Written evidence submitted by the Association
of Independent Research and Technology Organisations (AIRTO Ltd)
(TIC 12)
1. What is the Fraunhofer model and would
it be applicable to the UK?
1.1. The Fraunhofer model is used by 59 institutes
operating in Germany under the umbrella of the Fraunhofer Gestellshaft.
These institutes have an annual budget of €1.6 billion and
employ 17,000 staff.
1.2. The funding of these institutes is 2/3 from
industry and publicly funded projects, and 1/3 core funding from
federal and state sources. The core funding allows the institutes
to invest in infrastructure in the form of facilities, capital
equipment, and underlying technology. This allows the institutes
to support the strategic aims of the region or overall nation,
and also to make significant changes in technical focus where
this is required by regional/national strategy or the needs of
industry. This core funding also allows Fraunhofer Institutes
to participate in EU Framework research projects, where the level
of funding from the EU project is a percentage of the full cost
and the remainder must be met by the institutes' own resources.
1.3. Fraunhofer Institutes claim to work at every
Technology Readiness Level[1]
(TRL) from 1 to 9, but their main area of interest is between
the academic work of universities and the production activities
of industry - ie TRL 3 to 7.
1.4. Fraunhofer Institutes have a clear focus
on delivering to an industry agenda, with project timescales and
outputs that are specifically and carefully designed to be readily
assimilated by industry.
1.5. Each Fraunhofer Institute has a specific
technology focus, but operates across a range of industrial sectors.
1.6. Each Fraunhofer Institute is aligned with
a specific university that has strength in the technology focus
of the Institute. The head of the Fraunhofer Institute is a professor
at the university, although the majority of their time is spent
at the Institute.
1.7. The core, permanent staff are a minority
at the institute (typically 20-25%) with the majority of researchers
being PhD students or post-docs. The normal expectation for these
latter researchers is to stay at the institute for ~ 5 years,
and then move into industry. This has advantages in that there
is a flow of qualified researchers into industry, but does limit
the long-term core continuity and competences of an institute.
1.8. The overall Fraunhofer Gestellschaft has
an independent institutional status, and provides cores services
and interacts with the federal government. However, each Fraunhofer
Institute has a significant level of autonomy. This can lead to
overlapping of technical focus between institutes, but this is
controlled and minimised by liaison between individual institutes
and groups of institutes, and can be beneficial where specific
institutes are serving their local or regional industry.
1.9. The "Fraunhofer" brand is strongly
promoted. This has not always been the case, and the parallel
Helmholtz Institutes in Germany do not have an equivalent strong
branding.
1.10. The Fraunhofer model does require a major,
continuing investment of public funds at both the state and federal
level.
1.11. Attempts have been made to set up Fraunhofer
Institutes or centres outside of Germany (in France and the USA
for example). These have not achieved the success of the institutes
in Germany.
1.12. There is a significant level of collaboration
between UK research organisations and Fraunhofer Institutes, particularly
through working together on EU Framework projects.
1.13. Adopting the Fraunhofer model in its entirety
in the UK is not appropriate, as it would replicate an already
existing, successful infrastructure of applied research organisations.
1.14. What is needed is a set of measures to
increase the effectiveness of existing UK applied research resources
to meet the strategic aims of the UK and its industry. This will
be achieved by implanting the core funding component of the Fraunhofer
business model and the activities that it entails with the best
of the existing UK applied research organisations. In these instances,
access to a core funding stream will significantly increase the
impact which these existing bodies can make on industry, wealth
creation and economic growth.
1.15. Public investment in the best of the existing
UK applied research organisations will be far more cost effective
than introducing a new network of Fraunhofer type institutes.
Furthermore, the highly organised and strongly branded German
model is not appropriate in the UK, where industry needs for applied
research vary from sector to sector, and no "one size fits
all" model will give optimum efficiency.
1.16. However, there are already some elements of
the Fraunhofer model that are the same as those used in UK applied
research organisations, and some Fraunhofer Institutes did consult
with UK research organisations early in their development to understand
how to work with industry. Common elements are effective collaboration
with industry and working with relevant universities for the provision
of underpinning academic research. The missing component in the
UK applied research organisations is the 1/3 core funding, which
in Germany comes from federal and state sources.
2. Are there existing Fraunhofer-type research
centres within the UK, and if so, are they effective?
2.1. There are no direct equivalents of the Fraunhofer
institutes in the UK, but there is a network of applied research
organisations that undertake a similar role.
2.2. This UK network comprises organisations
based on a range of business models:
— Public
Sector Research Establishments (eg NPL).
— University
"spin offs" (eg Warwick Manufacturing Group, AMRC).
— Independent
Research and Technology Organisations configured as companies
limited by guarantee or charities, governed by industry (eg BRE,
Campden BRI, TWI).
— Privately
owned, commercial research and development organisations (eg QinetiQ,
Cambridge Consultants, PA Technology).
— Corporate
research functions and laboratories (eg ARUP, Tata, IBM, GSK).
2.3. The first three categories are driven by
an overall mission to support their specific technology or technologies,
and to work to the long-term benefit of industry in general. They
also maintain a strong symbiotic relationship with UK academia.
2.4. Many of these organisations are extremely
successful, working with industry worldwide. A report from Oxford
Economics commissioned by AIRTO[2]
demonstrated the economic impact of these organisations on the
UK. It concluded that they contribute at least £3 billion
per annum to UK GDP. They are particularly good at linking up
supply chains from which the aforementioned report and earlier
reports show that much of industry's innovation is derived.
2.5. Where they differ from the Fraunhofer Institutes
is the lack of core funding from government. This limits their
ability to:
— Liaise
with academia.
— Renew
core knowledge.
— Invest
in new facilities and equipment.
— Address
the evolving strategic needs of the UK and UK industry.
2.6. None of these necessary and very important
activities can be fully financed from margins on collaborative
and single client industry projects alone. By their very nature,
applied research organisations do not have product businesses
from which profits can be taken to fund such core activities.
2.7. Some public sector research organisations
do receive core funding from government, but this funding is not
targeted at the strategic needs of industry. Rather it is to perform
a national service, such as the responsibility for standards and
measurement performed by NPL.
2.8. It is worth noting that the UK began to
explore an equivalent of the Fraunhofer model with Faraday Partnerships
in the 1990s. However, with a piecemeal approach and a variety
of governance models, the initiative was not uniformly successful
and was replaced by the more limited knowledge exchange focused
activities of the Knowledge Transfer Networks (KTNs) from 2004.
KTNs are now administered by the Technology Strategy Board, and
have a very different mission from that of the Faraday Partnerships.
Therefore, they are of limited relevance to the current debate
on Technology Innovation Centres and the Fraunhofer model.
3. What other models are there for research
centres oriented toward applications and results?
3.1. As discussed above in 2.2, there are a number
of existing models for applied research centres in the UK. The
generic term used for such centres in the UK (and particularly
in Europe) is Research and Technology Organisations (RTOs).
3.2. A number of the independent research and
technology organisations were originally formed as Research Associations
in the 1920s and 1940s. As discussed above, they are now generally
companies limited by guarantee or charities with specific constituencies
of industrial interest. These are successful institutions operating
in a commercial world, often with clients worldwide. Their involvement
in research to support the needs of UK national strategy has declined
over the last twenty years, with the move to concentrate core
public funding for research on the universities. However, they
are equipped and willing to resume this "national" role.
3.3. Industry owned research centres have been
in decline, and many have been closed in favour of contracting
with universities. An example of the latter is the Rolls Royce
University Technology Centre (UTC) network. However, Rolls Royce
has realised that this network does not fill its need for applied
research, and has recently been developing organisations specifically
to bridge the gap between academia and industry.
3.4. A number of new organisations have come
into existence to address the need for applied research and for
bridging the gap between academia and industry. These organisations
have a similar role to the existing organisations discussed in
3.2, and are based mainly on new technologies or application domains.
The setting up of many of these has been supported by the Regional
Development Agencies (RDAs), but they are also often compromised
in their strategic work by the lack of a core funding stream.
Examples of these organisations are the Institute for Sustainability
(London), the International Space Innovation Centre (Harwell),
the Advanced Manufacturing Research Centre (Sheffield), the Manufacturing
Technology Centre (Midlands), the National Composites Centre (Bristol),
and TWI regional centres (Middlesbrough, Sheffield and Port Talbot).
3.5. There are also the commercial research and
development organisations and consultancies. These are generally
targeted at high TRL development projects directly for industry,
and are not structured to operate as open research and application
centres. They are therefore of limited or no relevance to this
current debate on TICs and the Fraunhofer model.
4. Whose role should it be to coordinate research
in a UK-wide network of innovation centres?
4.1. The logical organisation to undertake this
role is the Technology Strategy Board (TSB). This would be congruent
with government policy and the current role of the TSB.
4.2. This coordination could be undertaken by
the Department of Business, Innovation and Skills, but this would
represent a u-turn in policy and potentially cause a conflict
in roles with the TSB.
4.3. A third party organisation could be set
up to administer a UK-wide network of innovation centres, but
again this would seem to duplicate and conflict with the role
of TSB.
5. What effect would the introduction of Fraunhofer-type
institutes have on the work of Public Sector Research Establishments
and other existing research centres that undertake Government
sponsored research?
5.1. There will be little or no effect on PSREs
and other existing research establishments if the proposed investment
in such institutes is based on the existing infrastructure to
enhance the activities of organisations with an already proven
track record of excellence. New organisations would only be required
where there is no current provision.
5.2. The development of such centres based on
the existing infrastructure could benefit other UK research organisations,
as it will exploit the already existing collaborative links.
5.3. However, if a new network of Fraunhofer-type
institutes was introduced, ignoring the capabilities of the existing
infrastructure and duplicating resource, there would be a massive
effect on the viability of both the new and existing research
organisations, with a corresponding detriment to UK efficiency.
6. SUMMARY
6.1. The Fraunhofer model demonstrates how the
effective use of core funding for applied research organisations
can support the national industrial strategy.
6.2. The UK has an existing, comprehensive infrastructure
of applied research organisations working for industry worldwide,
but maintaining strong links with UK academia. The combination
of this existing infrastructure with core funding will enable
the UK to meet the strategic needs of national industry in an
effective and cost efficient way.
6.3. There is a similar situation in France,
where they have developed a system of "Institute Carnot"
which involves selected existing research organisations receiving
core funding to allow them to address national strategic issues.
7. DECLARATION
OF INTERESTS
7.1. This submission is made by the Association
of Independent Research and Technology Organisations (AIRTO).
The organisation represents research organisations and technical
consultants, operating in the space between the academic research
of universities and the commercial needs of industry. AIRTO members
undertake research and development, and knowledge and technology
transfer. They are largely funded by industry, but do undertake
competitively bid projects supported by UK and European public
funding programmes. AIRTO currently comprises 37 independent organisations,
employing more than 20,000 scientists and engineers, with a combined
annual turnover in excess of £2billion.
The members of AIRTO are:
Aircraft Research Association Limited (ARA)
ARUP
Atcare
BMT Group Limited
BRE Group
The Building Services Research and Information Association (BSRIA)
Campden BRI
CERAM Research Ltd
City University London
CIRIA
E-Synergy Ltd
FIRA International Ltd
Halcrow Group Ltd
Health and Safety Laboratory (HSL)
HR Wallingford Group Ltd (HRL)
Institute for Sustainability
ITRI Limited
Leatherhead Food Research
LGC
MIRA Ltd
The Motor Insurance Repair Research Centre (MIRRC)
National Metals Technology Centre (NAMTEC)
National Physical Laboratory (NPL)
National Nuclear Laboratory (NNL)
The Paint Research Association (PRA)
Pera Group
QinetiQ
Quotec
SATRA Technology Centre
The Scottish Whisky Research Institute (SWRI)
The Smith Institute
Smithers Rapra Technology Limited
The Steel Construction Institute (SCI)
Thames Innovation Centre Ltd (TIC)
TRADA Technology Limited (TTL)
TWI Ltd
University of Surrey
Professor Richard Brook
President
AIRTO
November 2010
1 Technology Readiness Level - a classification system
devised by NASA, see http://www.nasa.gov/topics/aeronautics/features/trl_demystified.html
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2 Study
of the Impact of the Intermediate Research and Technology Sector
on the UK Economy", Oxford Economics, May 2008, see http://www.airto.co.uk/oxfordeconomics.pdf
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