Is superconductivity the wrong science for New Zealand?

By Shaun Hendy 24/03/2010 22


After the announcements of the Prime Minister’s Science Prizes earlier in the month, Rod Oram wrote a piece for the Sunday Star Times, where he discussed the type of science that won the top prize.  As I wrote at the time, Jeff Tallon and Bob Buckley from Industrial Research Ltd in Lower Hutt were awarded this prize for their discovery of a ceramic material that remains a superconductor at temperatures close to the boiling point of liquid nitrogen.

In his opinion piece, however, Oram claimed that research into high temperature superconductivity is the wrong type of science for New Zealand. He wrote:

We have virtually no experience, scale or markets in these areas of science, technology and manufacturing.  From a commercial perspective it was completely the wrong science to pursue. We must focus instead on the life and environmental fields where we have the scale and the leadership to attract international collaborators.

Oram is by no means alone in seeing New Zealand’s future lying solely in the life and environmental sciences.  Despite the fact that high-tech manufacturing sector is now our third biggest export earner, the central dogma of New Zealand economic thinking seems to be that we can’t compete in this area.

I disagree. In new knowledge-based industries, small chance events can snowball to deliver competitive advantage to a region as an industry grows in scale.  I’m going to look at this in more detail as I work my way through Philip McCann’s paper – for now lets look at a few examples.

In the 1930s, the US electronics industry was firmly established on the eastern seaboard.  It would have seemed inconceivable to any analyst that in fifty years’ time, the industry would have shifted across the continent to distant San Francisco.  Similarly, in the 1980s, who would have guessed that the world mobile phone market would be dominated by technologies developed in Helsinki, a city the size of Auckland on the wrong side of the Baltic, or that the 3D movie industry would come of age in a sleepy seaside suburb of Wellington?

I have heard many explanations for why the semiconductor industry came to be localised in Silicon Valley, from the presence of San Francisco’s large ham radio community in the 1930s to the fact that William Shockley’s mother lived in Palo Alto.  These explanations are only offered post hoc of course; no one would suggest we base our economic growth strategy on ‘maternal proximity’ theory.

So while we may not be able to say what conditions are sufficient to establish regional high-tech industries, there are certainly lessons to be learnt about what might be necessary.  The regional presence of a world class research university such as Stanford or the University of Helsinki may be essential to deliver the large number of skilled knowledge workers that will be needed.  My analysis of Finland shows how a region can develop scientific and engineering capability in a new field in less than a decade.  Public investment can also be important — Silicon Valley was supported by decades of military contracts before its semiconductor industry was able to deliver competitive consumer products.

New industries have to start somewhere.  Provided New Zealand can supply our nascent high temperature superconductivity industry with the right people and sufficient levels of investment, Lower Hutt is no more disadvantaged than San Francisco in the 1930s, Helsinki in the 1990s or Miramar in the 2000s.

In order to ensure that new industries can be started in New Zealand, we need to be prepared to invest in talented people and their ideas, whether they are in superconductivity, making movies or kiwifruit.  We simply don’t have enough of these that we can afford to pick and choose among them: we must support bright ideas where we find them.


22 Responses to “Is superconductivity the wrong science for New Zealand?”

  • Wrt to superconductors (HTS in particular), it certainly helps that we already have world-leading knowledge in the area – something it would be a pity to marginalise! And the potential earnings of the industry are, of course, significant, even if we never really _apply_ much of it here in NZ.

  • One needs to agree that the only science NZ should invest in is where we have a chance to be world class (otherwise we should buy the science from overseas) or where it is essential and we can’t source it internationally. But we have limited enough areas where we have world class science capability with platform characteristics to pick and choose (Government funding small projects has tended to militate against developing platforms).

    Where Rod is wrong is that it is only “the life and environmental fields where we have the scale and the leadership to attract international collaborators”, and ironically superconductivity is just one such example that proves him wrong. On both the science and commercial sides NZ can pretty much pick and choose who it collaborates with, and is leading the world in the commercial exploitation of HTS. Thin capital markets with experience in backing knowledge based industries are a constraint, but BioVittoria will tell you that’s not solved in Rod’s rosy future either.

    In practice I suspect that the commercial aspects of getting new bio and environmental technologies away will be just as difficult as getting the engineering stuff away. Our scale and experience lies in commodity foods and ingredients. These industries are as different from the high end life and environmental sciences based industries as our successful aluminium export industry is from industrial products based on HTS.

    We’re going to have to learn new commercial tricks either way, and in some ways I’d put my money on the engineering manufacturers. Why? The Primary & Food sectors in NZ are under-investing in R&D relative to their turnover – $174m in 2008 compared with $195m invested by the Machinery and Equipment manufacturers.

    If you believe that innovation is essential to international commercial success then perhaps the Government should follow the money.

  • I was working at the Rutherford Appleton Laboratory in the UK when news first broke of the so-called high temperature superconductors in the mid 1980s. One thing was clear, while you need some science infrastructure for this kind of work – you don’t need a lot.

    Someone at the lab managed to replicate the first reported results in a day or two using little more than a bench top. Although admittedly he did have access to the exotic materials required for the compounds.

    And let’s not overlook the irony of the name Rutherford here, it’s unlikely he had much infrastructure in place when he started his work in Victorian Christchurch.

    Of course it wouldn’t make sense to build another large hadron collider in Lower Hutt, but superconductor research is ideally suited for a small, but smart country like New Zealand.

  • Not that I’m any sort of an expert on businesses, esp. larger ones, but woudn’t it be more appropriate to shift slightly from “world class”, which I worry is a bit of a red herring, to “there is a market”?

    I think you’re right to say the high-end of the value-added bio products are a different kettle of fish to the commodity market. A negative aspect of the low end of the commodity market, as I understand it, is that they are essentially competing for the dollar value, e.g. “who can sell the cheapest spuds” or whatever unless they can spin the marketing to make out that the raw produce is somehow better, cleaner, greener, whatever that the other guys’. With the value-added market, potentially you’re selling on perceived value (assuming you can protect your product from competitors). If the under-investment from the primary and food sector is low as you say, that’s a bit sad as it may be tossing potential markets away, ones that in principle might offer a hedge investment of sorts for their own industry.

    Perhaps the investment imbalance is a reflection of the lack of understanding of the biotech market here?, i.e. that investors have a better “feel” (and hence confidence) in what I guess you could call the “gadget” market?

  • Where Rod is right in my opinion is that the demand side of science is broken. Bolstering the supply side through reorganising the CRIs isn’t going to help that. How do we make NZ businesses value innovation? There needs to be incentives (R&D tax breaks) and a culture of innovation which is currently lacking. That’s the harder bit to fix but is essential if the CRIs are being told to stay out of commercialisation activities…

  • Peter,

    While there seem to be issues with the “demand” side, there are supply-side (“push”) issues too. My own view (so far!) is that even if/when you patch the very real supply side issues in terms of creating markets/profits, they’ll still be hampered by the issues on the “pull” side.

  • It is disappointing to see Rod Oram raining on the parade of Drs Buckley and Tallon after their well-deserved win. While the HTS industry should not be above criticism, I think we’d all prefer that it be a little better informed than this effort in the Sunday Star Times.

    Rod says that New Zealand should forget about HTS and pursue areas of science where “we have the scale and leadership to attract international collaboration.”

    This might seem like a good point if you haven’t read the two previous paragraphs where he notes that NZ’s HTS industry is collaborating with Siemens (which according to the Financial Times is the 63rd biggest company in the world) and General Cable – a Fortune 500 company.

    His other point – a lack of scale – ignores the fact that Lower Hutt-based company HTS-110 Ltd has almost a 100 per cent share of the HTS magnet market at present.

    Given that the two and only points he makes have little, if any, basis in fact, I am dismayed that he asserts HTS was, from a commercial perspective, “the wrong science to pursue.”

    Even the use of the past tense indicates his lack of understanding of where the commercialisation of HTS is. HTS is at the beginning of a global marketing phase (the increase in uptake of the technology over the last year or so indicates a steep trajectory) and isn’t something that should be talked about as if it has done its dash.

    I’m looking forward to seeing a column where Rod Oram eats humble pie in five years’ time when the HTS industry is really gaining momentum – but I won’t hold my breath.

  • Grant: we are rationing scarce taxpayer resources so the bar has to be set a lot higher than just “there is a market”.

    Also I should have quoted my source for the business R&D spend. Its the R&D in NZ Report (2008) Stats NZ and MoRST Table 8 Page 58.

    Peter: I think part of my point is that some sectors of the business community value innovation more than others, or perhaps that’s “have to value innovation ” if you see what I mean.

    I also think we need to see R&D as multi-faceted. The stuff most NZ sized businesses can do is close to market product and process development (3 – 5 year time frames). Policy instruments like the ones you mention work well here, but I don’t think there is a case for getting much more generous that our closely competing nations (e.g. Oz).

    The more important and strategic issue for the nation is where it should encourage investment for the longer-term. This is the area where NZ firms need help because the risk/returns are not good, particularly when you don’t know if you’ll be able to use the results in your own business. So the logic for Government intervention is much stronger.

    The answer in my view is to invest in platforms that have the potential to have payoffs in multiple products and multiple companies. To be any real use these platforms need scale, they need to be world class, they need to be well linked internationally commercially and scientifically and they need to fit with the reasonable ambitions of subsectiors of NZ industry.

    And we shouldn’t be too worried about where the seed for the innovation comes from, businesses or a great team of scientists (and an important part of science policy should be to make sure those with a few limbs and a head the merge from the primeval ooze get a chance to prove their worth).

    First best is to get the two happening together over a long period of time, and this implies a relationship between innovative medium sized businesses and those with the capability to do longer-term mission oriented applied research.

    Part of my criticism of Rod’s position is the assumption that this is more likely to occur in the life and environmental sciences, than in the physics and engineering sciences. My point is that it isn’t just any old company needed, its innovative companies – and as the stats attest there is more going on in the latter. (I could be particularly pointed and say that there is twice as much R&D going on in the computer services industry than there is in the primary sector).

    End of rave.

  • I’m glad Bob Buckley and the HTS team’s work in HTS is being recognised in NZ, however I have a couple of questions.

    If research funding is limited, which outcome would be better for NZ?. IRL spending money on HTS, or spending money on SFE ( supercritical fluid extraction ) – which IRL is also a world leader in, and which has resulted in commercial plants in NZ. The advantage of SFE is that it can add value to products that NZ already exports, as well as creating new products.

    I would like ( without paying for the report ) like to know what specific industries generate the “high tech manufacturing” export value?. I wonder how fuzzy the definitions are. “Manufacturing” implies a tangible fabricated product, but I suspect it might include artistic ( Weta ) and computer software programming, as the only bulk high tech export I’ve recently seen is the shipload of crushed scrap metal being exported.

    I’m pretty much with Peter above. The problem is not the ability of NZ research organisations to innovate, but for NZ business to appreciate and use research strategically, rather than continuing to treat it as a distress purchase.

  • Bruce: our top 5 companies by revenue in the TIN100 report are F&P Appliances (by a long way), Datacom, F&P Healthcare, NDA Group, and Weta: three “traditional” manufacturers (“its” not “bits”), one IT services company and one “artistic” company. The next 21 companies by revenue are all “traditional” manufacturers.

    I think the comparison between HTS and SFE is a bit of a strawman. The countries that we might like to compare ourselves to would support both: Denmark and Finland are not only eroding our competitive advantages in agricultural productivity through investment in technology, but have also managed to grow completely new industries at the same time (wind turbines & mobile phones). If we are passing up opportunities to invest in world-beating technologies then we are relegating ourselves to second place.

  • Bruce & Shaun

    For a variety of reasons I’m not going to enter into the debate between HTS & SFE either.

    The statistics on R&D spend, export statistics and contribution to GDP are all available for nothing from Stats NZ’s web site (and in some cases include table builders so you can do your own analysis). In particular when it comes to exports you can go to http://wdmzpub01.stats.govt.nz/wds/TableViewer/dimView.aspx and see what products (note not services) make up the numbers.

    Now I’m not sure how this will format because I was bought up on SGML not HTML, but the following are the 2008 exports over $1/4B. As you run down the list put aside commodities and think about value adding, and think about Ag and Food vs Machinery and Equipment manufacturers. The sexy end of biotech (phama) barely gets in .

    This is why I think our future lies in physics and engineering (and computing – not shown because it’s a serivce) as much as it lies in the life and environmental sciences.

    04 Dairy produce; birds’ eggs; natural honey; edible products of animal origin, not elsewhere specified or included $9,284,861,227
    02 Meat and edible meat offal $5,145,145,735
    27 Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes $2,950,106,052
    44 Wood and articles of wood; wood charcoal $2,184,000,465
    84 Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof $1,881,249,467
    08 Fruit and nuts, edible; peel of citrus fruit or melons $1,445,376,963
    76 Aluminium and articles thereof $1,427,880,584
    03 Fish and crustaceans, molluscs and other aquatic invertebrates $1,217,095,450
    35 Albuminoidal substances; modified starches; glues; enzymes $1,194,057,270
    22 Beverages, spirits and vinegar $1,076,466,766
    85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers; television image and sound recorders and reproducers, parts and accessories of such articles $1,075,325,730
    XX Confidential Items $986,645,941
    19 Preparations of cereals, flour, starch or milk; pastrycooks’ products $801,957,529
    51 Wool, fine or coarse animal hair; horsehair yarn and woven fabric $735,937,908
    72 Iron and steel $718,522,509
    71 Natural, cultured pearls; precious, semi-precious stones; precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin $649,613,496
    47 Pulp of wood or other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard $649,120,738
    90 Optical, photographic, cinematographic, measuring, checking, medical or surgical instruments and apparatus; parts and accessories $606,728,318
    21 Miscellaneous edible preparations $594,565,027
    48 Paper and paperboard; articles of paper pulp, of paper or paperboard $549,675,606
    41 Raw hides and skins (other than furskins) and leather $510,637,222
    39 Plastics and articles thereof $459,238,273
    07 Vegetables and certain roots and tubers; edible $424,008,858
    98 New Zealand miscellaneous provisions $408,230,552
    89 Ships, boats and floating structures $358,090,896
    88 Aircraft, spacecraft and parts thereof $357,344,762
    05 Animal originated products; not elsewhere specified or included $327,013,712
    73 Iron or steel articles $316,244,795
    87 Vehicles; other than railway or tramway rolling stock, and parts and accessories thereof $294,074,595
    30 Pharmaceutical products $288,432,536
    23 Food industries, residues and wastes thereof; prepared animal fodder $282,204,336

  • Simon,

    I wasn’t trying to say people should look at “lesser” targets. I was just saying I find it more “real” to talk about what is to be achieved (profits of some size, market distribution in x countries, whatever). “World class” feels more like an empty (self-)marketing jazz-word or term politicians would try impress with to me 🙂

    Speaking simplistically, I feel “fit” is more important, which part of what I meant by is there a market. I can’t quite find the right words tonight, but “lesser” isn’t what I was saying.

    I might write a few thoughts later.

  • Bruce,

    Speaking of software, I suspect part of Wellywood’s 3-D graphics advantage will be in-house software that they try keep to themselves. Things like rendering hair realistically (think King Kong), etc.

    For myself (selfish motivations, etc.!) I would like to see a decent R&D tax break, but then I’m smaller player who would like the opportunity to just get on with it on my own initiative which isn’t everyone’s approach. (In defence of small sizes, in the software product (not service!) world, it’s almost a cliché that big products start from small beginnings; there are reasons this happens.)

  • Simon,
    Thanks very much for that information, and I will look at the stats site later, and maybe comment further.

    To make it third, either agricultural outputs have been combined, or “high tech manufacturing” apparently includes exporting raw aluminium and making widgets. In the top 10 of your list, at no 5 we have Widget making, and at 7, Aluminium ( which essentially is use of our low cost hydroelectricity ), the rest appear to be low value-added products.

    I fully agree with your point that we should look at the list to consider value adding, eg SFE already adds value to a few low volume products. Uniqueness in the market and high value become particularly important as food miles, CO2 emissions, and other factors become relevant and important to our customers.

    Shaun,
    Strawman, maybe, but perhaps it’s more in line with what Rod Oram was suggesting. As the govt devolves funding decisions to CRIs, those two DSIR programmes ( ie both over 20 years ) will be part of IRL’s portfolio to sell to NZ companies – which should be the role of CRIs. The problem is finding appropriate visionaries in NZ companies to take them further. HTS partners overseas companies, which helps IRL, but maybe not NZ Industry.

    IRL has innovative patents in both areas. I can see application of SFE to add value to low volume speciality products both in NZ and Overseas – as IRL has IP on extraction solvents. High volume would require more innovation to make process less capital intensive and perhaps continuous.

    Grant,
    “World class” is often used because that was a metric that MoRST/FoRST used in funding decisions. In the case of IRL’s SFE and HTS, both teams are.

  • Bruce
    Shaun was referring to the T100 list of companies a list of the top technology companies, whereas the list above is aggregate exports.

    As you say the top 10 catgories are dominated by commodities (manufactured or otherwise), there are some elaborately transformed manufactures (ETM) in dairy (but note Fonterra’s product mix is: regional consumer products (34%), Dairy commodities (45%) and Dairy ingredients (21%)), and beverages, but really the only ETMs are the “wigets” (aka machinery and mechanical appliances of which F&P Appliances is the dominant player).

  • Simon,

    Thanks for that. My question was about the statement ” ..the fact that high-tech manufacturing sector is now our third biggest export earner,… “. I’m still dubious how that number arose, it presumably is because major commodity categories were consolidated. I think your list reflects my reality better, because for every small manufacturer that’s not included in your list, there will be a small vineyard, herbal extract manufacturer etc.

    For the last 40 years NZ politicians have talked about adding value to commodity exports, but not much has changed. As the issues of food miles, climate change emissions, etc, become important, NZ will need to produce high value, unique, products for export.

    That requires strategic thinking, which NZ companies and governments ( of all stripes ) seem rather bereft of. Most venture capitalists invest to make the best return during/after initial growth, so ownership of successful enterprises will go to the highest global bidder.

    Whiteware is high tech, but perhaps designed here, partially-manufactured elsewere, so not all F&P product value would on that list?.. For every F&P, Rakon, etc. there are also similar commodity producers.

    I’d agree that some Fonterra products are high tech, but most aren’t – unless spray drying is considered high tech. We may have to make products that have significant value because they are NZ sourced – our pale green image may need further enhancing.

    We have bright young scientists and innovators, but we need to point them at imminent nationally strategic problems, partner them to relevant industrial enterprises and set milestones. If they don’t progress, reassign that problem, rather than fund some other well-written proposal with a different target – as MoRST/FoRST ( and CRis ) have for the last two decades.

  • Bruce,

    because that was a metric that MoRST/FoRST used in funding decisions

    Thanks for the clarification. I’m sure they define what they mean by it somewhere; unless you do that it’d just be something to toss around.

    In general use I still think it’s an empty weasel jazz-word 🙂 Hehe.

    we need to point them at imminent nationally strategic problems

    Isn’t this top-down, rather than recognising opportunities when they arise? I suppose will suit some things, but not others. Isn’t an annoying reality of high-tech that it’s notoriously hard to forecast hence why some things tend arise directly from innovation or research, rather than “focused” approaches? (Thing I’m trying to ask, badly, is that wouldn’t you need a mix of approaches?)

  • Oh – if you add 84, 85 and 90 you’ll get to third, but it’s all a function of categories. Note that the above list is the total of all exports regardless of size of comapny involved.

    I would need to check but I think the group mentioned above has been the fastest growing (%) area of exports in recent times, and the definition of product categories basically excludes low value product and components.

    You are right about ownership, and the fact that increasingly these statistics don’t tell the real story – we need to include invisibles. I always like the stories that tell me another NZ companies has bought out an overseas one.

    As to your last point, my point is that on the basis of R&D spend our innovative companies are in the Machinery and Equipment and Computer Services areas so those are the ones we should be getting behind. Scale isn’t everything, quality counts for something.

  • I wrote ” we need to point them at imminent nationally strategic problems”
    Grant wrote:-
    “Isn’t this top-down, rather than recognising opportunities when they arise?”

    We have had 20 years of trying to recognize and respond to opportunities, and I’d suggest NZ just isn’t as nimble or agile as other nations. Whilst the proposer may see an opportunity, the referees often don’t.

    The model I’m proposing is because of the long lead time of virtually all major processing technologies – unlike consumer electronic goods and software. I’m not suggesting the method applies to all research, but we are discussing adding value to exports, and I’m struggling to find many major innovations arising from the nearly 1 billion dollars the taxpayer provides to researchers each year. Not many companies still have major strategic R&D programmes in NZ. We don’t offer sufficient incentives ( taxation, grants, etc ).

    From records, during the early 1980s DSIR Industrial Processing Division was asked to survey processing technologies likely to be relevant to NZ and they decided that SFE was one. A small team of chemical engineers was assembled, a young scientist selected to study for his PhD at an existing overseas centre of excellence, and bonded for several years on his return. Previous experience showed that even if a scientist left at the end of their bonded period ( often to return overseas ), the skill transfer was durable. The scientist has lead the programme for the last 15 years, and there have been commercial SFE plants in NZ for most of the last decade.

    It’s the team’s innovative approach and durability that has allowed them to become world class. Few scientists become “world class” overnight, so funding should directed at solving perceived NZ needs, rather than well-written bids that referees like. The definition of “world-class” was fuzzy, and it was usually the research institute, rather than individual scientists, who deemed programmes “world-class” in applications. Whatever it takes to obtain a successful bid is a reasonable approach.

    Sure the DSIR scheme also had misses, but those young scientists adapted or moved to industry. We have had a wasteland of 20 years where very little uniquely-NZ value has been added to exported commodities, and young scientists in CRIs focus on delivering thevious milestones on funded bids written by others, rather than investigating national needs..

    The bidding process favoured bids by established centres of excellence, and the 15% of extra funds CRIs received for innovative research was soon used to support mature scientists/teams who were underfunded.

    A detailed analysis of imminent commercial technologies would discover several specific avenues worth exploring. We have to assume GE will allow crops to grow in previously-unsuitable climates. NZ won’t compete on price if food/emission miles are included when others can produce similar yields.

    I’m not smart, but I’d suggest high value, unique, eco-friendly, low water-content, branded products will become more viable as exports than many existing commodity exports. Obvious issues are reducing transport cost to markets, reducing unwanted emissions – including CO2 ( often by reducing energy consumption ), reducing packaging, maximising unique desirable attributes, etc.

    Allowing CRIs to choose research programmes is unlikely to solve strategic national problems, as they will tackle problems where they have existing underfunded skills and can produce an acceptable outcome.