DISPUTANTA — Virginia budget officials are searching for ways to ease a cash crunch at a heralded research center for advanced manufacturing, beginning with more participation by public universities that benefit from state investments in high-tech research.
The Commonwealth Center for Advanced Manufacturing, known as CCAM, opened a spacious and well-equipped facility in late 2012 with a mission to bring together research universities and some of the state’s biggest companies to solve challenges in advanced manufacturing technologies critical to Virginia’s economy.
The center has become a valuable asset for economic development, higher education and dozens of companies that contribute to its research mission, but it is operating at an annual deficit between $3 million and $4 million, while trying to pay its debts and expand the research staff it needs to succeed.
Those debts include more than $2 million in unpaid rent to the University of Virginia Foundation that owns the 62,000-square-foot building, located southeast of Petersburg near I-295’s interchange with U.S. 460, and $4.5 million on a tapped-out bank credit line used to underwrite operations.
“There has to be a reset,” House Speaker Kirk Cox, R-Colonial Heights, said in an interview Friday. “We have to get the universities more engaged.”
The General Assembly’s money committees and Gov. Ralph Northam’s administration are looking for more investment of research talent by the five public universities that are members of the nonprofit collaborative: the University of Virginia, Virginia Tech, Virginia Commonwealth University, Virginia State University and Old Dominion University.
“They’ve got to put together a business plan that makes some sense,” Secretary of Finance Aubrey Layne said. “Higher education has got to be part of the plan.”
Higher education officials say the center does essential work in emerging technologies including additive manufacturing, or new ways to make parts for medical devices and manufacturing equipment; adaptive automation; machining; and surface engineering, such as “set it and forget it” spray coatings.
“It’s a wonderful facility,” said Barbara Boyan, dean of the VCU College of Engineering and a member of the CCAM board of directors. “No university in America today could create it from scratch.”
The center is part of Virginia’s push on workforce development, winning a $430,000 grant from GO Virginia earlier this year to develop a pilot training program in mechatronics, or automated mechanics, for students at two community colleges. It also provides machinist training for retiring soldiers at nearby Fort Lee.
The nonprofit also has secured a combination of state and federal funding to build a $12.6 million Advanced Manufacturing Apprentice Academy next to its facility here.
“It’s a game changer, bottom line,” said Dennis Morris, executive director of the Crater Planning District Commission, which relies on CCAM to help market the region.
But state officials say they won’t release $9 million in bond money planned for construction of the academy without an answer to the center’s financial questions.
“That is not going to happen until this issue is solved,” Layne said.
The state included money for CCAM in the budget bills Northam signed in early June — $500,000 in the fiscal year that ended on June 30, plus $925,000 each year of the two-year budget that began July 1.
The center also is counting on a $1.5 million loan from the Virginia Tobacco Region Revitalization Commission, which contributed to construction of the $18 million building and the center’s support of three educational “centers of excellence” in Southside and Southwest Virginia.
The commission placed liens on some of the center’s technologically advanced equipment to secure the loan, which it has advanced in monthly payments that now total about $1.3 million.
The center has struggled since its inception to find the right business plan to fund research that dues-paying member companies share under a unique intellectual property rights model, as well as proprietary research financed and directed by individual companies.
“They got themselves into a little bit of a hole,” said Sen. Frank Ruff, R-Mecklenburg, chairman of the Senate Finance subcommittee on economic development. “Nobody acted as quickly as they should have to correct the direction.”
Currently, CCAM is generating about $7 million a year in research — more than $30 million since it began operating — but needs about $10 million annually to break even.
“We’ve got to get more directed research money flowing through the building,” said William Powers , a retired Rolls-Royce North America executive who became president and executive director more than two years ago — its third leader in five years.
Powers has watched CCAM take shape from its conception in late 2007, when Rolls-Royce chose Prince George County for a factory to make components for aircraft engines.
Virginia won a highly competitive bidding war with Georgia and South Carolina in large part by offering a collaboration with UVa and Virginia Tech to create a center for research in advanced manufacturing and developing talent for technology-driven industries.
“It’s something that really made Virginia stand out,” Powers said.
State officials are following a similar game plan with their bid for Amazon’s second headquarters site, a project with an estimated investment of $5 billion that could create 50,000 jobs over the next 20 years.
The Commonwealth Cyber Initiative, known as CyberX, is a new $25 million budget plan to create a high-tech research operation led by Virginia Tech in Northern Virginia and involving universities across the state.
The state made a big investment in higher education as part of the Rolls-Royce deal, including money for new laboratories at UVa and Virginia Tech, and $23 million for the two universities to hire eminent scholars to conduct advanced research in technologies important to industry.
But those researchers remained largely in Charlottesville and Blacksburg, not in the pine woods of rural Prince George County. As a result, the second floor of the building — constructed on 20 acres Rolls-Royce donated next its Crosspointe factory — is empty, except for one information technology officer.
“One thing everybody wants to see is more people in the building, using the asset,” said Ken Hutcheson, a lobbyist for CCAM.
The asset features a 16,000-square-foot high bay for research that includes about $10 million in advanced equipment donated or lent by companies that are part of the consortium.
Since Powers took charge in 2016, the center has more than doubled the number of research staff, now at 40, with an additional five graduate research assistants, eight interns and 11 business employees.
CCAM Chief Technology Officer Jaime Camelio is a Rolls-Royce Commonwealth professor of industrial engineering at Virginia Tech who spends 80 percent of his time here.
Camelio’s role represents “an unusual situation,” said VCU’s Boyan, who understands the state’s desire for a stepped-up presence at the center by research universities.
“They want people — they want boots on the ground,” she said.
However, Boyan said it’s not easy to recruit an “eminent scholar” in high-demand research who is willing to be based far from a university’s main campus.
“Faculty love to collaborate, but they belong to an institution,” she said. “They want to be physically at the institution because that’s where the students are.”
Her suggestion is a stepped-up presence of university professors and students at CCAM during summer, outside of the academic year. “If the professor is actively involved with her or her students, that’s the best solution,” Boyan said.
But state officials are losing patience with universities over their lack of physical presence at the center.
The institutions need “to be there more than on the board and on the letterhead marquee,” said House Appropriations Director Robert Vaughn, who is working closely with the center to address the problems.
“We don’t want it to fail,” Vaughn said. “We just need people stepping to the plate.”
Jack Lesko, Virginia Tech’s representative on the board, said in a statement that “we remain fully engaged in discussions to support and grow the Commonwealth Center for Advanced Manufacturing. “
“We are committed to working with current and future university and industrial partners to resource and find solutions for a successful path forward,” said Lesko, associate dean of research and graduate studies in Tech’s College of Engineering.
UVa declined to respond to questions about the center’s financial issues.
One possible solution for CCAM’s financial stress would be for the state to purchase the building from the UVa Foundation, which Vaughn said would “save about $1 million a year” in rent and maintenance.
The state’s plan isn’t likely to emerge until Northam proposes his revised biennial budget in December.
“We’ve got to stop the bleeding, no question about it,” Cox said.
The speaker has been one of the center’s staunchest supporters.
“The original concept still works,” he said, “but we have to get more results.”