - PET Application Area: PET (Positron Emission Tomograph) imaging. History: A TRIUMF built PET VI imaging device has been in operation in the UBC Health Sciences Centre for a number of years. Many patients and volunteers have participated in the PET research program. Arising from this program, a novel design for a gamma ray detector has now been developed and tested at TRIUMF. The design will allow construction of economical, high resolution, larger aperture nuclear medicine scanners with performance superior to any now available. This initiative has been led by Joel Rogers and Brian Pate. About 10 TRIUMF personnel are involved in this work. Patents have been applied for in Canada, the U.S. and Europe. APPENDIX 2-7 Impact of TRIUMF: TRIUMF has supplied the essential nuclear physics laboratory resource to develop and test the PET detector. Isotopes have been obtained from the 42 MeV cyclotron. Future development: Local commercial interest in the PET detector has been informally expressed by MacDonald Dettwiler and Associates and Ventures West Technologies. Dr. Paul Doherty, Director of Nuclear Medicine at the University of Massachussetts Medical Center, has also expressed his intention to approach Picker and possibly General Electric with a proposal to adopt a detector design in their new generation of scanners. Instead of manufacturing entire whole body PET scanners locally, and thus competing with international companies (Picker, GE, Elcint and Siemens), Rogers and Pate felt that the potential for the PET detectors is so big that a local company should be incorporated to produce such products . possibly under contract to the scanner manufacturers. Allan Crawford developed, in January 1986, a business plan which supported the concept of selling complete PET systems. He proposed that a company be located in Vancouver close enough to TRIUMF to establish efficient technology transfer linkages. He estimated the potential market to be 50 machines over the next ten years (research community only; he did not foresee a clinical market initially), of which the company would capture 25% (twelve machines over 10 years). Each machine would sell for U.S. $1.2 million. Rogers cautions that in the Crawford scenario, it would be difficult to provide maintenance of equipment outside North America. Potential Impact of KAON Factory: The new facility will substantially increase TRIUMF's large pool of multi-disciplinary expertise to support development of future generation PET machines. The KAON Factory itself will not make any difference to the quality of research on PET. APPENDIX 2-8 Bow to enhance technology transfer: The TRIUMF Applied Programs Division should continue to focus on research which has strong potential for marketable results. National Research Council grants apply only to research projects and to development-oriented projects. Additional NRC funds for development projects would enhance technology transfer. * * * * * * NON-MEDICAL APPLICATIONS Case Study #6 - Neutron Activation Analysis Application Area: Neutron activation analysis has been developed at TRIUMF for geological assaying. History: This application arose from work for a group of labs interested in using neutrons for assaying purposes, partly because of the large volume of uranium exploration being done in the mid-1970's. In 1978-79 uranium exploration activity declined sharply, but gold exploration increased. gold. Now, 80i. of the assaying work is related to Impact of TRIUHF: The lab existed prior to 1978, but TRIUMF acted as a catalyst in its growth. TRIUMF was convenient but not essential. Chemex uses nuclear reactors in the U.S. when TRIUMF is not operating. (TRIUMF operates with the required high intensity unpolarized beam for only half of the year.) Chemex is at the leading edge of technology. There are only three other labs in North America · which do neutron activation analysis for assaying purposes. About 10% of the Chemex workforce is involved in the TRIUMF operation. Chemex now employs 200 people, 90i. of whom are in B.C. 70% of Chemex sales are exports. Future development: Information is not currently available in the development potential of this form of research. APPENDIX 2-9 Potential Impact of KAON Factory: The KAON Factory will neither enhance nor disrupt this application. How to enhance technology transfer: Sharing of TRIUMF's electronic expertise could enhance the transfer of technology. * * * * * * Case Study #7 - Gallium Arsenide Research Application Area: Gallium Arsenide CCD's (charge-coupled devices) are used for fast transient analysis for radar imaging where radar response is impressed on optical CCD's. History: This is a TRIUMF initiative resulting from interest in high speed properties of GaAs. Canadian Astronautics Ltd. (a radar . and space industry company with military and space customers) and Boeing have expressed interest. Impact of TRIUMF: This application is a direct spin-off of TRIUMF research activity. Future development: Another specialized imaging application is in the near infra red region of the spectrum, not for visible imaging like T.V. Possible applications are vehicle identification through measuring exhaust fumes; forestry surveys (health of trees); and friend/foe identification in radar signalling. The fast transient response analysis enables economical digitization of information from radar to be displayed on standard video equipment. This could significantly reduce the price of oscilloscopes as well. Potential Impact of nON Factory: Continued state-of-the-art research in this field will occur, if the KAON Factory proceeds. The KAON Factory does not have the same leverage as CERN, Which is a much larger opera-tion, so application research in this field will have to be selective. APPENDIX 2-10 How to enhance technology transfer: Technological transfer should be built into the project management of the KAON Factory t where TRIUMF's engineers collaborate closely wi th Canadian companies to become competitive internationally. This function should be funded and built into TRIUMF's operations and the KAON Factory development plan. * * * * * * Case Study #8 - Computer Software Application Area: Unique technical Software has been developed at TRIUMF in response to various research needs. History: In 15 years with TRIUMF t Corrie Kost and colleagues (total 5 1/2 people) have developed software with applications in industry and other research establishments. For example, they have developed: • PLOTDATA - An interactive utility for displaying data. • OPDATA - An interactive utility for manipulating data. • RELAX3D - A system to calculate the electrostatic field for any three dimensional geometry. • A graphics package which allows editing of data to produce publication quality graphics. All packages run on a DEC VAX. Packages have been given (free of charge) to local commercial enterprises such as MacMillan Bloedel Research, B.C. Hydro and Dow Chemical, and to institutions such as B.C. Research, RN. Los Alamos National Laboratory, and a number of universities world- wide. The packages are based on FORTRAN 77. Kost claims that the software is unique in flexibility, speed of operation, and ease of use. documentation has been developed. User Impact of TRIUMF: Physicists require software support and several unique packages have been developed at TRIUMF over the years. Unlike the private sector, a research facility such as TRIUMF enables development of software to high standards over a long period of time without severe budget constraints. APPENDIX 2-11 Future Development: Commercially, nothing is planned to derive revenue from this software. The cost of software development is considered to be in the public domain. Commercialization may redirect focus of effort away from TRIUMF's specific needs. Potential impact of KAON Factory: A larger facility will make greater demands on software support (more diverse, unique packages in greater numbers will be developed). Any change in commercial potential is unknown. How to enhance technology transfer: About five of Kost's colleagues have moved to the private sector over the past 15 years. Communication to them of continuing development would enhance transfer of techniques. A separate company could be set up to market software products developed at TRIUMF. * * * * * * LIST OF CANADIAN SUPPLIERS, BY COMPONENT APPENDIX 3 CO~ENT 1. MAGNETS APPENDIX 3-1 qST OF CANAD I AN SUPf>lI ERS« BY COtoPONENT SUBCO~NENT 1.1. Steel 1.1.1. M8terlals 1.1.2. Fabricating 1.2. CoIl makIng 1.2.1. MaterIals 1.2.2. CoIl makIng Assembly 1.3. Assembly SUPf>L I ER I/NAt-£ 1. Oofasco Inc. 2. Steelco Inc. 3. Algoma Steel Corp. 4. EBCO 5. K & S Tool and Ole 33. Tal Van MachIne Shop Ltd. 59. Avesta StaInless Inc. 6. John T. Hepburn Ltd. 66. Decade IndustrIes 7. Pyrotenax of Cenede Ltd. 8. PhIllIps Cables 9. WIsmer & RawlIngs PROVINCE Onterlo Onterlo Onterlo B.C. Menltobe B.C. B.C. OntarIo B.C. Onterlo Onterlo B.C. 10. Beever Electrlcel Mechlnery Ltd. 11. Best CoIl Ltd. 12. SterlIng Ltd. 13. Dow CornIng Cenede Inc. 14. Cenedlen Generel ElectrIc 15. WestInghouse Canede Inc. 16. Federel PIoneer Ltd. 17. Ferentl Packerd Ltd. 18. Hemmond Menufecturlng Co. 19. Moloney ElectrIc Corp. 20. Thomson ElectrIc 21. Kockums Cencer 62. Cenron 14. Cenedlen Generel ElectrIc 15. WestInghouse Cenede Inc. 16. Federel PIoneer Ltd. B.C. B.C. Onterlo Onterlo Onterlo Onterlo Onterlo Onterlo Ltd.Ontarlo Onterlo Quebec B.C. B.C. Onterlo Onterlo Onterlo 17. Ferantl Packard Onterlo 18. Hommond Menufacturlng Co. Ltd.Onterio 19. Moloney Electric Corp. Onterlo 20. Thomson ElectrIc Quebec 21. Kockums Cencar B.C. 62. Canron B.C. APPENDIX 3-2 2. R. F. SYSTEMS 2.1. ~"fler 2.1.1. High voltage power supp lies 2.1.2. Low power station 22. Nexus Engineering Corp. B.C. 2.1.:5. High power station 2:5. Larcan Communications Equipment Inc. OntarIo 2.2. Cavities 4. EBCO B.C. 5. K & S Tool end Ole Manltobe 59. Aveste StaInless Inc. B.C. 6. John T. Hepburn Ltd. Ontario 2.:5. Tuners 2.:5.1. D.C. power supp lies 14. Caned len Generel Electric OntarIo 15. Westinghouse Canede Inc. Onterlo :54. Tectrol Inc. Onterlo 24. CTS of Canada Ltd. Onterlo 25. Thyristor DevIces Ltd. Ontario 26. Emerson Electric Ontario 27. Modern Power Conversion Onterlo 28. crIterion Instruments Ltd. Onterlo 29. Bee I Controls Ltd. Quebec :50. Phil tek B.C. :51. Alpha Technologies Ltd. B.C. 2.:5.:5. Cavities 4. EBCO B.C. 5. K & S Tool end Ole Menltobe 59. Aveste SteIn less Inc. B.C. 6. John T. Hepburn Ltd. OntarIo :5:5. Tel Van Mechlne Shop Ltd. B.C. ,. VACUUMS :5.1 • Beem pipes :5.1.1. Stainless steel :5.1.1.1. MaterIels 1 • Dofesco Inc. Onterlo 2. Steelco Inc. Onterlo :5. A I gome Stee I Inc. Onterlo :5.1.1.2. Fabrlcetlng 5. K & S Tool and Ole B.C. 4. EBCO B.C. :5:5. Tal Ven Machine Shop Ltd. B.C. 59. Aveste Stelnless Inc. B.C. 6. John T. Hepburn Ltd. Ontario 66. Decede IndustrIes B.C. :5.1.2. eel lows and ceremlcs :5.2. Pumps and velves APPENDIX )-3 4. FRONT END 4.1. ~uters 15. westInghouse Canada Inc. OntarIo I NSTRUMENTAT I ON 35. DIgItal EquIpment of Canada OntarIo 36. Data General of Canada OntarIo 37. rJemorex Canada OntarIo 38. IBM Cenada B.C./Ont. 40. Electron rJetal FabrIcators Quebec 43. Gandalf Data Ltd. OntarIo 44. Devdcon ElectronIcs Ltd. Sask. 45. Gould ElectronIcs Ont&rlo 46. K>A B.C. 47. Dynapro Systems Inc. B.C. 48. Response ServIces Inc. B.C. 49. Mlcrotel Ltd. OntarIo 50. Northern Telecom OntarIo 51. Spar Aerospace OntarIo 4.2. Front end InstrumentatIon 39. TransductIon Ltd. OntarIo 40. Electron Metal FabrIcators Quebec 41. Anatek MIcrocIrcuIts Inc. B.C. 42. CanadIan MarconI B.C. 52. GEC Cenada Ltd. OntarIo 55. CIrcuIt Grephlcs Ltd. B.C. 56. Pachena ScientifIc & Industrial Electric Inc. B.C. 60. Nautel N.S. 61. Allan Crawford & Assoc. B.C. 4.3. Lab InstrumentatIon 40. Electron Metal Fabricators Quebec 53. Hewlett Packard Ontario 4.4. Cebles ,. POWER CABLI NG Standard sourcing 6. REK>TE HANDL I NG 6.1. Components 6.2. Des I gn TRIUMF B.C. 7. SHIELDING, BEAM DlM'S, NEUTRINO t«lRNS Standard sourcIng 8. ELECTRICAL SERVICE AND UTILITIES Standard sourcIng 9. COOliNG SYSTEMS 10. POWER SUPPLIES 10.1. Low voltege 10.2. High voltege 11. INSTRUMENTATION (beem end sefety) 12. CONVENTIONAL CONSTRUCTION n. ADDITIONAL StPPLlES EXPERIMENTAL STAGE 13.1. Geses APPENDIX 3"'4 Stenderd sourcing 14. Cenedlen Generel Electric 15. westinghouse Cenede Inc. 34. Tectrol Inc. 24. CTS of Cenede Ltd. 25. Thyristor Devices Ltd. 26. Emerson Electric 27. Modern Power Conversion 28. Criterion Instruments 29. Bee I Controls Ltd. 30. Ph IItek 31. Alphe Technologies Ltd. 3. Trensductlon Ltd. 40. Electron Mete I Febrlcetors 41. Anetek Microcircuits Inc. 42. Cenedlen Merconl 52. GEC Cenede Ltd. 55. Circuit Grephlcs Ltd. 56. Pechene Scientific & Industrlel Electric Inc. 61. Allen Crewford & Assoc. Stenderd sourcing 54. Medlges Peclflc Ltd. 57. Methlesen Ges Products Cenede Inc. 58. Aptec Engineering Onterlo Onterlo Onhrlo Onterlo Onterlo Onterlo Onterlo Onterlo Quebec B.C. B.C. Onhrlo Quebec B.C. B.C. Onhrlo B.C. B.C. B.C. B.C. Onterlo Onterlo CONTACT LIST OF CANADIAN SUPPLIERS APPENDIX 4 CONTACT LIST OF CANADIAN SUPPlIERS PAST/ CURRENT OUESTI ONNA IRE INTERVIEW TRltwF LEVEL OF RESPONSE (Personel SUPPLI ER PARTS CONTACTS SUPPLIERS TECHNOLOGY RECEIVED or telephone) 1 • Oofesco Inc., E I ectd ce I stee I Not contected * Low 1330 Burlington E., (1.1.1.) HAMILTON, Onterlo Low cerbon steel L8N 3J5 (416) 544-3761 <1.1.1.,3.1.1.) 2. Steelco Inc., Low cerbon steel Not contected * Low 100 King W., (1.1.1.,3.1.1.) HAMILTON, Onterlo L8N 3Tl (416) 538-2511 3. A I gome Stee I Corp., Low cerbon steel Not contected * Low 900 - 4 Robert Speck Perkwey, (1.1.1., 3.1.1.) MISSASSAUGA, Onterlo L4Z 1 SI 4. EBCO, Steel febrlcetlng Helmut Eppich X Low to med I urn X Personel 7851 AIder-bridge Wey, (1.1.2.,3.1.1.2.) Chelrmen & CEO RICHMOND, B.C. Cevltles 278-5578 (2.2., 2.3.3.) 5. K & S Tool end Ole (Cenmeg), Steel febrlcetlng Peter Klein, X X Telephone 21-1865 Sergent st., (1.1.2.,3.1.1.2.) President WINNIPEG, Menltobe Cevltles R3H OC9 (2.2, 2.3.3.) 6. John T. Hepburn Ltd., Steel febrlcetlng John C. Collins Low to med. X 914 Dupont St., (1.1.2.,3.1.1.2.) Mgr., Merketlng TORONTO, Onterlo Cevltles Services, Mechenlcel M64 lZ2 (2.2., 2.3.3.) Division 7. pyrotenex of Cenede Ltd., Hoi low copper A. G. Lewrence, X High X ~ "d West st., conductors (1.2.1.) President & CEO t>l TRENTON, Onterlo E3 K8V 5S2 (613) 392-6571 H ><I ~ I * - not e direct supplier es TRIUMF buys steel from distributors .... SUPPLIER 8. PhIllIps Cables, 1 KIng Street W" BROOKVILLE, OntarIo 9. WIsmer & RawlIngs, 1647 W. 5th Ave., VANCOUVER, B.C. V6J lN6 736-7211 10. Beaver ElectrIcal MachInery, Ltd. 7440 Lowland, BURNABY, B.C. V5J 5A8 438-5201 11. Best CoIl Ltd., 1000 Parker, VANCOUVER, B.C. V6A 2H2 254-6277 12. SterlIng Ltd., P.O. Box 544, 5-9 Ph I I I p St., ST. CATHERINES, OntarIo L2R 6Xl 13. Dow CornIng Canada Inc., 6467 Campobello Road, MISSASSAUGA, OntarIo L~ ~1 (416) 826-9600 PARTS WIres, cables and copper <1.2.1.) Col I mak Ing <1.2.2.) Coli meklng (1.2.2.) Col I mak Ing <1.2.2.) Epoxlte - small part of col I makIng (1.2.2.) Epoxlte - small part of co I I mak I ng (1.2.2.) CONTACTS M.G. Sumpton, PresIdent R. S. HarrIson PresIdent B. Crowther, Controller PAST! CURRENT TRIUMF SUPPLIERS X X X X John G. Bulilvant, Exec. V.P. LEVEL OF TECIflOLOGY Low to hIgh Low to hIgh Low to hIgh Low to hIgh QUESTIONNAIRE RESPONSE RECEIVED X X X X INTERVIEW (Personal or tel!!2hone) Telephone Personal Personal ~ ~ ~ H ><I .ll-I N PAST/ CURRENT OUESTI ONNA IRE INTERVIEW TRIUMF LEVEL OF RESPONSE (Personel SUPPLIER ~ CONTACTS SUPPLIERS TECHNOLOGY RECEIVED or telephone) ---- -- ----14. Cenedlen Generel Electric, Coil essembly High Heed Off Ice, (1.2.3.) Commerce Court North, TORONTO, Onterlo Megnet essembly M5L 1 J2 (1 .3.) Trensformers of D.C. power supp I I es (2.3.1.) 15. westinghouse Cenede Inc., Coil essembly G. J Hoolboom High X Telephone P.O. Box 510, (1.2.3.) Dlr. of Eng. HAMILTON, Ontario Technology LBN 31<2 Magnet assembly (1.3.) Trensformers of D.C. power supplies (2.3.1.) Computers, progremmeble logic controllers (4.1. ) 16. Federel Pioneer Ltd., Col I essembly Richerd P. X High X 19 Waterman Ave., (1.2.3.) de Lhorbe, Mktg.Mgr. TORONTO, Onterlo Trensformer Group M4B lY2 Magnet assembly Herry Schonert, (416) 752-8020 (1.3.) Product Assistant Trensformer Group 17. Ferantl-Peckerd Transformers Col I essembly F. M. Squires High Personel Ltd., (1.2.3.) V.P. & General Seles Mgr. ~ 121 Industry Street, TORONTO, Ontario Megnet assembly '"d t<1 M6M 4M3 (416) 762-3661 (1.3. ) ~ H ><l ~ I W PAST! CURRENT QUESTIONNAIRE INTERVIEW TRIUMF LEVEL OF RESP~SE (Personel SUPPLIER PARTS CONTACTS SUPPLIERS TECHNOLOGY RECEIVED or telephone) 18. H8mmond M8nufecturlng Co. Col I 8ssemblv Tom D8vld High Ltd., (1.2.3.) 949 Como L8ke, COQUITLAM, B.C. M8gnet 8ssemblv V3J 3N5 (1 .3.) 19. Molonev Electric Corp., Coli 8ssemblv High 213 - 219 Sterling R08d, (1.2.3.) TORONTO, Ont8rlo M6R 2B4 (416) 534-9226 M8gnet 8ssemblv ( 1 .3. ) 20. Thomson Electric Ltd., Coli 8ssemblv X High 5710 Notre D8me West, (1.2.3.) MONTREAL, Que. H4C 1 V3 Magnet assemblv (1.3.) 21. Kockums CenCer Inc., Co" essemb I V K.G. Miles, HIgh X 19433 - 96th Ave., (1.2.3.) Pres. & CEO SURREY, B.C. V6B 4K6 Magnet 8ssemblv (1 .3.) 22. Nexus EngIneerIng Corp. ~I Ifler, low power Vello Sork HIgh X Per son 8 I 7000 Lougheed Hwv., st8tlon Corpor8te Counsel BURNABY, B.C. (2.1.2.) V5A lW2 23. Larcen Communlcetlons ~Ilfler, hIgh power Lou Spence, HIgh X Personal EquIpment Inc. stet Ion VIce Chelrm8n 6520 North8m DrIve, (2.1.3.) MISSISSAUGA, Ont8rlo ~ L4V lH9 (416) 678-9970 ~ tol ~ H >cI ~ I ~ SUPPLIER 24. CTS of C8nada Ltd., 80 Thomes Street, STREETSVILLE, Onterlo L5M lY9 (416) 826-1141 25. Thyristor Devices Ltd., 1893 Bonhlll Road, MISSASSAUGA, Onterlo L5T lCl (416) 671-2928 PARTS D.C. power supply (2.3.1., 10.1.1. to 10.1.5.) D.C. power supply (2.3.1., 10.1.1. to 10.1.5.) 26. Emerson Electric Ceneda Ltd., D.C. power supply (2.3.1 ., 10.1.1. to 10.1.5.) 27. Modern Power Convers Ion, 7100 Werden Ave., Unit 13, MARKHAM, Onterlo LJR 2L6 (416) 447-3387 28. Cr I ter I on Instruments, Cenedlen Research Institute, 30 Progress Avenue, SCARBOROUGH, Onterlo Ml P 4W8 (415) 299-6666 29. Bee I Controls Ltd., 2650 Pltfleld Blvd., MONTREAL, Que. H4S 1 G9 (514) 334-6500 30. Phlltek 6 - 2520 Simpson Rd., RICHMOND, B.C. 270-4642 D.C. power supply (2.3.1.,10.1.1. to 10.1.5.) D.C. power supply (2.3.1.,10.1.1. to 10.1.5.) D.C. power supply (2.3.1.,10.1.1. to 10.1.5.) D.C. power supply (2.3.1., 10.1.1. to 10.1.5.) PAST! CURRENT TRIUMF CONTACTS SUPPLIERS R.J. Holmes, Operetlons Mgr. Sid Sincielr, Vice President Mertln Proudfoot, President Peul Tennyson, Gen. Meneger Peter Soma, Gen. Manager Ben Eser, President Phil Pong X X OUESTIONNAIRE LEVEL OF RESPONSE TEC~OLOGY RECEIVED Medium X X Low to med I um INTERVIEW (Personel or telephone) Per son eI Personel Personal ~ ~ ~ H ~ ~ I VI SUPPLIER 31. Alpha Technologies Ltd., 7033 Antr 1m, BURNABY, B.C. V5J 4M5 4JO-1476 32. Bennett and Emmott Ltd., 12031 I Road, RICI-M>ND, B.C. V7J lG4 9B4-3545 33. Tal Van Machine Shop Ltd., JOB - 13395 76th Ave., SURREY, B.C. V3W 6K2 594-1141 34. Tectrol Inc., 39 Kodlac Crescent, BELVIEW, Ontario MJJ 3E5 35. Digital Equipment of Canada, Ltd., 10711 Camble St., RICHMOND, B.C. V6X JG5 (416) 278-3466 36. Data General (Canada), 2155 Leanne Blvd., MISSASSAUGA, Ontario L5K 2K8 (416) B23-7BJO 37. Memorex Canada Ltd., 7050 Woodbine Ave., MARKHAM, Onhr 10 Local B75-1371 PARTS D.C. power supply (2.3.1.,10.1.1. to 10.1.5.) Coli making (1.2.3.) Magnets (1.3. ) Steel fabricating (1.1.2.,3.1.1.2.) D.C. power supply (2.,.1.,10.1.1. to 10.1.5.) Computers (4.1) Computers (4.1 ) COITputers (4.1) CONTACTS Barry JankowskI Sales Manager Bob Vaughan President Martin Gelb, President PAST/ CURRENT TRIUMF SUPPLIERS x x x x Eleanor Lester, X Dlst. Sales Mgr. (60% Canadian content) Michael Tookey, X President (40% Canadian content) Bob Henderson, X VIce President (Cdn. content 7) OUESTI ONNA IRE LEVEL OF RESPONSE TECHNOLOGY RECEIVED Low to med I um INTERVIEW (Personal or telephone) Low to medium NO - In receivership X High x Telephone High ~ ~ ~ Z t:I H >< l:-I 0'\ SUPPLIER 38. IBM Cenede Ltd., P.O. Box 10132, 701 W. Georgie St., VANCOUVER, B.C. V6Y lGl 39. Trensductlon Ltd., 1645 Sismet Roed, Unite 12, MISSISSAUGA, Onterlo L4W lZ3 40. Electron Mete I Febrlcetors, 7800 Chemin Cote de Llesse Rd. Suite 360, MONTREAL, Quebec H4T lGl (515) 735-6144 41. Anetek Microcircuits Inc., 240 Brooksbenk, NORTH VANCOUVER, B.C. 980-7061 42. Canedlen Merconl, 2442 Trenton Ave., MONTREAL, Que. MJP lY9 (514) 341-7630 43. Gendelf Oete Ltd., 100 Colonede Roed, NEPEAN, Onter 10 K2E 7M4 (613) 226-6500 44. Devdcon Electronics Ltd., 856 - 51st Street E., SASKATOON, Sesk. S~ X7 45. Gould Electronics 6630 Cempobello Roed, MISSISSAUGA, Onterlo L5N 2L8 (416) 821-8200 PARTS Computers - P.C.'s (4. J) Front end Instrumentetlon (4.2) CONTACTS Jim Coray (B.C. Industry) Frttnk 011 Ie Pertner Reeks - used In computers, end In front end end leboratory Instrumentetlon (4.1., 4.2., 4.3.) Front end Instrumentation (4.2) Front end Instrumentation (boerd menufacturer) (4.2.) Scott Lewis, President PAST/ CURRENT TRIUMF LEVEL OF SUPPLIERS TECHNOLOGY X X Low x High x ~uters (4.1.) Desmond Cunnlnghem X President Computers (4.1.) Progremmeble logIc contro I I er s ~uters (4.1.) Don Mahoney, Merketlng Dept. x x High OUESTIONNAIRE RESPONSE RECEIVED INTERVIEW (Personel or telephone) No - not Telephone appl !cable per company x Personel x Personel x ~ rg e3 H ~ ~ I ....., PAST/ CURRENT OUEST! ONNA IRE INTERVIEW TRIUMF LEVEl OF RESPONSE (Perso""I SUPPLIER PARTS CONTACTS SUPPLIERS TECHNOLOGY RECEIVED or telephone) 46. ~A Software (computers) X HIgh No - not 3751 Shel I, (4.1> eppllcable RICHMOND, B.C. per company V6X 2Z9 278-3411 47. Dynapro Systems Inc., Software (computers) X HIgh X 1000 - 1200 W. 7th Ave., (4.1.) VANCOUVER, B.C. 872-1631 48. Response ServIces Inc., Software (computers) X HIgh No - not 2358 GrandvIew HWy., (4.1 .) eppllcable VANCOUVER, B.C. per company V5N lN9 873-1641 49. Mlcrotel Ltd., Software (computers) HIgh 2100 - 401 W. GeorgI a, (4.1. ) VANCOUVER, B.C. V6B 5Al 683-3575 1211 DenIson St., MARKHAM, Onterlo 50. Northern Telecom, Software (computers) 304 The Eest M8 I I, (4.1 .) ISLINGTON, OntarIo M9B 6E4 (416) 232-2000 51. Spar Aerospace Ltd., RobotIcs (computers) R.D. Pol lock HIgh X Royel Benk Plaza, South Tower, (remote handlIng) PresIdent & CEO Box 83, (4.1 .) TORONTO, Onterlo MSJ 2J2 52. GEC C8nade Ltd., Front end Rupert Melr X HIgh ~ 5112 Tlmberlea Blvd., InstrumentatIon (4.2) PresIdent "tI t>l MISSISSAUGA, Onterlo e':i L4W 255 (614) 624-8300 H >< s:-I 00 SUPPLIER 53. Hewlett Packard Canada Ltd., 6877 Goreway Drive, MISSISSAUGA, Ontario L4V 1MB (416) 678-9430 54. Medlgas Pacific Ltd., 1339 Franklin St., VANCOUVER, B.C. V5L lP2 255-8422 55. CircuIt Graphics Ltd., 8030 Winston, BURNABY, B.C. V5A 2H5 420-3313 56. Pachena Scientific & Industrial Electrical Ltd., 1395 Boundary Road, VANCOUVER, B.C. V5K 4T9 291-2025 57. Mathieson Gas Products Canada Inc., 530 Watson Street, P.O. Box 39, WHITBY, Ontario LIN 5R9 (416) 668-3397 PARTS Front end Instrumentation (4.2) Lab Instrumentation (4.3. ) Gases - experimental stage Board manufacturer Front end Instrumentation <4.2.) Front end Instrumentation (4.2. ) Gases - experimental stage (13) CONTACTS Malcolm Glsslng Pres./G.M. A.K. Smethurst Gen. Mgr. Hugh Kay, Pres. & G.M. M.P. ~rley, General Mgr. Alan Knight, President PAST/ CURRENT TR I UMF LEVEL OF SUPPLIERS TECHNOLOGY x x x High x High x OUEST I ONNA IRE RESPONSE RECEIVED INTERVIEW (Personal or telephone) No - not applicable per company x Telephone Telephone ~ "tI t'I1 E3 H ><I ~ I \0 SUPPLIER 58. Aptec Engineering Ltd., 4251 Steeles Ave., West, DOWNSVIEW, Ontario M3N lV7 (416) 661-9722 59. AVESTA Stainless Inc., 4001 Rem I PI., BURNABY, B.C. V5A 4J8 420-9222 60. Nautel, R.R. II, Tantallon, Hackett's Cove, HALIFAX Co., N.S. BOJ .3JO 61. Allan Crawford and Assoc., 58.35 Coopers Avenue, MISSISSAUGA, Ontario 62. Canron Inc., Weston Bridge Division, 145 W. 1st Avenue, VANCOUVER, B.C. V5Y lA2 6.3. Canadian Aircraft Products Ltd. 2611 Viscount Way, RIC~D, B.C. V6V lM9 64. Zenon Environmental Inc., 845 HarrIngton Court, BURLINGTON. Ontario Lm ~.3 PARTS Experimental stage Steel fabrIcating <1.1.2., .3.1.1.2.) C8vltles (2.2 •• 2 • .3 • .3.) Front end Instrumentation (4.2.) Front end Instrumentation (4.2.) Magnets (1 • .3.) Coil makIng (1.2 • .3.) Resonater panels CONTACTS Ed Zieba PresIdent Allan Crawford M. Frank, ChIef Engineer PAST/ CURRENT lRlUMF SUPPliERS ---X X X X X W.M. WillIams, X Dlr. of Eng. Research Andrew Benedek President LEVEL OF TECHNOLOGY High Low to med. QUESTIONNAIRE RESP~SE RECEIVED X No - no time X Medium to high X INTERVIEW (Personal or telephone) ~ "tI t11 E3 H >< ~ I t-' o SUPPLIER 65. Werdrop Eng. Consultents, 600 - 6725 AIrport Rd., MISSISSAUGA, Onterlo L4V lV2 66. Decede IndustrIes 7860 RIver Roed, RICH~ND, B.C. V6X lX7 PARTS PAST! CURRENT TR I UMF LEVEL Of' CONTACTS SUPPlIERS TECHNOLOGY Tony Stonehlll, X Sr. DesIgn EngIneer Brice Pete Ed Pege X QUESTIONNAIRE RESPONSE RECEIVED X x INTERVIEW (Personel or telephone) Telephone ~ ~ E3 H >I ~ I ..... ..... APPENDIX 5 ESTIMATES OF SPIN-OFF BENEFITS APPENDIX 5-1 ESTIMATES OF SPIN-OFF BENEFITS (All amounts stated in 1986 dollars) 1. KAON Factory sales. Description: Once the KAON factory is operational, it is expected that some direct revenues will be generated by selling certain outputs of facUity. For example, AECL currently sells isotopes generated at TRIUMF throughout North America. Projected Timing of Opportunities: We will assume that sales will commence in the 7th year and continue indefinitely. Project Magnitude of Opportunities: It would be appropriate to organize separate cost centres for producing revenues and to budget expendi tures and income accordingly. However, for the purposes of this report we have assumed that aggregate revenue objectives will amount to 5% of the overall operating budget of the KAON Factory. Assuming the annual operating budget will be at the $89 million level commencing in the 7th year through to the 15th year, total revenues would be in the order of $40.5 million (i.e. $4.5 million per year). Strategies to Increase the Magnitude of Opportunities: To increase KAON Factory sales, strategies could be implemented as follows: • Sign long term contracts for KAON product sales. • Apply for and sell patents where appropriate. • Assign revenue generation responsibilities and targets to each cost centre. • Conduct market research to determine potential customer needs and commercial opportunities. Strategies to Accelerate the Timing of Opportunities: To accelerate the development of KAON Factory revenues, positive steps APPENDIX 5-2 should be taken at an early stage to plan the sale of outputs immediately after the KAON Factory is commissioned. Projected Impacts of Magnifying and Acceleration Strategies: Effective implementation of magnifying and acceleration strategies could increase sales revenues by 10%, say, or $450,000 annually. Source of Opportunity Projections: Currently, sales revenues are running in excess of 5% of the annual operating budget. * * * * * * 2. Spin-offs to KAON Factory construction suppliers Description: Companies supplying medium to high technology products and services for KAON Factory construction should be able to capitalize on this experience to accomplish one or more of the following results: • Expand their product line. • Enter new markets. • Use the KAON Factory as a reference for new orders. • Introduce new technology to other products. • Reduce costs. • Introduce new manufacturing technology. • Increase quality of production. • Commence joint ventures with other companies to enter new markets. • Increase expenditures on research and development. Projected Timing of Opportunities: Construction expenditures will be made commencing year one and extending to year six. Spin-off sales are assumed to begin in year two and continue through to year 15, and beyond. Projected Magnitude of Opportunities: We have measured the opportunities in terms of additional sales (other than to TRIUMF) J APPENDIX 5-3 which will be made by the supplier companies, as a resul t of their KAON contacts, over the 15 years following commencement of construction of the KAON Factory. We have valued these potential sales at $240 million in 1986 dollars, calculated as follows: Medium and high tech products and services supplied Magnification factor Projected spin-off sales $120 million 2.0 $240 million Strategies to Increase the Magnitude of Opportunities: Strategies to increase construction supplier spin-off sales are as follows: • Increase Canadian sourcing of KAON Factory goods and services. • Use KAON Factory staff to assist in marketing company goods and services. • Encourage KAON Factory staff to help companies commercialize specialized products and services supplied to the KAON Factory. • Provide government grants in proportion to a companies' KAON Factory sales for new export sales of related products and services (e.g. rebate $1 for every $10 of incremental sales). • Constantly publicize events, progress, needs of the KAON Factory's construction in trade magazines and the general media. • Negotiate with foreign governments to arrange for reciprocal sales to the extent that the KAON Factory is supplied from their country. • Purchase whole assemblies from suppliers rather than sub-assemblies and parts, in order to transfer more complex work to suppliers. • Organize the KAON Factory to share the risks of new product development to encourage suppliers of complex assemblies to finance commercial product development. APPENDIX 5-4 Strategies to Accelerate the Timing of Opportunities: Example of strategies to accelerate the timing of spin-off sales are as follows : • Accelerate the construction of the KAON Factory. • Appoint a "business manager" at TRIUMF to facilitate commercialization of products supplied to the KAON Factory. Projected Impacts of Magnifying and Acceleration Strategies: Through the application of magnification and acceleration strategies, spin-off sales may be increased over the 15 year period by, say, 10%. Source of Opportunity Projections: Our magnification factor of 2.0 is based on the detailed research carried out for CERN, ESA and NASA. Spin-off sales achieved by suppUers of these projects have been reduced for the KAON Factory from the 2.7 to 3.7 range (see Appendix 1) to 2.0 because: • the measurement period extended beyond 15 years for these other facilities; • different procurement policies may have affected the level of spin-off sales; and • a lower factor provides a more cautious estimate. We have not used the results of our own survey of suppliers because the sample size was in our opinion, inadequate for this purpose. * * * * * * 3. Spin-offs from KAON Factory construction infrastructure Description: During the construction of the KAON Factory, a wide range of sophisticated equipment, manpower and technology will be assembled. Based on events in other international scientific research f acili ties, these resources are frequen tly used by local companies to develop, test, debug and commercialize related products. APPENDIX 5-5 Companies using this resource infrastructure will not necessarily be KAON Factory suppliers. They could include operations set up by ex-TRIUMF and/or KAON staff. Projected Timing of Opportunities: Spin-off sales from construction infrastructure would begin in the second to seventh year period after commencement of construction, and would continue thereafter. Projected Magnitude of Opportunities: Factory construction costs of about $120 million relate to externally purchased medium to high technology products and services. If it is assumed that the spin-off sales of suppliers and other local companies, as a result of access to the resources of the KAON Factory, will be in the order of 5% of the medium and high tech value of the facility, these sales would be about $6 million over the period of construction. Projected Timing of Opportunities: Spin-off sales from construction infrastructure would begin in the second to seventh year period after commencement of construction, and would continue thereafter. Strategies to Increase the Magnitude of Opportunities: Spin-offs from the construction infrastructure could be increased formalizing access to the infrastructure through appropriate policies, and provision of a "business" manager to facilitate the process. Strategies to Accelerate the Timing of Opportunities: The timing of these spin-off sales could be accelerated through appropriate strategies. However, such strategies could impact on the timely and effective completion of the KAON Factory. Therefore, this spin-off should be considered as a passive benefit and not be accelerated. Projected Impacts of Magnifying and Acceleration Strategies: Because of the limited time frame over which this spin-off effect can be managed (during construction), and the need to focus magnification APPENDIX 5-6 strategies on more important spin-off areas, no provision has been made for magnifying or accelerating this benefit. Source of Opportunity Projections: The estimated value of this opportunity cannot be verified by reference to other studies. * * * * * * 4. Spin-offs to KAON Factory operations suppliers Description: Spin-off sales will be achieved by those companies that supply sophisticated products and services to the KAON Factory once it is operational. The value of these operational supplies has been estimated at about $25 million annually, in 1986 dollars spent in Canada, excluding power and TRIUMF salaries. Projected Timing of Opportunities: Operations will begin in year seven after commencement of construction. Spin-off sales are assumed to begin in year 8 and continue through to year 15, and beyond. Projected Magnitude of Opportunities: The value of spin-off sales to operations suppliers through years eight to 15 inclusive is estimated to be $135 million. This estimate has been calculated as follows : 9 years of operational expenditures of $10 million on medium and high tech products and services Magnification factor Projected spin-off sales $ 90 million 1.5 $135 million Stra teg1es to Increase the Magni tude of Opportuni ties: to increase operations supplier spin-off sales include: • Increase sourcing from local suppliers Wherever possible. • Issue multiyear/long term contracts Where feasible. Strategies • Contract out design and development work as much as possible, rather than undertaking the work in-house. APPENDIX 5-7 • Constantly publicize events, progress, needs of TRIUMF in trade magazines and the general media. Strategies to Accelerate the Timing of Opportunities: To accelerate the timing of spin-off sales, strategies should be considered as follows: • Provide marketing support and references to suppliers. • Appoint a "business manager" of TRIUMF to facilitate commercialization of operational products supplied to the KAON Factory. Projected Impacts of Magnifying and Acceleration Strategies: Through appropriate strategies, the spin-off benefits to operations suppliers may be increased perhaps by 10%. Source of Opportunity Projections: A magnification factor of 1.5 has been used because of the relatively short impact period of 4.5 years (i.e. 9 years ~ 2). This compares to the construction magnification factor where the impact period averages 12 years. * * * * * * 5. Spin-offs from KAON Factory operations infrastructure Description: Once the KAON Factory is operational, there will be an extensive support infrastructure in place at TRIUMF. Resources from this infrastructure will be used for pure research, commercialization of research findings and problem solving for operations suppliers to the KAON Factory. Projected Timing of Opportunities: These benefits will extend over the 6th to the 15th year of operations. Projected Magnitude of Opportunities: Quantification of the spin-offs from the use of the KAON Factory infrastructure once it is operational is difficult to estimate. Assuming that after operations APPENDIX 5-8 commence spin-off benefits continue to occur at, say, 5% of annual high tech operating expenditures of $10 million, the total benefit will be in the order of $5 million, (i.e. 5% of $10 million X 10 years c $5 million. Strategies to Increase the Magnitude of Opportunities: The spin-off benefits from the KAON Factory infrastructure could be magnified by: • not charging for the use of infrastructure facilities. • setting up a "commercialization" department at the Factory to joint venture with industry on developing saleable market products. • conducting market research which could influence the scope and direction of scientific research toward some -. commercial opportunities and market needs. Strategies to Accelerate the Timing of Opportunities: It will not be appropriate to interfere with the scientific use of the KAON infras truc ture by throwing it open to indus try. On the other hand, and as occurred at TRIUMF, there will be many instances of collaboration between KAON staff and industrial entrepreneurs in working to resolve mutual problems. To accelerate spin-offs from these activities, the following preliminary strategies should be considered: • describe and circulate specifications on the infrastructure and its availability to appropriate members of Canadian industry. • provide strong support to initiatives to use the infrastructure in the early years of the Factory's operations. • publish results of the collaborative use of the infrastructure in the early years of KAON Factory operations. Projected Impacts of Magnifying and Acceleration Strategies: Assuming the magnification and acceleration successful, it is estimated that spin-off benefits 15 could be increased by 10% or $.5 million. strategies are in years 6 through APPENDIX 5-9 Source of Opportunity Projections: this area are based on: The estimates developed in • case study reviews of the TRIUMF facility. • interviews with TRIUMF applications of research. staff respond ble for commercial • questionnaire results and interviews with TRIUMF suppliers and other high tech companies in B.C. * * * * * * 6. Commercialization of KAON Factory research Description: In the course of conducting experiments and operating the KAON facility, new facts, theories, processes and systems will be developed. Some of these will have the potential to become viable commercial produc ts or services. opportunities would either not Canada. Wi thout the KAON Factory, these occur at all or not occur in PrOjected Timing of Opportunities: Except to the extent that applications are already being developed utilizing the meson facility, opportunities will commence when the KAON Factory is operational. Projected Magnitude of Opportunities: Estimation of the value of commercial production from KAON research and factory operations is difficul t. The process will only commence 1n the seventh year and even with results in the seventh and eighth years, few opportunities may have developed into significant commercial enterprises by the end of the fifteenth year. On the other hand, based on examination of the TRIUMF, CERN, ESA and NASA research, significant commercial benefits could arise over the longer term. In addition, the commercialization of KAON research may in some cases be related to APPENDIX 5-10 spin-off benefits to suppliers, and some supplier companies may even experience both types of benefits. A major difficulty in making this type of estimate is the probability that early markets for any new process or technology coming from KAON research will be very limited in the early years. Taking this limiting factor into account, sales from commercialization of KAON research could be as follows: Year 7 $ 1 million Year 8 1 million Year 9 2 million Year 10 2 million Year 11 onwards 15 million 21 million --It can be expected that the spin-offs will continue to grow at a rapid rate beyond the tenth year. Based on the assumption that there will be an increasing number of applications. Strategies to Increase the Magnitude of Opportunities: To increase commercialization of research, the following strategies should be considered: • Involve interested companies in KAON research; • Allow companies to use the facility for applied and commercial research. • Encourage companies to bid for ownership of discoveries with commercial value. • Appoint a business manager to develop and implement business plans for the commercialization of applications. Strategies to Accelerate the Timing of Opportunities: These benefits could be brought forward in time by completing the factory at an earlier date and by appointing a business manager. APPENDIX 5-11 Projected Impacts of Magnifying and Acceleration Strategies: Application of magnification and acceleration strategies can be expected to have relatively minor impact on commercial activity in the earlier years (of say 10%), but will have a much greater impact in later years. Source of Opportunity Projections: These estimates are very subj ective and are based on a number of indicators and factors, namely: • The size of KAON's operating budget, in the order of $90 million annually. • The magnitude and timing of commercial applications ofTRIUMF research such as the PET scanner. • Case histories from other facilities such as CERN, ESA and NASA. * * * * * * 7. Establishment of new companies Description: Because of the volume of external purchasing which will result from the construction and operations of the KAON Factory, there is significant incentive for the creation of new companies to market specific products and services. However, this has not been shown to occur in connection with TRIUMF. It can be assumed, therefore, that to capitalize on the KAON Factory opportunity, specific strategies must be developed. Proj ected Timing of Opportunities: These new companies 1IlOuld mos t likely be fully operational in the eleventh to fifteenth years al though some new companies may well have been established in the early stages of construction. Projected Magnitude of Opportunities: The primary benefits of the creation of new companies are first the added employment they provide, and second the new sales they generate (beyond the servicing APPENDIX 5-12 of the KAON Factory) as they strive to grow and succeed. Many of these incremental sales would be outside Canada. If it is assumed that five new companies could be created locally from a base of KAON Factory sales, and their annual sales are $1 million each starting in the eleventh year after commencement of construction, the incremental sales value for years 11 to 15 would be in the order of $25,000,000. Strategies to Increase the Magnitude of Opportunities: To increase the creation of viable new companies, the following strategies could be utilized: • Use preferred sourcing of products and services for the KAON Factory from new local companies. • Make loan capital to ex-TRIUMF staff to set up related businesses. • Provide counselling to TRIUMF scientists who may wish to set-up commercial operations. Strategies to Accelerate the Timing of Opportunities: To accelerate the impact of new companies formed as a result of the KAON Factory: • Provide incentives to new high technology companies to initiate and build export sales. • Provide marketing assistance and references from KAON scientists to support company growth. Proj ected Impacts of Magnifying and Acceleration Strategies: Assuming magnification and acceleration strategies are successful, the sales of new companies could be increased by, say, 10% or $2.5 million over the 5 year period. Source of Opportunity Projections: The spin-off opportuni ties for the creation of new companies to service the KAON Factory is evident most especially through the experience of NASA. APPENDIX 5-13 * * * * * * 8. Attraction of new companies to Canada Description: With medium to high technology construction expenditures exclusive of TRIUMF salaries, in the order of $120 million, and annual medium to high technology operating costs of $10 million, it is possible that some foreign companies will anticipate sufficient opportuni ties to set up operations in Canada. Their operations could range from manufacturing through to assembly, distribution, or simply importing goods and services for the KAON Factory. Projected Timing of Opportunities: It is possible that two or three foreign companies will set up KAON related operations over the first 15 years of construction and operations. Projected Magnitude of Opportunities: Assuming that these businesses will each employ 20 people, and two of the 20 employees will transfer to Canada from the corporate parent, new Canadian employment could be in the range of 35 to 55 people. Measurement beyond the possible number of jobs created, such as level of sales, appears too speculative to present here. Strategies to Increase the Magnitude of Opportunities: To increase the number of new foreign companies setting up Canadian operations to service the KAON Factory, the following strategies could be initiated: • Promote the opportunity to foreign companies already supplying nuclear research facilities. • Approach foreign companies which will be asked to supply the KAON Factory (where Canadian suppliers are not available) to suggest they set up Canadian operations. APPENDIX 5-14 • Encourage local Canadian companies to joint venture with compatible foreign companies. Strategies to Accelerate the Timing of Opportunities: To accelerate the timing of this opportunity, strategies such as the following could be implemented: • Provide grant, loan or tax reduction incentives to encourage the establishment of new foreign based operations. • Provide long term forecasts of KAON Factory purchasing needs to foreign as well as Canadian companies. Projected Impacts of Magnifying and Acceleration Strategies: Strategies to increase the number, size and earlier formation of Canadian operations by potential foreign based KAON suppliers could have the following impacts: • Increased number of companies by perhaps 100%. • Increased size of operations. • Increased value of commercial sales (exclusive of KAON). Source of Opportunity Projections: The estimates provided above are speculative, but illustrate the opportunities from this type of spin-off benefit. * * * * * * 9. Scientific tourism and conferences Description: A KAON Factory at UBC ~uld be unique for at least a decade and could remain 80 if no other country proceeds wi th a similar research centre. Based on the experience at TRIUMF and elsewhere, it is projected that a KAON Factory ~uld attract significant visitation by scientists from allover the ~rld. While Some visits would be of short duration, say, for technical conferences, other researchers would likely move to Canada with their families for months or even years to conduct experiments at the facility. APPENDIX 5-15 Projected Timing of Opportunities: These impacts of scientific tourism from the KAON Factory will commence in the 7th year and continue annually thereafter. Projected Magnitude of Opportunities: Assuming such visitation occurred from the 7th to the 15th year and is constant throughout this period the value of this spin-off of the KAON Factory is in the order of $3.6 million. This estimate is calculated as follows: 300 annual visits to Vancouver each of 7 days with associated expenditures of S200/day times 9 years 40 visits to Vancouver each of 30 days with associated expenditures of S200/day times 9 years $3.8 million 2.2 million $6.0 million Strategies to Increase the Magnitude of Opportunities: The magnitude of this spin-off opportunity could be enhanced by: • scheduling large conferences in the early years of the Factory's operation. • continuing to provide package deals (accommodation, meals, tours) for visiting scientists to encourage their visitation. • including encouragement to visit the facility in all technical articles written about the KAON Factory. Strategies to Accelerate the Timing of Opportunities: The level of scientific tourism could be accelerated by the following plans and programs: • commence arrangements for visitation plans during the early stages of construction. • schedule a world class international opening event wi th sui table promotion and conferences. APPENDIX 5-16 Projected Impacts of Magnifying and Acceleration Strategies: Assuming effective strategies are in place to magnify and accelerate scientific tourism, the value of this spin-off opportunity could be increased by 10% or $4 million. Source of Opportuni ty Proj ections : Projections are based on the estimated level of scientific tourism at the TRIUMF facility and the schedule of related conferences held in recent years at UBC. * * * * * * 10. Increased university enrollment Description: It is expected that because of the construction of a KAON Factory, UBC and affiliated universities will attract students in physics and other disciplines (such as electrical engineering) Who otherwise would not have attended these institutions. These students contribute to the economy in that they spend money to purchase goods and services during the university year. Projected Timing of Opportunities: The economic impacts of these additional students should occur commencing the 4th year after work on the Factory is started. Projected Magnitude of Opportunities: A very preliminary quantification of this spin-off effect of a KAON Factory is $6 million. This amount has been calculated as follows: 100 additional students per year for, say, twelve years whose annual incremental spending is $5,000 Strategies to Increase the Magnitude of Opportunities: of increased student enrollment can be increased by: • actively recruiting students on a international basis. The impact APPENDIX 5-17 • provid"ing a larger number of scholarships than is presently the case • • ensuring that all universities affiUated with the KAON Factory participate in the recruiting process. Strategies to Accelerate the Timing of Opportunities: Based on the need to adequately prepare for larger enrollment and the inability for students to accelerate spending money over their university attendance, it does not appear practical to accelerate the occurrence of this opportunity. Projected Impacts of Magnifying and Acceleration Strategies: It is assumed that if strategies were implemented to increase student enrol~ent, the increment could be as large as 10% of $0.6 milli6n. Source of Opportunity Projections: These projections are speculative but appear reasonable at this time. Current enrollment in graduate and undergraduate physics programs at UBC and SFU, the University of Victoria and the University of Alberta is estimated at 800: * * * * * * 11. Industrial diversification Description: Industrial diversification occurs when new economic sectors and subsectors develop Which were not previously represented in an area. Wi th some nuturing, a KAON Factory could provide an opportuni ty to add and/or strengthen local, regional and perhaps national economies in the medium and high tech field. Projected Timing of Impacts: It is likely this diversification process would commence in the early years of construction. Projected Magnitude of Opportunities: It is not possible at this time to place a value on the diversification arising from the construction and operation of a KAON Factory. APPENDIX 5-18 Strategies to I~rease the Magnitude of Opportunities: The magnitude issu~ ;e! ates to sectors that are not currently represented :l:: . ,~ . ,.., . , in the local ~coqpmy t and how many can be encouraged to develop. Strategies to achieve higher levels of diversification include: W Q: • breaking co~ract8 into small specific parts for the target industries. t~ ." ~: . ~. i ' . • advertising ~lf in advance that certain industries are targets for development. • looking beyond~ the KAON Factory, including examination of offshore markets to deicribe the longer term opportunities in these target sectors. _. " ~ t ' : Strategies to ' -::'Accelerate the Timing of Opportunities: The : f diversification 'process can be accelerated by such approaches as: • provision of appropriate incentives and grants for company functions. • awarding of pre construction/or early construction development contracts. • assistance from KAON staff for new market and export market development. Proj ected Impacts of Magnifying and Acceleration Strategies: Industrial diversification could be accomplished but it is not possible to quantify the degree of diversification at this time. To some extent, this diversification is already counted in the report sections describing the attraction of new companies to Canada and the creation of new companies within Canada. Source of Opportunity Projections: Major research projects such as CERN and ESA are described as having a significant impact on economic diversification.
Report
eng
Unreviewed
Vancouver : University of British Columbia Library
Attribution-NonCommercial-NoDerivatives 4.0 International
Researcher
Industrial opportunities of a Canadian KAON Factory
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