25 November 2016

Regional Innovation Monitor Plus 2016

Regional Innovation Report (Advanced materials)

To the European Commission Internal Market, Industry, Entrepreneurship and SMEs Directorate-General Directorate F – Innovation and Advanced Manufacturing

Regional Innovation Monitor Plus 2016

Regional Innovation Report Overijssel (Advanced materials)

technopolis |group| in cooperation with

Chiel Scholten and Daan Oxener, Technopolis Group

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Table of Contents

1. Advanced Manufacturing: Advanced Materials 6 1.1 Overview of performance and trends 6 1.2 Business sector perspective 8 1.3 Scientific research potential 11 1.4 Role of intermediary institutions 12 1.5 Developing skills for the future 15 1.6 Major investment projects 17 1.7 International cooperation 19 1.8 Policy support and delivery mechanisms 21 1.9 Good practice case – Micronit Microfluidics 22 1.10 Leveraging the existing potential 25 2. Regional Innovation Performance Trends, Governance and Instruments 28 2.1 Recent trends in innovation performance and identified challenges 28 2.2 Institutional framework and set-up 30 2.3 Regional innovation policy mix 32 2.4 Appraisal of regional innovation policies 36 2.5 Policy good practice 37 2.6 Possible future orientations and opportunities 38 Appendix A Bibliography 40 Appendix B Stakeholders consulted 42

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Table of Figures

Figure 1 Percentage of persons employed per sector in 2013 in the and Overijssel ...... 7 Figure 2 Gross Regional Product Overijssel’s sub regions in 2013 ...... 9 Figure 3 Economic growth 2011-2014 in the Netherlands, Overijssel and its sub regions ...... 9 Figure 4 Turnover trend the Netherlands and , 2009-2013 ...... 10 Figure 5 Innovation Governance Model in Overijssel ...... 13 Figure 6 Educational initiatives for enhancement of skills in HTSM ...... 15 Figure 7 Innovation and R&D performance indicators for Overijssel, benchmarked against NL and EU level ...... 28 Figure 8 Expenditures on innovation in the Netherlands and Twente (in million euros) ...... 29 Figure 9 Innovation support measures Overijssel ...... 33

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PREFACE In the context of the growth and investment package set out in the Investment Plan of the European Commission, the Regional Innovation Monitor Plus (RIM Plus) provides a unique platform for sharing knowledge and know-how on major innovation and industrial policy trends in in some 200 regions across EU20 Member States. Launched in 2010, the Regional Innovation Monitor aimed at supporting sharing of intelligence on innovation policies across EU regions. Building upon the experience gained and results obtained during the period 2010-2012, the RIM Plus 2013-2014 provided practical guidance to regions on how to use the collected information, via a network of regional experts. Since 2014, the RIM Plus has introduced a thematic focus on advanced manufacturing. The RIM Plus 2015-2016 evolved from a general monitoring of innovation policies towards establishing a more thematic focus in selected areas in order to contribute to improving the competitiveness of European regions. Particularly, the RIM Plus aims through its activities and in close cooperation with the regional stakeholders and other relevant initiatives to: • Contribute to the development of new and open spaces of collaboration and exchange on advanced manufacturing, each with a clearly defined thematic focus. • Play an enabling role in providing evidence-based information on specific themes and bring in outside perspective from other regions. • Map out regional practices in support of advanced manufacturing and relevant pilot/demo projects and work towards involving the relevant stakeholders. • Provide an easy access and comparative overview of regional innovation policies and relevant actions in the field of advanced manufacturing. • Share the lessons learned with the European Commission services to feed into the preparation of future programmes. The main aim of 30 regional reports is to provide a description and analysis of developments in the area advanced manufacturing with a clearly defined thematic focus and regional innovation policy, taking into account the specific context of the region as well as general trends. All regional innovation reports are produced in a standardised way using a common methodological and conceptual framework, in order to allow for horizontal analysis, with a view to preparing the Final EU Regional Innovation Monitor Plus report. European Commission official responsible for the project is Alberto Licciardello ([email protected]). The present report was prepared by Chiel Scholten (chiel.scholten@technopolis- group.com) and Daan Oxener. The contents and views expressed in this report do not necessarily reflect the opinions or policies of the Regions, Member States or the European Commission. Copyright of the document belongs to the European Commission. Neither the European Commission, nor any person acting on its behalf, may be held responsible for the use to which information contained in this document may be put, or for any errors which, despite careful preparation and checking, may appear. Further information: https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor

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Executive Summary

This report presents a regional innovation profile of the province of Overijssel. The economic governance of the region is divided over three sub regions: Twente, and Stedendriehoek ( in Overijssel, Zutphen and Apeldoorn in the province of ). Through sub regional economic boards the province of Overijssel aims establish an economic strategic agenda, including public-private innovation initiatives and to coordinate input from businesses, local governments and knowledges institutes. Each region has its own innovation desk, which is 50/50 funded by regional stakeholders and the province. There is no involvement of the national level in this governance model. With this governance model the province aims to maximise sub regional strengths. 1. Advanced Manufacturing: Advanced Materials In Overijssel, especially Twente is seen as a traditionally strong region for High Tech Systems & Materials (HTSM), including advanced materials. In terms of employment (18.2% in 2013), the manufacturing sector is the second sector in Overijssel, after wholesale and trade (27.6% in 2013). National and regional stakeholders see the HTSM sector as highly important for economic growth and employment, both as a solitary sector and as an enabler for employment in related sectors. SMEs have an important role in Overijssel's economy, as 25% of employment is in companies with <10 employees and 60% in companies <100 employees. In Overijssel, most companies who are doing business in advanced materials are Original Equipment Manufacturers. Overijssel is known for an extensive infrastructure of regional platforms and cooperation between business, science and government. Yet, only a fraction of the SMEs and manufacturing companies are seen as innovation leaders who are significantly contributing to the regional R&D infrastructure and innovation activities. Nonetheless, with a high number of high-tech start-ups and well-known research groups, there is a strong innovative climate around the University of Twente (UT) and the adjacent Business Science Park, which includes advanced materials and nanotechnology. Also the climate in the Zwolle region and at several major industrial companies can be considered as innovative. International cooperation takes place to a large extent at the UT (i.e. MESA+ institute for nanotechnology) with other research institutions and industry at a global scale. Regional authorities are increasingly focusing on the creation of international linkages, as shown by a recent agreement with the Vanguard network and by various Interreg-projects aiming to connect the regional SMEs with regions abroad especially in the neighbouring German regions. To make the most of the region’s advanced manufacturing and advanced materials activities for the economy of Overijssel, three key challenges can be identified: • Challenge 1: Strengthen clusters of SME, industry, government and research Overijssel’s business sector, especially in Twente, demonstrates a high innovation potential with research institutes and companies specialised in advanced materials and nanotechnology. This potential can be mobilised and applied in different related industries and markets. However, most industrial companies are too loosely connected to the regional innovation infrastructure. Therefore, a challenge in the strengthening of the region’s economy is to attract and invite larger industrial companies into regional clusters such as the Open Innovation Centres. Preferably, these larger companies set the collective innovation focus and involve the regional SMEs into new value chains. Regional intermediary institutions like Knowledge Park Twente (Kennispark Twente) and Oost NV are challenged to encourage both industrial companies and SMEs to work in line with the regional innovation agenda and national and European roadmaps.

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• Challenge 2: Improve on the labour potential in light of Smart Industry developments Given the worldwide investments and dynamic changes taking place in the area of advanced materials and nanotechnology, Overijssel faces a challenge of anticipating and being actively involved in those new global value chains. Smart Industry is one of the new roadmaps that Knowledge Park Twente is working on, in collaboration with regional institutions and companies. The digitalisation and robotisation of the manufacturing industry, in referred to as Industry 4.0, is expected to fundamentally change factory operations and business models, which is changing the demand for labour to higher skilled employees whose skills are up to date and flexible to adapt to these contemporary developments. Industrial companies could have a contribution by offering 21st century skills development programmes or apprenticeships on Smart Industry. • Challenge 3: Crossovers between advanced materials and other sectors in an (inter-) national setting Cooperation across regions is seen as a crucial next step to create crossovers between advanced materials and related sectors like Health, Agro & Food and Logistics. Eastern Netherlands and Overijssel are starting joint projects with other Dutch regions and across borders, for instance with Nordrhein-Westfalen in Germany. The composites industry is an example of a sector that could benefit from international cooperation. Internationally, the demand for more advanced composites and applications in related domains is increasing. 2. Regional Innovation Performance Trends, Governance and Instruments The R&D performance of Overijssel is good compared to the overall performance of the 28 EU Member States. In the European Regional Innovation Scoreboard, the province of Overijssel is consistently rated as an innovation follower. As shown by figures in the Twente Index, the region’s innovation performance has significantly improved between 2004 and 2010. For instance, the number of start-ups and innovative companies has increased. More recent innovation performance is hard to assess, as most recent figures are from 2011. Overijssel’s regional innovation policy is geared towards triple helix cooperation between industry, government and science. In the past years Open Innovation Centres have been set up. The province of Overijssel and regional intermediary institutions like Kennispark Twente, Kennispoort Zwolle and Oost NV support companies to align and collaborate on innovation and technology with these centres. As the three sub regions in Overijssel have their own strengths and characteristics, innovation policies are implemented at the sub regional level and closely monitored by the regional economic boards: Twente Board (former Strategy Board Twente and Economic Development Board Twente combined), Economic Board Regio Zwolle (former Strategy Board Zwolle) and Stedendriehoek Innoveert (Deventer in Overijssel, Apeldoorn and Zutphen in Gelderland). At the provincial level, support measures are geared towards the stimulation of innovation in four out of ten nationally defined Topsectors: High Tech Systems and Materials (HTSM), Health, Agro & Food and Energy & Environmental Technology. Direct funding to business R&D and innovation is organised via the investment fund Innovation Fund Overijssel. Each of the three sub regions in Overijssel have their own economic agenda and therefore also provide investment funds. 3. Future Actions and Opportunities With regard to the advanced materials thematic area There are three key actions related to advanced materials opportunities in the region: • Technology Base Twente as advanced materials campus Regional stakeholders see the development of Technology Base Twente as an iconic zone for advanced materials as a promising opportunity to strengthen the region’s

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economy and innovation infrastructure in the HTSM Topsector. Together with Thales, a leading company in aviation, defence and information technology, that supports a high tech systems campus and the University of Twente, as a leading research institute on different types of advanced materials, Technology Base Twente would be of complementary value to create a stronger ecosystem in advanced materials. • Cooperation at the European level for labour skills development and clusters on Smart Industry and societal challenges Future opportunities for advanced materials are oriented towards new functionalities for existing materials (i.e. sensors), Smart Industry systems and innovations for societal challenges. For Twente, and Overijssel at large, it might be beneficial to intensify collaboration with research institutes and industrial companies from other European regions. A promising opportunity is to build on the talents and competences of young advanced materials researchers and technicians in an international setting, for instance through skills centres and apprenticeships. The Grand Societal Challenges, for instance in health, food and environmental issues, could function as themes for new forms of collaboration. • Stronger international branding of Twente as region for advanced materials A stronger positioning and marketing of the high-tech Twente region in the area of advanced materials would help to attract more international investors and companies to the region. An opportunity for Twente is to better communicate about its distinctive innovation track record and its regional knowledge and innovation infrastructure. There are five key future orientations to consider for broader innovation policy in the region of Overijssel: With regard to innovation policy • Stronger role for industrial companies through simplified platforms Overijssel is characterised by a strong collaboration between industry, science and government. In future orientations of the region’s innovation policy, a further focus and strengthening of innovation clusters is recommended. To leverage the potential of these clusters, regional platforms need to be simplified and to be more business- minded. The region could use a strong branding and focused approach towards international industrial companies in order to attract (new) cluster and value chain leaders. • Build a strong logistics sector in Twente to create employment and strengthen the HTSM sector As the Twente sub region is challenged by high unemployment in the lower segments of the labour market a broader focus than only HTSM is recommended. The logistics sector provides opportunities for job creation. Twente could also become a ‘logistical growth region’ with competitive services in water and road transport to Germany and North-East Europe. A strong logistics sector would be beneficial to the HTSM sector as well, as it creates opportunities for crossovers (i.e. advanced packaging materials) and because it makes international transport of goods easier. • Improve cooperation with cross border regions in Germany When it comes to the creation of high-tech employment and business opportunities, the cooperation with the cross border regions in Germany could be further improved. The Twente Werkt (Twente Works) agenda aims to encourage SME export, trade missions and the matching of Dutch employees with German vacancies. Implementing the agenda needs attention to improve cross-border cooperation.

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• Position and brand Eastern Netherlands as a region for Smart & Sustainable Industries Though Overijssel, and more specifically Twente, has an unique profile, from an international perspective the region is small. A recommendation has been given to the province of Overijssel to position and brand Eastern Netherlands as a region for ‘Smart & Sustainable Industries’. In this light, there is an opportunity to align the agenda and activities of the earlier mentioned Fraunhofer Project Centre and Technology Base Twente with this strategic focus. • More active role of government as launching customers and involve high tech start-ups in regional clusters The low density of business and financial services in Overijssel, especially Twente, makes it hard for SMEs to acquire growth capital. As was suggested in several interviews with regional stakeholders, Overijssel’s governments (province and regions) should become more active in the role of launching customer. Considering the ambition of creating more dynamic and innovative clusters, strong ties between the University of Twente, the Windesheim and Saxion universities of applied sciences, their start-ups and the regional infrastructure and OIC’s are desired. Therefore, it could be beneficial to use regional funds for the involvement of start-ups in further developing the Open Innovation Centres. Furthermore, such collaboration would stimulate sharing of technological knowhow and skills between technicians and researchers.

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1. Advanced Manufacturing: Advanced Materials

As an introduction to this chapter it is good to mention that the biggest portion of the manufacturing industry, and economic activity in the area of advanced materials is covered by one of the three economic sub regions in Overijssel, namely Twente. The sector High Tech Systems and Materials (HTSM) accounts for more than 70% of industrial employment in Twente (Draijer, 2014). HTSM is of added value to related sectors such as building & construction, services, healthcare and logistics. Moreover, HTSM is strongly connected to regional focus areas like Healthcare, Safety/Security, Sustainability, Production Technology, Food/Agri and Building & Construction.

1.1 Overview of performance and trends Historically, the manufacturing sector is strongly rooted in Overijssel’s economic landscape, especially in the Twente sub-region. The textile and plastics industry for instance, is highly represented. Some of these companies, such as Norma1 and TenCate2, transformed successfully into high tech companies. As stated in several strategic policy documents (Commissie van Wijzen, 20143; Commissie Draijer, 20144 and Smart Specialisation Strategy, 20135), Overijssel’s manufacturing sector, often referred to as High Tech Systems & Materials (HTSM), is highly important for economic growth and employment, both as a solitary sector and as an enabler for employment in affiliated businesses. The aim of the regional economic plan for Twente is to increase the Gross Regional Product (GRP) with more employment and a higher net income for Twente’s inhabitants. Of the non-financial economic output in terms of Gross Value Added (GVA), manufacturing activities accounted for 18.4% in Overijssel in 2012 (Eurostat, 2015). The same figure is even higher for the Twente sub-region (21.8% in 2012) compared with 13.1% and 18.9% in the other two sub regions North East Overijssel and South West Overijssel, respectively. In the whole of the Netherlands, the GVA for manufacturing activities amounts to 12.2% (in 2012). In terms of the number of persons employed, manufacturing (18.2% in 2013) is the second sector in Overijssel after wholesale and trade (27.6% in 2013; Eurostat, 2016). These sectors are followed by administrative and support service activities (15.4% in 2013), construction (9.8%) and professional, scientific and technical activities (9.2% in 2013). As shown in the figure below for the Netherlands significantly less people (12.8% in 2013) are working within manufacturing. Employment rates in Overijssel are lowest in the energy sector, water management, finance, real estate and mineral extraction (RIM Repository, 2016).

1 See: http://www.norma-groep.nl/en/ 2 See: http://www.tencate.com/company-profile/ 3 Independent commission who investigated opportunities for a more economically sustainable Twente region with strong emphasis on the future role of former airport Twente as an iconic zone for Advanced Manufacturing and Advanced Materials 4 Visitation commission who gave recommendations for a stronger economic position and development of Twente 5 Smart Specialisation Strategy for Eastern Netherlands as a result of the National ‘Topsectors’ policy of the Dutch government, with focus on four sectors: High Tech Systems & Materials (HTSM), AgroFood, Health and Energy & Environmental Technology

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Figure 1 Percentage of persons employed per sector in 2013 in the Netherlands and Overijssel

Eurostat (2016)

In 2013, 63.901 people were employed in Overijssel's manufacturing sector (Eurostat, 2016). In line with the economic downturn, the numbers of persons employed in Overijssel’s manufacturing sector decreased with 4.818 persons (7.0%) between 2008 and 2013, compared with 9.5% for the Netherlands in the same period. In terms of wages and salaries manufacturing is the largest sector in Overijssel (€2.473,9m in 2013). In 2012, the number of jobs in HTSM in Twente amounts to 26.692 (Twente Index, 2013), which is 4.9% if the total jobs in HTSM in the Netherlands in 2012 (543.247). In the past few years, the unemployment situation in the Twente region has become worse, especially for lower skilled workers in the urban areas of (18.1% unemployment in 2013), (16.7%) and (10.5% in 2013). At the end of 2013, unemployment in Twente increased up to 12% versus 9.7% at the national level. With a 56% participation level, Enschede (the largest city in Twente) had the lowest participation of all cities in the Netherlands6. According to Draijer (2014), even a successful growth in HTSM will not give this group an improved employment perspective on the mid to long term. The R&D performance of Overijssel is good compared to the overall performance of the 28 EU Member States (Eurostat, 2016; MERIT Community Innovation Survey, 2010). In Overijssel, the business R&D investments are significantly higher than overall in The Netherlands and EU28. In total, Overijssel’s businesses spent 1.68% (2011) of the GDP in R&D, which is 35.5% (2011) higher than in The Netherlands and 58,5% (2011) higher than in EU28. Patent applications are higher in Overijssel than in EU28 (+14.8%, 2011), but lower than in The Netherlands overall (-36.6%, 2011). For The Netherlands, Overijssel has relatively more people working in medium-high and high-tech manufacturing. With 3.9% of the total employment in Overijssel, this seems a small number, but it is 44.4% higher than in The Netherlands overall. In Europe (EU28) generally, 31,6% more people work in medium-high and high-tech manufacturing. As a result of the economic crisis, Twente seemingly became less attractive in terms of its competitiveness and its climate for company establishment (Commissie van Wijzen, 2014). Nevertheless, in 2015 KPMG listed Twente as one of the three most competitive regions for international companies7. The closure of Twente’s airport in 2007 caused a loss of 2.500 direct and indirect jobs (Commissie van Wijzen, 2014). Plans to reopen the airport for large-scale civil aviation stranded during political

6 See: http://nos.nl/artikel/656492-haarlemmers-kampioen-werken.html 7 See: http://www.consultancy.nl/nieuws/10335/ey-na-zes-jaar-afwezigheid-weer-terug-in-hengelo

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decision-making. The Commissie van Wijzen (2014) recommends to fully focus on strengthening and modernising the regional economic structure, with a strong emphasis on Technology Base Twente8 (TBT) as an open ecosystem and state-of-the- art zone for advanced materials. The Topteam, responsible for the implementation agenda of TBT, is now looking for strong industrial partners to realise this ambition. The most influential, global challenge that companies in advanced manufacturing and advanced materials face at the moment and in the near future is the Smart Industry transition, mostly referred to as ‘internet of things’ and ‘industry 4.0’. Some companies and knowledge institutions in Overijssel join these global developments through fundamental research, reform of production processes and development of new, smart (material) applications. While there is general awareness about the upcoming changes, many companies (especially SMEs) seem to lack the knowledge and capacity to respond in a sufficient manner, as was stated by one of the regional stakeholders. In response to these developments, the regional institutions and companies in Twente are currently working on the Smart Industry roadmap, a process coordinated by Kennispark Twente (Knowledge Park Twente)9 (more information about this intermediary institution is presented in the next paragraphs). As Overijssel embraces the Dutch 'Topsectors’ policy with a strong focus on HTSM, regional trends in advanced manufacturing correspond to a large extent to the trends that can be observed at the national level. Overijssel hosts several niche companies and institutions in advanced materials and nanotechnology. For instance, in the area of nanotechnology (MESA+10), thermoplastic composites (TPRC11) and recycling of materials (PSP12 and Texperium13). More information about these niche organisations is presented in the next sections.

1.2 Business sector perspective Some companies in Overijssel, for instance TenCate, Micronit Microfluidics14 and Demcon15, are innovation leaders as they are operating at a global scale and are known for their state-of-the-art technology. TenCate is a globally leading company in synthetic turf components, flame-resistant protective fabrics and geosynthetics. Micronit is a producer of chips for lab-on-a-chip applications, whilst Demcon is a high-end technology supplier of products and systems, with focus areas in high-tech systems, industrial systems and medical devices. A considerable number of companies in Overijssel can be considered as innovation followers. Often, these companies successfully apply incremental innovations to their products and product lines that help them keep or improve their competitive position. SMEs own an important role in Overijssel's economy, as 25% of employment is at companies with <10 employees and 60% at companies <100 employees (RIM Repository, 2016). Quite some innovation followers can be found in the plastics and metal industry, for instance under the ‘Verenigde Maakindustrie Oost-Nederland’ VMO16 (United Manufacturing Industry Eastern Netherlands). As revealed in one of the interviews with regional stakeholders, from the companies in the innovation follower group, who spur on partners abroad, most have intentions to increase their market share, instead of being driven by innovation purposes. The aforementioned innovation leaders (i.e. TenCate, Micronit) look for partners on a worldwide scale. In general, Twente shows a mixed picture: a strong and innovative high tech industry at the one hand and many

8 See: http://www.technologybase.nl/(only in Dutch) 9 See: http://www.kennispark.nl/ 10 See: https://www.utwente.nl/mesaplus/ 11 See: https://tprc.nl/ 12 See: http://www.polymersciencepark.nl/ 13 See: http://www.texperium.eu/en/ 14 See: http://www.micronit.com/ 15 See: https://www.demcon.nl/en/ 16 See: http://www.vmo.nl/(only in Dutch)

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companies with low degrees of innovation at the other hand. In Eastern Netherlands, companies who are active in advanced materials are mostly operating as original equipment manufacturers (Twente Index, 2011). Looking to the manufacturing industry as a whole, a diverse picture can be observed as many suppliers operate in textile and chemistry, system integrators are mostly active in the plastics industry, rubber industry and machinery, and original equipment manufacturers can be found in aerospace, defence and medical technology. Other European regions with a strong focus on advanced materials are for instance Bourgogne, Asturias and Midi-Pyrénées (Smart Specialisation Platform EU, 2016). For Overijssel, competitors as well as possible partners in the advanced materials industry could be found in these regions. Looking at the regional economic infrastructure, a loose connection can be observed between some of the larger, industrial companies and the surrounding SMEs. Often, the industrial companies are strongly tight to their head quarters’ policy abroad. Disruptive technologies from regional high-tech start-ups are often exposed to international markets in an early stage, as was mentioned in an interview with a regional stakeholder. The Gross Regional Product (GRP) of Overijssel amounts to €35.8b in 2013, which is 5.6% of the Gross National Product17. As shown in the figure below, from Overijssel’s three sub regions Twente has the largest contribution to the GRP (€19b in 2013). In the years of economic growth (2011 and 2014) Overijssel’s economy grew faster than the Dutch economy, whereas in the years 2012 and 2013 the economic decline in Overijssel was stronger than in the Netherlands overall. In 2010, the GRP per inhabitant in Overijssel (€31,426) was lower than for the Netherlands as a whole (€38,255). Figure 2 Gross Regional Product Overijssel’s sub regions in 2013

12,3

19,0

4,5

North Overijssel South-West Overijssel Twente CBS Figure 3 Economic growth 2011-2014 in the Netherlands, Overijssel and its sub regions 5 4 3 2 1 0 -1 Netherlands Overijssel North South West Twente Overijssel Overijssel -2 -3 -4 2011 2012 2013 2014 CBS

17 http://www.overijssel.nl/over-overijssel/cijfers-kaarten/economie/economie/economie-groeit/

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The economic and financial crisis had a low impact on the number of companies in the HTSM-sector. There are no important companies that left the region during this period. In 2015, tyre manufacturer Apollo Vredestein moved its management from Enschede to Amsterdam18. The production facilities, however, stayed in Twente. XUV Optics19, a research group with strong industry relations and funded for 38% by industry, came to Twente in 2012 to become a research group of the MESA+ institute. XUV Optics collaborates with companies like ASML, Carl Zeiss, Demcon, PANalytical and SolMateS. Recently, AeroNextLife, a company in recycling of aircraft components, started its business at Technology Base Twente20. Regarding the sales volume in Overijssel, two industries that are related to advanced materials are considered: the metal industry and chemical, rubber and plastics industry respectively. Since the economic and financial crisis of 2009 the following trends can be observed (Panteia, 2016): • between 2009 and 2014, the sales volume for both industries, and in all of Overijssel’s regions, increased, • in absolute terms, the sales volumes of Twente are substantially higher than in the other two regions, • in relative terms, growth in the sub region of Zuid-West Overijssel was highest with 79.5% for the chemical, rubber and plastics industry and 47.1% for the metal industry. The figure below shows the turnover development of Twente and the Netherlands, in the period 2009-2013. In the first years after the financial crisis we see an increasing trend in both Twente and the Netherlands, albeit very volatile, with many ups and downs. After a downfall between mid-2011 and 2013, the turnover increases again in the first half of 2013. Figure 4 Turnover trend the Netherlands and Twente, 2009-2013

Netherlands

Twente

Twente Index, 2013

18 See: http://www.iamsterdam.com/en/business/invest/business-news/management-of-tyre-giant-apollo- vredestein-moving-to- 19 XUV Optics focuses on high tech applications for the industry in the area of multilayer mirrors to manipulate ultraviolet light. These mirrors can be used in space telescopes and for the production of chips with ever-growing speed and memory capacity. 20 See: http://www.kennispark.nl/news/10568-municipality-of-enschede-grants-license-to-axl/

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The University of Twente is known for its focus on entrepreneurship. The university ecosystem acts as a hotspot for knowledge intensive and high-tech companies. Knowledge Park Twente, the regional incubator and facilitator of spin-offs from the University of Twente and Saxion University of Applied Sciences, is known for its large number of start-ups: on average 100 a year of which 50% comes from the University of Twente, and 50% from Saxion as was revealed in one of the interviews with regional stakeholders. Examples of successful start-ups are the previously mentioned Demcon (average annual turnover of €25m21) and Micronit (a good practice case that will be discussed in more detail in paragraph 1.9). Both companies show the ability to integrate start-of-the-art technology with entrepreneurship. A relatively new and promising start-up is SoLMateS22, which produces unique thin film solutions for several markets. Another start-up is Eurekite23, which developed a disruptive kind of technology (ceramic nano-materials) and is now supported by the Cottonwood Technology Fund24, an American technology investment fund that landed on Twente in 2014. The start-ups and companies that are mentioned is this paragraph constitute not an exhaustive overview. Interviews with regional stakeholders revealed that many of the start-ups fail to substantially grow their business. Moreover, in the Twente region there is a high percentage of start-ups that go bankrupt. To improve its position in international value chains, companies in the HTSM sector need to better market and commercialise their innovations, as was often mentioned during interviews with regional stakeholders.

1.3 Scientific research potential The province of Overijssel has one academic institution: the University of Twente (UT), which is located in the Twente region in the lower east of the province. The University of Twente is a rather young and small university, with 9,614 students and 2,948 employees, of which are 1,676 researchers (2014 figures25). The university has five faculties of which four are focusing on engineering and/or the natural sciences. For the thematic area of Advanced Materials, the MESA+ Institute for Nanotechnology and the MIRA Institute for Biomedical Technology and Technical Medicine26 are the most relevant. The former is involved in developing advanced materials and production techniques on the nanometer scale (10-9 meter), while the latter is specifically focusing on novel biomaterials. Furthermore, the UT focuses on supporting the areas of high tech systems, fabrics and high-tech polymers. These research themes are addressed by Open Innovation Centres (see next paragraph 1.4) in conjunction with the institutes for higher education and businesses with either knowledge on the topic or a research need. The institutes for higher education, so-called Universities of Applied Sciences (UAS, or in Dutch: HBO), are active in advanced manufacturing technologies as well. For instance, Saxion27, Stenden28 and Windesheim29 aim to enhance the innovative capabilities of regional SMEs through applied research, emphasis on entrepreneurial development and realisation of start-ups. Through lectureships in Smart Functional Materials (Saxion), Lightweight Design (Saxion) and Plastics Technology (Windesheim) the Universities of Applied Sciences gained a more significant role in the development of advanced materials. Compared with the scientifically oriented

21 See: https://www.demcon.nl/tag/demcon/(only in Dutch) 22 See: http://www.solmates.nl/ 23 See: http://www.eurekite.com/ 24 See: http://cottonwoodtechnologyfund.com/about/ 25 See: http://www.utnieuws.nl/sites/default/files/pdf/TwenteMünster.pdf 26 See: https://www.utwente.nl/mira/ 27 See: https://www.saxion.edu/ 28 See: https://stenden.com/english/ 29 See: http://www.windesheiminternational.nl/

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activities at the UT, the institutions of higher education provide a more applied type of research (R&D). Together, the UT and the Universities of Applied Sciences offer a wide range of courses on advanced materials and related technologies. UT, Saxion and Windesheim started a Centre of Expertise on HTSM30 meant to connect industrial challenges with relevant knowledge and research capacity. The TPRC (ThermoPlastic composites Research Centre), based at the UT, in partnership with the lectureships of polymer technology of Saxion, recently initiated the establishment of a thermoplastic composites applications centre. TPRC offers the production technology to develop thermoplastic composites (recyclable and lightweight new generation materials) for the aerospace and automotive industry. As was mentioned in several interviews with regional stakeholders, TPRC works with a solid and structural research programme whilst being oriented towards research and development and practical applications at its partners. Just as the MESA+ and MIRA institutes, the TPRC holds a strong knowledge and competitive position at international scale. Besides the university’s ecosystem, these institutions do not directly contribute to the region’s industrial base. MESA+ combines research, state-of-the-art cleanroom and lab facilities, interaction with companies and a focus on commercialisation. In the period 2008-2014 MESA+ employed an average of 550 scientists, including 44 professors and over 250 PhDs. Currently, 36 research groups are part of MESA+. The integral turnover of MESA+ is about €50m per year of which around 60% is acquired from competition of external resources (MESA+ Annual Report, 2014). Technology and application areas that are strongly related to advanced materials and that evolved from TPRC, MIRA and MESA+ are: • lightweight design and recyclable materials for the aerospace industry, • nanomaterials for lab-on-a-chip applications / BIOS Lab-on-a-chip31, • catalytic processes and materials, • inorganic & hybrid nanomaterials, • molecular nanofabrication, • polymers, • semiconductor components, • graphene, • sensors for food and water applications, • bio-nanotech and advanced bio-manufacturing, • organs-on-chips, • biomedical micro devices.

1.4 Role of intermediary institutions Overijssel is characterised by a high level of cooperation between industry, knowledge institutions and governments. The institutional setup is aligned with the concentration of economic activity within the three economic sub regions: Twente, Zwolle and Deventer as part of the Stedendriehoek (City Triangle of Deventer in the province of Overijssel and Apeldoorn and Zutphen in the province of Gelderland). Innovation policies in these three regions are derived from the economic agenda of the province of

30 See: http://www.windesheim.nl/bedrijven-en-instellingen/samenwerken-met-windesheim/centres-of- expertise/(only in Dutch) 31 See: https://www.utwente.nl/ewi/bios/

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Overijssel (Executive Framework Regional Economy 2012-2015 and Overijssel Works! Coalition Agreement 2015-2019) - which concentrates on four sectors of the national ‘Topsectors’ policy - and based on the economic strengths and opportunities of the respective regions. Responsible for the strategic innovation policies within these regions are the following boards: • Twente Board32 (the former Strategy Board Twente and Economic Development Board Twente combined); • Economic Board Regio Zwolle33 (former Strategy Board Zwolle); and • Stedendriehoek Innoveert34 (aforementioned City Triangle). Figure 5 Innovation Governance Model in Overijssel

TWENTE BOARD

STRATEGY STRATEGY BOARD BOARD ZWOLLE STEDENDRIE- HOEK

INVESTMENT COMMITTEE

MEETINGS PLATFORM MEETINGS PLATFORM MEETINGS PLATFORM REGIONAL BUSINESSES REGIONAL BUSINESSES REGIONAL BUSINESSES INNOVATION INNOVATION INNOVATION DESK DESK DESK KENNISPOORT KENNISPARK STEDENDRIE- ZWOLLE TWENTE HOEK

BUSINESS BUSINESS BUSINESS BUSINESS BUSINESS BUSINESS CASE CASE … CASE CASE … CASE CASE …

Province of Overijssel (2012)

In 2007, Innovation Platform Twente (IPT), a group of companies and knowledge institutions, developed a regional innovation agenda for Twente: the Twente Innovation Path (Twentse Innovatieroute). Between 2007 and 2011, the investment volume amounted to €250m for projects in food, health, High Tech Systems and materials, safety and construction (Smart Specialisation Strategy, 2013). Innovatiesprong Twente is a follow-up of the Twente Innovation Path and is a collaboration between the Twente Region, the province of Overijssel, industry and scientific institutions. Through the Innovatiesprong programme the Twente Region invests €30m in the period 2012-201735. An important platform for knowledge and technologically intensive companies in Twente, is Technology Circle Twente36 (Technologie Kring Twente), aiming to bring cooperation and clustering in an informal environment.

32 see: http://www.twenteboard.nl/en/ 33 see: http://regiozwolle.net/nieuws/22/economic-board-regio-zwolle-bekend (only in Dutch) 34 see: http://www.stedendriehoekinnoveert.nl (only in Dutch) 35 see: http://www.regiotwente.nl/projecten/innovatiebeleid-twente (only in Dutch) 36 see: http://www.tkt.org/index.php/nl/information-in-english

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As shown in the figure above, every region has its own ‘innovation desk’, for innovation support to companies. The regional development agency Oost NV37 and its daughter PPM Oost38 finance start-ups with risk capital from regional innovation funds. Oost NV aims to spread knowledge about advanced materials that enable re- design of existing products and crossovers to new product applications. The organisation offers knowledge, network and personal contacts to the regional SMEs as well. Moreover, Oost NV gives assistance to companies in decision-making about national and European innovation programmes (i.e. FieldLabs39). Interviews with regional stakeholders revealed that Knowledge Park Twente, in which the province of Overijssel, the University of Twente, the Saxion University of Applied Sciences, the Twente Region40 and the municipality of Enschede participate collaboratively, can be considered as a prominent incubator for high-tech start-ups. Located at the campus of the UT and close to the adjacent Business and Science Park41, it acts as a facilitator for innovation in the Twente region, through knowledge dissemination, pitch & matchmaking sessions between research and industry. It secures the available knowledge in the region. The Zwolle region is considered as a top economic location in Overijssel with its own economic agenda and economic board. It consists of 20 municipalities. The agenda focuses on entrepreneurs, government, research and education. Currently, the Zwolle region adds €22b to the Dutch economy. The ‘Stedendriehoek’ region (City Triangle) has a broadly developed economic structure consisting of manufacturing, business services, healthcare and ICT. The region aims to strengthen innovation by marketing the investment climate, connecting innovation in manufacturing, connecting with other top regions and scaling innovation in sustainable energy. Through support for the Open Innovation Centres (OIC’s), FieldLabs and a Smart Industry Action Agenda for Eastern Netherlands (2015), the aforementioned institutions try to promote the uptake of new technologies. In the past few years the OIC’s integrally contributed to improved innovation stimulation in the region. End 2014, the national action agenda Smart Industry was launched. Smart Industry is about the integration of advanced ICT with modern production technologies like robotics, 3D printing and the manufacturing industry. Production processes can be designed in a more efficient, flexible, sustainable and tailor-made way. As a result, these systems realise a high level of flexibility in terms of product demand, volume and materials and resource use. In line with these Smart Industry developments, Overijssel and Twente aim to create practically oriented environments for the development and implementation of Smart Industry solutions. The Smart Industry roadmap for Twente is developed by Knowledge Park Twente in cooperation with Oost NV, the University of Twente, Saxion University of Applied Sciences and is based on input from industry. A project that stems from the Smart Industry agenda is the Factory of the Future42 at TenCate in , a test factory for printing of materials instead of pressing. To sum up, there are many intermediary institutions involved in regional innovation policies and dissemination of R&D knowledge. As stated in several interviews with regional experts, this diffuse picture of organisations leads to unclarity amongst companies about where to find which support. Moreover, there is a lack of capital from industry to stir up further development of new innovations. In this light its worth

37 See: http://www.oostnv.com/ 38 See: http://www.ppmoost.nl/page/ppm-oost-english 39 See: http://www.smartindustry.nl/eng/ 40 See: http://www.regiotwente.nl/(only in Dutch) 41 See: https://www.enschede.nl/vestigingslocaties-en-bedrijventerreinen/kantorenlocaties/kennispark-business- sciencepark(only in Dutch) 42 http://www.tencate.com/emea/factory-of-the-future/default.aspx

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mentioning AMMON43 (Advanced Materials Manufacturing Eastern Netherlands). AMMON is a business development and innovation programme with an explicit focus on acceleration of industrial cooperation in the East of the Netherlands. AMMON’s ambition is to make the regional SME sector ready to join a regional, integrated value chain. By doing so they want to make a statement that the East-Netherlands can be seen as an internationally leading region in Europe on the long term. The direction of the programme is led by the Industrial Board, where CEO’s/Board members of large industrial participants are represented (i.e. Wavin, Pentair, TenCate).

1.5 Developing skills for the future Because of rapid industrial innovation in smart systems and materials (i.e. Smart Industry, Industry 4.0), there’s a need in Overijssel for higher qualified technical personnel who have start-of-the-art knowledge and the skills to adequately adapt to these contemporary developments. Same as for the Netherlands, there’s a shortage of graduates in technical professions, especially at vocational and higher education level. In light of a high a percentage of the technical workforce who will retire before 2020, the aforementioned shortage is expected to increase in the coming years (Techniekpact Twente, 2013). Though this is a problem in the whole country, the threat is even bigger in Twente because of the high density of companies in the high tech and plastics industry. In response, the region has set up a ‘Human Capital Agenda’ as a joint initiative of the regional government (i.e. province of Overijssel, Twente region), industry and educational institutions (i.e. Saxion, Twente University, Windesheim). Through the implementation strategy ‘Techniekpact Twente’ emphasis is on a higher influx from the side of technical vocational education, renewed employment practices, life-long learning, upgrading of associate degree programmes and becoming more attractive to international knowledge workers. In 2025, Twente aims to have 4 out of 10 (40%) beta/technically-educated students, compared with 25% in 2011 (province of Overijssel - Human Capital Agenda, 2012). An important part of the Human Capital Agenda in Overijssel are the Centres of Excellence (CoE) and Centres of Innovative Craftmanship (CIV) within higher education and TechWise, a centre for technology, industry and innovation at the vocational level. These centres are initiated and monitored by the Dutch Ministry of Education, Culture and Sciences (OC&W) as part of the national ‘Topsectors’ policy. In the figure below an overview is presented of the educational initiatives (projects) and centres with a strategic focus on enhancement of skills in High Tech Systems and Materials (HTSM). Figure 6 Educational initiatives for enhancement of skills in HTSM Educational Leading organisation(s) Strategic focus initiative TechYourFuture Saxion & Windesheim Educate enough young, talented 44 - CoE (Zwolle technicians. Make technical and Twente) professions more popular TechForFuture45 - Saxion & Windesheim Contribute to HTSM product and CoE HTSM process innovations through (Zwolle and research and internships. Enforce Twente) innovation capacity on economic and social issues

43 http://cctwente.com/en/actueel/twenty-twente/editie-10/ammon-innovatieprogramma 44 http://www.techyourfuture.nl/nl(only in Dutch) 45 http://www.techforfuture.nl/?lang=eng

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Educational Leading organisation(s) Strategic focus initiative TechWise46 - CIV ROC Twente (participants: Eaton, High Tech Systems & Materials (Twente) Niverplast, Voortman Automatisering, Norma, Safan, Schuitemaker, Teunis, Aebi Schmidt Nederland and IMS (WWINN), ROC Twente, Stodt, SMEOT, REMO, Technologie Kring Twente, Uneto VNI, OBM Twente BV, Kenteq, Saxion and VMO)

Toptechniek in ROC Twente Practical approach to educate bedrijf47 (Twente) more qualified technicians at vocational level 3TU48 (Twente) Partnership of the three technical Producing sufficient numbers of universities in the Netherlands: Delft, highly qualified engineers and Eindhoven and Enschede. Together the technical designers, of conducting universities offer specific courses, for outstanding and socially relevant instance the post master programmes in research of an international Technological Design of the Stan Ackermans standard, and of promoting Institute and the PDEng programme cooperation between research (Professional Doctorate in Engineering) institutes and businesses. CoE Smart Windesheim & Stenden Develop state-of-the-art Polymeric knowledge on polymers and fibers Materials49 - through 1) cooperation and Centre of Open knowledge sharing between Chemical knowledge institutions and Innovation innovative companies, 2) applied (Zwolle) research and 3) coaching of companies in order to come to green chemistry and smart materials. CIV Polymers, In cooperation with Polymer Science Park Get students interested for these Coatings and and 10 regional entrepreneurs areas of expertise and select the Composites50 best students in their second year STODT51 STODT On-the-job training and practical (Bedrijfscentrum education in advanced technology : Praktijkopleiding voor Geavanceerde Technologie) Integral Practical ROC Twente in collaboration with STODT Educate technical personnel for Centre (Integraal and Kenteq52 (knowledge and advice centre) rapidly changing manufacturing Praktijkcentrum: and supported by Saxion. Public private industry. Learning pathways. IPC) partnership. Source: Technopolis (2016), based on the websites of these educational initiatives

The UT is one of the three technical universities of the Netherlands. Saxion has chosen for a technical profile and the ROC van Twente53 also has a strong technical tradition. In several of the initiatives shown in the figure above these institutions work together. Thus in general it can be concluded that Overijssel has an extensive knowledge infrastructure on advanced materials and HTSM: a comprehensive network of educational institutions, centres and projects put emphasis on skills enhancement and distribution of knowledge. This makes it possible to create ongoing learning-teaching trajectories.

46 http://techwisetwente.nl/ (only in Dutch) 47 http://www.toptechniekinbedrijf.nl/(only in Dutch) 48 https://www.3tu.nl/en/education/ 49 http://www.tkispm.nl/(only in Dutch) 50 http://www.deltion.nl/civ/civ-pcc (only in Dutch) 51 http://www.stodt.nl/(only in Dutch) 52 http://www.kenteq.nl/(only in Dutch) 53 http://www.rocvantwente.nl/site/home/overige-paginas/regional-community-college-of-twente.html

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With ‘Industry 4.0’ and the ‘Internet of Things’ developments, the industry for advanced manufacturing and advanced materials is rapidly changing. As mentioned in one of the interviews with regional stakeholders, higher skilled employees are needed who are able to adapt quickly to these contemporary industry developments. Though the IPC pays attention to the education of personnel in a fast changing production environment, no specific and explicit certificate courses in Smart Industry or Industry 4.0 can be found. Thereby Twente lacks large, industrial companies in advanced materials who are able to create their own training centres and work-based learning trajectories in this specific domain. Therefore, an ongoing challenge will be to improve the opportunities for skills development in advanced materials in order to meet the labour needs in the region.

1.6 Major investment projects In the past years, industry, regional government and scientific research institutions started several Open Innovation Centres (OIC’s). These centres aim to enhance the region’s innovation capacity by connecting companies to research & development capacity in order to create opportunities to test and develop applications. The University of Twente, Boeing54 as a major stakeholder, TenCate and Fokker55, initiated the ThermoPlastic composites Research Centre (TPRC). Through fundamental research in production technology (i.e. computer models, process design, designer tools) for thermoplastic composites, TPRC enables the development of advanced construction materials for the aerospace and automotive industry. The novel characteristics of these thermoplastic materials enhance durability and strength. Thermoplastic composites are becoming more popular because of the potential for recycling and their ability to be deformed and welded at elevated temperatures, which make them suitable for high-speed production techniques such as thermoform pressing. At TPRC tier-1 suppliers (i.e. DAHER56, an aerospace equipment manufacturer and Fokker), tier-2 suppliers (i.e. DTC Almere57, KVE Group58) and software companies are involved in the development of new production techniques. So far, 29 projects have been run and 22 paying members joined. About 22 people are employed at the TPRC and, on average, six students work at the TPRC (province of Overijssel, 2014). In recent years 40% of TPRC’s budget was covered by EFRO- budgets, as was revealed by one of the consulted stakeholders. Recently, TPRC was granted continuation of this budget. In the start-up phase TPRC has been strongly supported by Knowledge Park Twente, Oost NV and Innovatieplatform Twente (IPT). This support was in terms of bringing partners on board and to help acquiring starting capital. TPRC collaborates with current and future leading companies and other organisations in the field of thermoplastics. Several companies from the United States cooperate with TPRC such as Harvard Engineering from Seattle. Moreover, successful partnerships at the French market are realised through cooperation with DAHER and SAFRAN59 (aerospace systems and equipment supplier). Because of TPRC’s set-up (fundamental type of research and production technology development), the centre is most attractive to either large multinationals or smaller specialists. In order to create more business value in the region, TPRC is developing a thermo plastics application centre at Saxion (institute for higher education) with the lectureship for composites. In terms of technology readiness levels (TRL), the activities of TPRC range from 3 to 4, as activities range from experimental proof of concepts to technology validation in a lab environment. However, close partners of TPRC operate at higher technology

54 http://www.boeing.com/ 55 http://www.fokker.com/ 56 http://www.daher.com/en/ 57 http://www.composites.nl/ 58 http://www.kve.nl/index.php?id=820&L=1 59 http://www.safran-group.com/aviation

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readiness levels as they develop and implement products in the relevant and operational environment. TenCate in Nijverdal initiated the Open Innovation Centre for Advanced Materials60 (OICAM) in Nijverdal (Twente) in 2011. Companies and knowledge institutions work together to develop and test applications based on specific needs of SMEs who want to develop solutions with other types of materials. Focus areas are recycling, composites, textile products and biomaterials. Project partners can use OICAM’s lab and brainstorm facilities, including devices for demonstration projects and pilot production. So far, five knowledge institutions and 50 SMEs have been involved in OICAM. Ten projects have been run so far (province of Overijssel, 2014). One of the successes of OICAM is the contribution to the GreenSource Sports for Water sustainable drinking water systems61 built in South Africa. The water treatment part of this integrated system is produced by Pentair, the water buffering and pipe systems manufactured by Wavin62 and the high-grade synthetic turf and geotextiles by TenCate. A demonstrator of the innovative GreenSource drinking water system was built by OICAM. The activities of OICAM range from TRL 6 to 7, as activities range from technology demonstrations in relevant environments to prototype demonstration in the operational environment. The Polymer Science Park63 (PSP) in Zwolle hosts multiple initiatives on smart materials, which are to a large extent based on the interests of surrounding SMEs. DSM, Wavin, Van Wijhe Verf (painting), the province of Overijssel, Deltion (vocational education) and Windesheim started PSP in 2011. Later on, some research groups of the University of Twente joined the initiative with contributions in the areas of polymers and production technology. Since its birth 62 SME entrepreneurs have been involved and 8.5 FTE is employed at PSP (province of Overijssel, 2014). In 2013-2014, the project portfolio of PSP consisted for about 65% of projects in the area of recycling and sustainable production and processing of plastics, 10-15% projects in coating, 10% in 3D printing and the other 10-15% in courses64. PSP is a breeding place for smaller and larger companies in polymer application technologies to test their new products. Recently, a grant for a test and demonstration site has been approved. One of the projects within this experimental garden is the recycling of thermosetting materials. The goal is to develop a model that helps members to understand what the possibilities are to responsibly deal with such waste stream. Some other projects are about finding new recycling methods for specific materials, such as fossil-based polymers. The activities of PSP range from TRL 4 to 7, as activities range from validation of technology in the lab to prototype demonstration in the operational environment. Texperium in Haaksbergen65 encourages the processing of textile waste into products with added value. Thereby it offers a unique technology for recycling and reuse of fibers with added value for the value chain. Only 1.5 FTE is working for Texperium, 20 SME entrepreneurs have been involved and six projects have been run (province of Overijssel, 2014). One of the projects is about the fabrication of scarfs made from discarded uniforms of the flight company KLM. Normally, these clothes are being burned because they have to comply with high safety standards. Texperium found a way to reuse these materials in an advanced way.

60 http://www.oicam.nl/(only in Dutch) 61 http://www.tencate.com/fr/emea/grass/news/TenCate-Pentair-and-Wavin-supply-innovative-drinking-water- system-GreenSource-to-South-Africa.aspx 62 http://www.wavin.com/ 63 http://www.polymersciencepark.nl/ (only in Dutch) 64 http://www.polymersciencepark.nl/innoveren/onderzoeksmogelijkheden/ 65 http://www.texperium.eu/en

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The activities of Texperium range from TRL 3 to 4, as activities range from experimental proof of concepts to technology validated in a lab environment. Especially in the start-up phase, intermediary institutions like Knowledge Park Twente and Oost NV offered support to the OIC’s. As was often mentioned during interviews with regional stakeholders, it takes some time before OIC’s start to commercialise their innovations. Though some companies do pay a fee for the OIC’s, usually the regional industry is reserved in contributing financially. Major projects that are planned to be launched in the near future include the Fraunhofer Project Centre for Design & Production Engineering in Complex High- Tech Systems66 and the previously mentioned Technology Base Twente (TBT). According to several regional stakeholders, Fraunhofer is seen as a huge opportunity for Twente as the institute is known for its capacity to translate knowledge into specific products and business value. On behalf of the University of Twente, an external advisor is working on a plan for the Fraunhofer Project Centre that should be ready in the summer of 2016, according to one of the consulted regional stakeholders. TBT is identified as a development and focus area for advanced materials. As a result from the national ‘Topsectors’ policy the FieldLabs instrument offers an opportunity for Overijssel to enhance its innovation capacity. Eastern Netherlands is involved in 6 of the 10 Dutch FieldLabs. Two of these FieldLabs are: 1. Region of Smart Factories67. Partners (Philips Drachten, Fokker , Noordelijke Investerings- en Ontwikkelingsmaatschappij and TenCate, on behalf of Overijssel) focus on the development and implementation of intelligent systems for the high tech industry. These systems enable production processes without errors. 2. Flexible manufacturing68. Goal of this FieldLab is to produce in small badges with robots and without programming time. Partners are: Philips, Brainport Industries, NMT, De Cromvoirtse, Saxion, TNO, Roboned, BOM, Oost NV, InnovationQuarter. Development and production activities of both FieldLabs takes place at different locations, in and outside Overijssel. Because the action agenda Smart Industry is a collaboration between public and private organisations, the financing should be jointly taken care of as well. To finance the action agenda Smart Industry several instruments are available such as the MIT measure, TKI-surcharge measure and funds for education and work.

1.7 International cooperation Most international collaborations on developing advanced materials take place in the region’s major research institutions like MIRA (Institute for Biomedical Technology and Technical Medicine), TPRC and MESA+ (Institute for Nanotechnology). All of these institutes collaborate with academic institutions and industry at a global scale. At the University of Twente, internationalisation has recently become an important aspect of the university’s new vision69. The university closely collaborates with the University of Munster70 and is very active in the Horizon 2020 framework programme. New projects strongly focus on collaborations with European and international partners.

66 https://www.utwente.nl/en/news/!/2015/8/91385/fraunhofer-establishes-project-centre-on-the-university-of- twente-campus 67 https://www.nom.nl/idee-naar-project/smart-factory/(only in Dutch) 68 http://www.smartindustry.nl/fieldlabs/(only in Dutch) 69 https://www.utwente.nl/vision2020/en/summary_vision2020/ 70 https://www.uni-muenster.de/en/

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The MESA+ institute for nanotechnology has strategic collaborations with multiple institutions in Germany, the UK, the United States, and Japan. One example is the EICOON project (MESA+ Year Report, 2012), the FP7 Euro-Indo forum for nano- materials research coordination & cooperation of researchers in sustainable energy technologies. The consortium addresses the strategic assessment including synergy analysis of nanomaterials research needs in the EU and India. EICOON addresses the dissemination of the nano-materials knowledge by organising events. Through Interreg and Horizon 2020 projects the region aims to meet the needs of SMEs and industry for international cooperation. A recent initiative – aimed at bringing the plastics industry to a next level – is the Interreg project Sustainable Surfaces & Membranes71 (S2M). Within S2M Dutch (from Eastern Netherlands) and German (from Niedersachsen and Nordrhein-Westfalen) companies work together on the development of coatings and membranes with anti-microbial properties. As a process facilitator, business development organisation Oost NV is helping to establish this project together with the German lead partner Netzwerk Oberfläche NRW. Dutch partner companies are Pentair X-Flow, SABA, Van Wijhe, AquamarijnParthian, Smart Materials Printing and the European Membrane Institute as part of the University of Twente (UT). The project is executed between Janary 2016 and April 2019 with a total budget of €6.52m, of which half is funded by the European Commission (Euregio agenda meeting 18 March 2016). A second major Interreg-5 project is I-Pro (‘Intelligent Products’; Euregio, 2016). The project supports SMEs to make a next step towards the smart and digital industry. Its focus is on the development of innovative, technologically advanced and intelligent products (Industry 4.0). The project consists of specific measures like acquisition talks, concept development, feasibility studies and prototype development. External service providers, especially from the neighbouring country, execute these activities together with SMEs. Moreover, special events and workshops are organised and young entrepreneurs and university spin-offs are brought together. Total budget for this project is €11.6m over four years (2016-2019). SMEs can get 40% to 50% of the development costs refunded through a subsidy. Subsidies for the different measures range from €2,500 up to a maximum of €48,000. ‘Netwerk GMA’72 was set-up as an Euregio project by STODT (on-the-job training centre for advanced technology) in cooperation with Handswerkkammer Münster, Syntens (former service department of Chambers of Commerce, stopped its operations in 2013), VMO and Osnabruck-. Recently, the cooperation continued in an Interreg-project under the name of ‘Netwerk GEP’. The cooperation aims to develop new production technology and educational materials in, for instance, sheet metal working and metal removal. By reducing waste, it aims to enhance business value. Moreover, its aim is to improve the marketing of the participating companies. Cooperation between German and Dutch companies is encouraged by business journeys and joint stands at trade fairs. The Manufacturing And Innovation Network73 (MAIN) aims to connect the strengths of industrial entrepreneurs and branch organisations in order to maintain and enforce the international competitive position of the manufacturing industry in Eastern Netherlands. MAIN is an initiative of FME-CWM, Royal Metal Union, Verenigde Maakindustrie Oost (VMO), Oost NV, Innovatieplatform Twente (IPT), PKM and STODT.

71 https://www.fh-muenster.de/forschung/forschungskatalog/projekt.php?pr_id=835(only in German) 72 http://www.kennispark.nl/nl/case/netwerk-gma-versterkt-de-regio/(only in Dutch) 73 http://www.oostnv.nl/page/manufacturing-and-innovation-network(only in Dutch)

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1.8 Policy support and delivery mechanisms In the Smart Specialisation Strategy (2013) of Eastern Netherlands High Tech Systems and Materials (HTSM) is indicated as a priority sector, especially for Twente. Advanced materials is seen as an integral part of HTSM, as was mentioned several times during consultations with regional stakeholders. In a strategic report about strengthening the regional economy in Twente (Draijer, 2014), wide support was found amongst government and industry stakeholders to create more projects and international linkages in HTSM. The shared belief is that a focus on HTSM can bring economic sustainability to the Twente region. Governmental and educational institutions that are involved in the enforcement of advanced materials are Knowledge Park Twente (regional incubator), Oost NV/PPM Oost, Kennispoort Zwolle, Stedendriehoek Innoveert, Twente region, the province of Overijssel and the Technology Base Twente (TBT) Topteam. Between 2012 and 2015, the province of Overijssel invested €6m to support intermediary organisations like Oost NV, Knowledge Park Twente, Kennispoort Regio Zwolle en Stedendriehoek Innoveert. As was widely adopted amongst regional stakeholders, TBT should become an iconic zone for advanced materials (Commissie van Wijzen, 2014). Through various support measures these institutions aim to boost the HTSM sector in the region, sometimes through an individual approach and sometimes collaboratively. One of the main support initiatives in the past years has been the installation of the Open Innovation Centres (OICs) of which most focus on innovative product and process development within advanced materials. Innovation vouchers are introduced to help SMEs test and develop new products and for business coaching. The subsidy goes to a maximum of 70% of the costs with a maximum of €10.000 euro per applicant per OIC74. NanoLab vouchers are meant to enable companies to make use of research and development facilities of the MESA+ Institute. Interreg subsidies and projects are available for innovative product development in a collaborative, international setting in Smart Industry, Smart Materials and affiliated domains. Seemingly, support measures like the innovation vouchers, NanoLab vouchers and the aforementioned Interreg projects have a positive impact on engaging and activating SMEs into innovative developments. One of the points of improvement that came forward in the interviews with regional stakeholders is the need of SME entrepreneurs to get support from a strong and experienced sparring partner. Someone who is more than a business coach and is able to provide support on commercialisation of products and the creation of new business models. The previously mentioned American Cottonwood Technology Fund offers intensive support for starting companies in the pre-seed, advanced materials included. Another chance to improve the regional support measure infrastructure is to offer better information to SMEs. The recently introduced innovation desks of the three sub regions (Twente, Zwolle, City Triangle) helped to provide more clear and direct information. Though success and impact level differ for the various OICs, in general they seem to positively influence the ties between SMEs, knowledge institutions and industry. In the start up phase the OICs have been supported by organisations such as Knowledge Park in order to attract finance (partly from the province of Overijssel) and to facilitate the process of consensus building amongst the various partners. As was revealed in several interviews with regional stakeholders, for the further development of the OICs its crucial that companies are going to contribute financially, which turned out to be a difficult process so far. Causes seem to be related to the regional culture in which quite a number of SMEs are internally oriented and have always strongly relied on subsidies. Time is needed to fully realise the OICs valorisation potential, make production facilities more attractive to companies in the region and challenge industrial partners to take a leading role. TPRC can be considered as a good practice,

74 http://www.overijssel.nl/loket/subsidies/@E2_/innovatievouchers/

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as it proved to be able to cooperate with a chain of suppliers and industrial partners worldwide, and having one multinational fully committed to the centre: Boeing. As revealed in interviews with regional stakeholders, TPRC, as well as Texperium in , became leading research & development centres with a strong added value for the value chain. TBT, the intended iconic campus for advanced materials at the former airport base, has the potential to become a strong cluster able to produce on a mass scale. The crucial question here is if an industrial company is willing to take a leading role. The Innovation Fund Overijssel and the national MIT measure are examples of investment funds with a broad focus that aim to boost regional innovation. In several interviews stakeholders pledged for a stronger role of governments as launching customer75. Though subsidies are still there, in the past few years the regional funds have increasingly become revolving. It is hard to assess the financial success of these funds on the longer term. Various organisations put emphasis on the international orientation and positioning of companies from Twente region. For this cause multiple innovation support measures are available, while at the same time the province and the region want to intensify collaboration across its borders. In general, it can be concluded that within the province of Overijssel a high number of innovation support measures are provided, with subsequently, a high level of fragmentation. With the new innovation desks, the region aims to create more clarity and direction to companies. As proposed by the Commissie van Wijzen, one central HTSM fund, which brings together instruments from the national ‘Topsectors’ policy and EU-resources (i.e. European Regional Development Fund, European Investment Bank, Knowledge and Innovation Communities and the European Institute of Innovation & Technology), could bring the desired focus and more powerful positioning of advanced materials in Twente. Moreover, focus is needed because of lower innovation budgets. The challenge is to make existing products and technologies in advanced materials more visible and promote collaboration on social relevant issues. Though formative evaluations of innovation support measures are hard to find, a general concern that was revealed in interviews with regional stakeholders is a lack of direction and focus, certainly when it comes to innovative product and process development in advanced materials with a potential commercial and societal value. In this light, the planned Fraunhofer Project Centre and TBT can be considered as a promising development. Though significant efforts have been made to bring SMEs, industrial companies and scientific institutions closer together, especially by the province of Overijssel and Knowledge Park, there is still work to do in engaging SMEs in advanced materials clusters, in order to fulfil the innovative strengths and potential of this region.

1.9 Good practice case – Micronit Microfluidics Background and origins Micronit Microfluidics (Micronit) is specialised in the development and manufacturing of glass, microfluidic chips on a worldwide scale, for both commercial and academic researchers. Since its birth in 1999, the company has gone through a high-growth performance in niche markets like DNA, blood analysis and point-of-care diagnostics. Clients are based in the medical, pharmaceutical and biotechnical industry. Micronit was founded 1999 by two university colleagues of the UT, with its

75 In the context of this report ‘launching customership’ refers to governments or companies who participate in the development, prototype testing and launching of a new product, whereby this organisation acts as (one of) the first customer(s) – and thus being denoted as the launching custoner.

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initial focus on miniaturisation of devices using micro technology. After a short period of external finance, the company was established as an independent and financial healthy business. After a while Micronit started to concentrate on microfluidics for life sciences applications and through the years it transformed from a parts supplier in a lab-on-a-chip product development and manufacturing partner. Micronits’ mission is to design, develop and manufacture custom made microfluidic components based on micro- and nanotechnology. Micronit has been chosen as a good practice, because the company: 1) has strong academic roots making use of the science and technology infrastructure of the University of Twente and 2) is able to translate distinctive technology (a combination of advanced processing and advanced materials) into commercial and societal added value. Micronit’s activities are almost fully geared towards export. The United States of America (USA) is considered as an important growth market. Micronit has the intention to open a sales office in the USA and Asia. Recently, the company took over the German iX-factory, with 10 employees. Same as Micronit, iX-factory is specialised in development and manufacturing of innovative microfluidic and MEMS components. This merger will expand Micronits’ portfolio, as iX- factory brings important capabilities such as Deep Reactive Ion Etching of silicon and glass allowing the production of high aspect ratio structures for MEMS and microfluidics applications. Novelty Micronits’ lab-on-a-chip products integrate laboratory processes on a single microfluidic chip or microfluidic cartridge releasing new applications and possibilities. Lab-on-a-chips are small reservoirs of either glass, polymers and/or silicon, with electronic sensors, which can help detect detailed properties from droplets of liquids. In fact, tests that are now done with test tubes can be replaced by portable lab-on-a- chips. Furthermore, Micronit develops applications for organ-on-a-chip systems that can accommodate for neural or cardio-vascular networks-on-a-chip, liver-on-a-chip, lung-on-a-chip etcetera. These applications improve the predictability of drug screening models and personalised medicine. Organ-on-a-chip technology provides an environment that can mimic the human physiology and morphology in vivo better than traditional cell culturing methods. Facts & figures Currently Micronit employs about 70 highly-educated employees who serve customers in more than 50 countries worldwide. In 2005, Micronit was ranked at the 13th position of the Deloitte Technology Fast 50. From its establishment in 1999 to 2005, Micronit has been in a constant annual turnover growth of 80 to 90%. Though recent turnover figures are not available, the interview with the CEO of Micronit revealed that currently the company is in a financially healthy state. Its manufacturing processes are ISO 9001 and ISO 13485 certified. Partners One of Micronits’ partners that have helped the company to succeed is the High Tech Factory at the campus of the University of Twente. Because of laboratory space being available on a lease contract base, it prevented Micronit from the urge to invest in real estate and equipment in an early stage. The research infrastructure (MESA+) and the entrepreneurial climate of the University of Twente helped Micronit to connect with sufficient sources of knowledge, resources and human capital. One of Micronits’ major partners is the MESA+ BIOS lab-on-a-chip research group, headed by professor Albert van den Berg. In the BIOS group micro- and nano-devices for biomedical and environmental applications are studied and realised, such as chips for monitoring medication, mimicking organs on a chip, development of new biomarkers and ultrasensitive detection thereof (MESA+ year report, 2012).

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Industrial partners change depending on the specific markets and technologies Micronit is working on. In order to test and develop new applications, Micronit participates in several research projects (website Micronit): EuroMBR is a 7th Framework Programme (FP7) project aiming at the development of versatile microbioreactors that are capable for usage in various processes and analytic screenings. Cooperation partners come from universities in seven European countries as well as microbiotechnology companies in four European countries. In NanoNextNL, a Dutch national research and innovation programme for micro and nanotechnology, novel microfluidic devices are developed in order to assess and monitor food production and food product quality. This is done by exposing and monitoring the response of cells with recombinant G-protein coupled receptors (GPCRs) developed at Plant Research International (Wageningen, The Netherlands). Nirion Plus is a project funded by EFRO, the province of Overijssel and the Twente region, aiming at developing a point-of-care device that enables kidney patients to measure sodium, potassium and creatinine levels in their own blood and urine samples in a fast and effective way. Focus and size Micronit develops and manufactures lab-on-a-chip products. It focuses on both the development of lab-on-a-chip consumer products and support in design for manufacturing. Lab-on-chip product developments allow for a wide range of functional applications. Numerous hospital tube tests can be replaced by lab-on-a-chip tests. By using a single droplet of liquid several blood values can be measured. This is not only of value for the health sector but also finds application in environmental testing for detecting waste materials. Organisational structure Micronit is divided into two major departments: research & development and production. The first is organized in a matrix structure, the latter is more traditionally structured. Other departments are marketing & sales, finance and quality control. Results and impact Through its market channels Micronit has contributed to rapid acceleration in DNA research: lab-on-a-chip products are distributed to companies with disruptive technologies in DNA sequencing. The Netherlands cancer institute, Antoni van Leeuwenhoek, makes use of Micronit’s products to improve its cancer research. Micronit collaborates with the European Space Agency (ESA) to develop silicon mirrors for a telescope that can help to find answers to questions like: how do black holes grow?76 In recent years these new development helped to create more jobs at Micronit. Micronit has an annual turnover of about 5 million euros77 and an annual turnover growth of more than 40%78. In Twente, Micronit has an exemplary role towards other high tech start-ups as the company helped to set a stronger innovation climate. Ambition, growth markets and new application areas The market in analytical life sciences (especially on DNA) continues to grow. Micronit has provided services to only a small fraction of the market so far. With ageing populations there is an enormous demand for products that can help to decentralise healthcare. Micronit is going through a transition from a technical service provider to a provider of solutions. The company is increasingly working together with customers to offer tailor-made solutions.

76 http://www.micronit.com/blog/2014/07/10/silicium-spiegels-voor-athena-rontgentelescoop/ 77 http://www.ivam.de/members/micronit_microfluidics_bv?lang=en 78 http://www.traxxys.com/downloads/Files/PINNL NLGUTS 9-4-14 presentation Micronit NL.pdf

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Sustainability and future directions In order to sustain its business Micronit aims to: • Strengthen its customer’s base by proactively investing in various growth markets on a worldwide scale, • Ftrengthen its technology base by improving the capabilities of its work force, • Find new sources of finance on the European level, • Best practice lessons and transferability. Major lessons that can be learnt from Micronit are: 1. Launching customership is important to innovative high-tech companies in advanced materials: Dutch governments and companies are less active as launching customers than foreign governments and companies. According to the CEO of Micronit, Dutch governments should act more as active customers of disruptive technologies. 2. Good collaborations are important and are characterised by equal partnerships, in which costs and benefits are equally shared. 3. Openness and integrity in research and business are important values in the field of nanotechnology and should be respected for successful collaborations. These lessons can be transferred to other companies and high tech start-ups in the region in the field of nanotechnology and advanced materials, as well as to other sectors with a strong potential for cross-collaboration, such as healthcare and aerospace. In summary In summary, what the good practice of Micronit shows are some important success factors for start-ups in advanced manufacturing / advanced materials: • The competitive advantage of a strong regional research and R&D infrastructure which enables start-ups to benefit from available R&D facilities, knowledge and human capital in the region • Full focus on the social and commercial added value of a disruptive technology (which makes use of both advanced materials and advanced processing) which leads, in fair cooperation with partners, to new market opportunities and solutions for relevant challenges of the region and beyond • A strong combination of innovation & research driven and entrepreneurship driven company leadership can make a difference

1.10 Leveraging the existing potential Based on the analysis of materials collected during the desk research, complemented by a series of face-to-face interviews with the regional stakeholders, the following main challenges related to the area of advanced materials/nanotechnology have been identified. Challenges • Challenge 1: Strengthen clusters of SMEs and industry Overijssel is characterised by a high number of high-tech start-ups and a strongly innovative climate around the UT, Zwolle and several major industrial companies. The region is known for a variety of companies in High-Tech Systems and Materials (HTSM). HTSM significantly includes advanced materials. The level of openness and capacity for innovative cooperation differs highly across the region. A part of the SMEs is rather internally oriented, as revealed in interviews with regional stakeholders. Most large, industrial companies who are based in the region are loosely connected with the

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regional SME infrastructure. Therefore, a hindrance in the strengthening of regional clusters is a lack of leading industrial companies. These companies should set the innovation focus and involve the regional SMEs to have a significant contribution as Original Equipment Manufacturers, tier-1 or tier-2 suppliers. The challenge for intermediary organisations like Knowledge Park Twente and Oost NV is to get both industry and SMEs on board and to get them involved in the regional innovation agenda, especially in HTSM. • Challenge 2: Improve on the labour potential in light of Smart Industry developments As revealed in interviews with regional stakeholders, Smart Industry is one of the prominent innovation roadmaps for Twente. The general expectation is that the digitalisation of the manufacturing industry, referred to as Industry 4.0 in Germany, will continue to expand in the forthcoming years. A considerable part of the SMEs and employees in HTSM is aware of these developments, but generally they lack the competences to adapt to these changes. As a consequence, the regional demand for higher skilled employees at all levels is increasing. A common challenge is to involve regional, industrial companies involved in skills development and apprenticeships for talented young technicians and researchers. • Challenge 3: Crossovers between advanced materials and other sectors in an (inter-) national setting Regional cooperation is seen as a crucial next step in order to create crossovers between advanced materials and related sectors. As stated in its Smart Specialisation Strategy, Eastern Netherlands has the ambition to start joint projects with other Dutch regions such as South East Brabant/Eindhoven (with a strong HTSM focus) and across borders, for instance with Nordrhein-Westfalen in Germany. The Red Med Tech Highway79, generally known as Health Valley, is a good example of the intended type of cross regional collaboration. Health Valley is concentrated around the Dutch cities Enschede, Nijmegen, Oss and Eindhoven. Health Valley has the ambition to develop an internationally acknowledged cluster in life sciences, health and technology. An example of a growth market in advanced materials that could benefit more from international cooperation is the composites industry. The composites industry is considered a growth market indeed (Composites report Technopolis, 2015). Recently, the demand for composites in international markets has increased, as well as for its application domains. Within the composites industry, a challenge is the identification and valorisation of knowledge of SMEs. Therefore, an important next step is to develop crossovers, for instance on how composites products can add value to industries such as shipbuilding and automotive. Future opportunities • Technology Base Twente as advanced materials campus In light of creating strong clusters in advanced materials, a future promise is Technology Base Twente (TBT) as a desired state-of-the-art advanced materials campus. As was revealed in one of the interviews with regional stakeholders, the crucial next step for the Topteam is to attract at least one leading industrial company to the TBT. TBT would be of complementary value to a strong positioning of Twente in advanced materials, as Thales already has a high tech advanced materials campus and the University of Twente has a leading institute in advanced materials research.

79 http://www.health-valley.nl/english/

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• Cooperation at the European level for labour skills development and clusters on Smart Industry and societal challenges As revealed in interviews with regional stakeholders, future opportunities for advanced materials are oriented towards new functionalities for existing materials (i.e. sensors), Smart Industry systems and innovation for societal challenges. For Twente, and Overijssel at large, it might be beneficial to intensify collaboration with research institutes and industrial companies from other European regions. A promising opportunity is to build on the talents and competences of young advanced materials researchers and technicians in an international setting, for instance through skills centres and apprenticeships. The Grand Societal Challenges, like in health, food and environmental issues, could function as anchors for new collaboration. The research capacity and experience of the University of Twente in international cooperation, and the strong reputation of the HTSM sector in Twente, might be crucial assets to create strong partnerships at the European level. • Stronger international branding of the Twente region As mentioned in several interviews and strategic reports, a stronger positioning and marketing of the Twente region in the area of advanced materials would help to attract more international investors and companies to the region. An opportunity for Twente is to better communicate about its distinctive innovation track record. Several stakeholders pointed out that it is necessary to clearly map the regional knowledge and innovation infrastructure for potential international investors and companies.

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2. Regional Innovation Performance Trends, Governance and Instruments

2.1 Recent trends in innovation performance and identified challenges Overijssel has consistently scored as an Innovation Follower in the Regional Innovation Scoreboard 2014. This means that Overijssel is performing between 50- 90% and 90-120% of the EU average on various innovation indicators (see figure below). As previously mentioned in paragraph 1.1 the R&D performance in Overijssel is good compared to the performance of the EU Member States. R&D business investments in Overijssel amount to 1.68% of the Gross Domestic Product (GDP) in 2011, whereas the average for the Netherlands is 1.06% in the same year and 1.24% in the EU. With 0.05% government expenses for R&D in Overijssel are significantly lower than in the Netherlands (0.21% in 2011) and the EU (0.25% in 2011). The contribution of higher education to R&D in Overijssel (0.56% in 2011) is closer to the national average (0.62% in 2011) and is higher than in the EU overall (0.46% in 2011). In 2014, employment in medium and high-tech manufacturing (as percentage of the total employment) is 3.90% in Overijssel whereas the national average amounts to 2.80% versus 5.70% at the EU level. As shown in the figure below, the score for SMEs introducing product or product innovation is somewhat higher but does not stand out from the national average. In comparison with the EU level, Overijssel scores 90-120% on this indicator. The same conclusion can be drawn for innovative SMEs collaborating with others. Compared with the national average public investments in R&D are rather low while the business investments in R&D are little higher than the national average. Both indicators do not stand out from the EU scores. One has to bear in mind that the indicators in the figure below are based on data from 2008, 2010 and 2011. This means that Overijssel's most recent innovation policy could not have had effect on these scores. Secondly, these scores are not percentages and only indicate how European regions score in comparison to each other (comparative assessment), with a highest possible score of 1 for the best region. Nonetheless, it does show that the innovative capacity of the region has its limitations and that specific policy attention is justified. Figure 7 Innovation and R&D performance indicators for Overijssel, benchmarked against NL and EU level Innovation / R&D Overijssel NL average score Score Overijssel indicator against EU average Public R&D (2010) 0,387 0,422 90-120% Business R&D (2010) 0,385 0,344 50-90% EPO patents (2008) 0,382 0,372 90-120% Technology intensity 0,397 0,463 50-90% (2011) SMEs introducing 0,675 0,668 90-120% product & process innovation (2010) Innovative SMEs 0,489 0,483 90-120% collaborating with others (2010) Source: Regional Innovation Scoreboard EU (2014) At the sub-regional level, innovation figures are published in the Twente Index. The general trend between 2004 and 2010 is a significant improvement in innovation performance. The index ‘innovation capacity’ gives insight in the general innovation performance based on: innovation expenses per innovator, share of R&D personnel compared with total personnel and share of turnover on innovative products. In 2010, Twente scored above the Dutch average on these indicators, but lower than the regions Noord Brabant (South Eastern part) and Southern . An area of improvement for Twente is the share of turnover on innovative products, on which the region scores below the Dutch average. A second indicator that scores lower than the national level

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are the innovation expenses per innovative company. This can be explained by the large amount of small manufacturing companies in Twente. The share of R&D personnel in the total personnel shows an upward trend in the 2004-2010 period, with a strong increase between 2008 and 2010. In 2010, the innovation expenses as a share in the GRP (Gross Regional Products) amount to 2.64%, which is higher than the Dutch average of 2.10% in the same year. The expenditure on innovation in Twente and the Netherlands is shown in the figure below: Figure 8 Expenditures on innovation in the Netherlands and Twente (in million euros) Twente Netherlands Netherlands

Twente

Twente Index (2013)

Some of the other trends in the Twente Index that are worth of mentioning are: • A significant growth in the number of start-ups over the period 1998 – 2011 • The percentage of innovative companies has grown significantly between 2004 and 2010. During the whole period 2004-2010 the percentage of innovative companies in Twente is higher than the Netherlands as a whole Innovation drivers The University of Twente, with its entrepreneurial climate (as expressed by a high number of start-ups), can be considered as one of the main drivers for the innovation performance in Overijssel. However, not all companies in the region connect easily with the university. Major reason for this is the academic profile of the UT focusing strongly on fundamental research. Naturally, the University of Applied Sciences Saxion has a stronger connection with the regional SME because of its profile in applied research. A second driver for innovation performance is the strong emphasis on cooperation in the triple helix between industry, government and knowledge institutions, for instance via Knowledge Park Twente and the open innovation centres TPRC and PSP. These knowledge hubs create a potential for crossovers with other sectors. Thirdly, Twente can build on a strong HTSM cluster.

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Innovation barriers As mentioned by one of the consulted regional stakeholders, a significant barrier for innovation performance in Overijssel is a lack of capital for high-tech start-ups with disruptive technologies in an embryonal stage. Secondly, a general concern shared in the interviews, is the lack of attention for international marketing and promotion of its regional knowledge and innovative technology. Traditionally, the regional SMEs are strongly used to acquire subsidies and are quite reluctant in significantly investing in joint R&D projects. Out of the aforementioned innovation trends and the drivers and barriers to innovation, two major challenges for Overijssel can be derived: • Challenge 1: Involve regional SMEs and industrial companies in R&D investment Reflecting on the ambitions of Overijssel to collaborate in innovation clusters, the levels of R&D investment of regional industrial companies and SMEs are rather low. The challenge is to structurally involve the present industrial companies and SMEs, both when it comes to the willingness to collaborate and the financial contribution they make. • Challenge 2: Attract industrial companies through a strong marketing approach As mentioned in a previous section, with 60% of the companies below 100 employees, the average company size in Overijssel is rather low. In order to become more competitive as a region leading industrial companies of considerable size should be attracted. Therefore, it is needed to strongly market the existing regional knowledge and innovation technology and the attractiveness of its business climate. • Challenge 3: Boost high tech start-ups with high potential in disruptive technologies As shown in this paragraph, the number of high tech start-ups in Twente has significantly grown in the 2004-2010 period, while the share of turnover on innovative products remained low. Considering the lack of capital for high tech start-ups, this means there is a challenge in boosting disruptive technologies in the region.

2.2 Institutional framework and set-up In the Netherlands, innovation mostly falls under national policy but specific regional policy exists to either fill in blind spots of national policy or develop regional competences. Overijssel fosters regional innovation with networking initiatives around the technical university and its participation in the regional development agency. Since 2010, regional economic policy is decentralised and involvement of the national government is gradually being phased out. Regional innovation is now part of the national Topsectors approach. Thereby Overijssels’ strategic innovation policy is aligned with the Europe-2020 strategy and the smart specialisation strategy. For Eastern Netherlands (Gelderland and Overijssel) the focus of the smart specialisation strategy is on four of the national Topsectors: HTSM, Agro&Food, Health and Energy & Environmental Technology. As mentioned in previous sections, HTSM is an important focus area in Twente. Provinces get their funding from the national authorities and from European Commission (EC) funds but they generate no direct tax-income. Due to the economic circumstances since 2008 and changing policy views at national level, regional budgets have decreased and the role of the province has shifted towards an initiator and network supporter instead of a project funder. As a result, revolving funds are increasingly used as a policy measure. As was revealed in interviews with stakeholders, the region is known for a strong subsidiary culture. Nevertheless, the province of Overijssel intends to become more active in the role of launching customer.

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Though several interviews with regional stakeholders reveal that the province of Overijssel adopts a quite directive role in the region’s innovation policy, the province aims to give more responsibility to regional and local actors (i.e. companies, municipalities, boards, knowledge institutions) to create new policies and directions. The implementation of the regional innovation policy is executed at organisations such as Oost NV/PPM Oost (regional development agency) and the three regional innovations desks at Knowledge Park, Stedendriehoek Innoveert and Kennispoort Zwolle. Multiple interviews revealed that Knowledge Park plays a central role in facilitating and accelerating innovative collaboration in the Twente region, for instance by developing specific roadmaps and gathering organisations around promising business cases. There is currently no economic agenda for the entire province of Overijssel. The most recent policy has been set out in the coalition agreement for 2015 – 2019. In order to foster the regional economy and innovation, the province of Overijssel strongly focuses on an attractive business environment for companies, enforcing the knowledge position, a better connection between education and the labour market and stimulating innovation and entrepreneurship, i.e. by enhancing the international orientation of SMEs and industry. In the coalition period 2015 – 2019 an additional €108m will be released for economy and employment, which makes a total of €226m. Figure 5, as presented in paragraph 1.4, gives a comprehensive overview of the regional and institutional governance structure. Strategic boards in the three sub regions are set up to design the innovation policy at sub-regional level, as previously mentioned in section 1.4. Overijssel has chosen to adapt to the strengths and unique characteristics of its sub-regions. Important recent policy initiatives are Twente Werkt, the Commissie van Wijzen (Technology Base Twente) and continuation and development of the existing innovation infrastructure in the subregions of Zwolle, Twente and Stedendriehoek (i.e. see innovation desks in the figure above). A combined focus on Topsectors, SMEs and the self-employed (‘ZZP’) will be applied by the province of Overijssel. Though municipalities have a significant influence on the local design of innovation policies, the general impression is that their activities are not always aligned with the innovation policies of the province and sub regions. In Overijssel, regional development agencies like Oost NV/PPM Oost and Wadinko (Deventer) offer growth capital and support measures for promising companies. Wadinko is a regional development agency, mostly active around Deventer and Zwolle. The KvK (Chamber of Commerce) has a less prominent role after the desk function has been digitalised and Syntens, who provided advisory services to SMEs on innovation, has stopped its operations. A significant hindrance for the implementation of Overijssels’ innovation policy is the large number of platforms with a rather informal character. Many companies who have no decisive power or capital to structurally invest in high-profile business cases usually join these platforms. Therefore, it is hard to come to a widely supported innovation approach. Consequently, many leaders of industrial companies stop being involved. Twente is primarily internally oriented and the region would benefit from more network coordination and leadership in the future. Overijssel is known for its innovation paradox: a high extent of fundamental and relevant research & development, but low involvement and commitment from SMEs to structurally and significantly contribute to new, innovative concepts. This also relates to an under representation of the financial and business services in Overijssel. Though Twente has a high number of companies in HTSM, the density of companies across the region is low. Furthermore, decreasing funding of the national government and a low national attention for Twente as a region hinder the development of strong clusters. It is not always clear where support measures can be found, because of a diverse offer of measures and complex governance structure with various meeting boards. There are several opportunities to form strong clusters on technologically advanced and society

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relevant innovations, because of the strong presence of HTSM, and high profile institutes and applied research qualities of the University of Twente and Saxion respectively. The fact that Overijssel is close to Germany, where various developments in the domain of Smart Industry take place, offers an opportunity for a stronger exchange of human capital and product & process innovations.

2.3 Regional innovation policy mix Support measures at the three levels: province of Overijssel, sub regions and University of Twente At the province level, support measures are geared towards the stimulation of innovation in the four Topsectors: Energy & Environmental Technology, Agro & Food, Health and High Tech Systems & Materials (HTSM). As mentioned in a previous section, direct funding to business R&D and innovation is organised through the investment fund Innovation Fund Overijssel. In this fund, means from the EFRO fund and the SME innovation programme of the national government (MIT measure) are combined. Furthermore, there’s a strong emphasis on strengthening the regional knowledge infrastructure and clusters between industry, science and government. For instance, this is done by financing the start-up phase of the Open Innovation Centres and the innovation vouchers. At the level of Eastern Netherlands (province of Overijssel and province of Gelderland), the participation company PPM Oost, which is part of the development company Oost NV, made an innovation fund (€7.5m) available to support of promising business cases in the sectors High Tech System Materials (HTSM), Chemicals, Healthcare and Life Sciences. Crossovers with Agrofood, Energy and Building can also apply for funding. As mentioned in the previous section, the sub-regions within Overijssel have their own economic agenda and, consequently, also provide investment funds. The Twente Region invests €30m in innovation in the region, through the innovation fund Twente, SME fund and vouchers, Twente Branding and the human capital agenda Twente. The Zwolle region invests in innovation through the organisation ‘Kennispoort Zwolle’ which provides assistance in acquiring innovation vouchers (i.e. for the Open Innovation Centres and vouchers in Agro&Food), loans and European funding such as EFRO and Horizon 2020. Zwolle Incubator Fund is a pre-seed fund initiated by Isala hospital, Rabobank IJsseldelta and the province Overijssel. It provides loans between €15.000 and €100.000 in a phase where the market (investors and banks) are not yet ready or willing to join. Stedendriehoek (City Triangle) stimulates and facilitates innovation of SMEs in Deventer region. In Overijssel, a significant number of innovation support measures can be found at the University of Twente (UT) and Knowledge Park Twente. These measures are meant to enhance knowledge transfer with industry and to stimulate the incubation of start-ups. Recent changes The American Cottonwood Technology Fund can be seen as an important new support measure for high tech start-ups. Every year Cottonwood invests in two promising high tech start-ups to enable them to accelerate at high pace. Cottonwood provides direct business support and advisory services. As mentioned in a previous section, this is a key factor in the fostering of gazelle companies. The portfolio of Cottonwood consists of companies in photonics, advanced materials, health care and clean energy. Initially a fund of €10m was made available for Twente. The NanoLab vouchers (installed in 2013), Innovation Vouchers and the High Tech Lease Fund (installed in 2010) help start-ups and SMEs to make use of state-of-the-art research and product development facilities in an affordable way. In the Dutch national ‘Topsectors’ policy FieldLabs have been introduced. FieldLabs are meant to improve the competitiveness of the manufacturing industry. Eastern Netherlands participates in six of the ten first FieldLabs of which several are joined by companies from Overijssel. As mentioned in a previous section, to finance the action

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agenda Smart Industry several instruments are available such as the MIT measure, TKI-surcharge measure and funds for education and work. In 2015, in Eastern Netherlands €10m has been invested in innovation projects and Fieldlabs, engaging over 1.500 entrepreneurs80. Several regional stakeholders consider Technology Base Twente (TBT) as a highly promising initiative. Currently, the Topteam – who is leading the implementation phase – is finding ways to attract international investors to this area. As was suggested by the Commissie van Wijzen a regional HTSM-fund could be created in Twente. From the Interreg-programme for Dutch-German R&D collaboration, two projects, S2M and i-Pro, have been initiated recently. The Horizon 2020 programme is mainly joined by the University of Twente (UT), R&D intensive companies and the universities of Applied Sciences. Compared with the previous European programmes, participants in Horizon 2020 should maintain their innovation activities at higher Technology Readiness Level (TRL): level 8 instead of 5-6. Because the success rate of a Horizon 2020 proposal is quite low, companies may not be interested anymore. However, a more recent element of Horizon 2020 is the opportunity for individual SMEs to take part in the programme. This is called the SME-instrument. This measure is specifically meant for highly innovative companies. Comments on the innovation policy mix As shown in the standard summary table, in Overijssel considerable emphasis is put on university-business cooperation. Knowledge transfer structures and organisations like MESA+, MIRA, TPRC and Knowledge Park aim to valorise the academic potential into ready to market technology and products. Furthermore, considerable emphasis is put on the facilitation of demonstration projects and proof of concepts (i.e. Proof of Concept Fund, STW Demonstrator). At both the province and sub regional level funds are available to encourage SME innovation, mostly focusing on companies in Topsectors like HTSM, Health and Agro&Food. For instance, this is done through Twente Technology Fund. Though new initiatives (i.e. Cottonwood) have entered the arena, professional and individual support for start-ups is limited, as was revealed in the interviews with one of the regional stakeholders. Figure 9 Innovation support measures Overijssel Title Duration Policy Budget Organisation More priorities responsible information Proof of Closed until 2.4 €2m with a Knowledge Park http://www.Kno concept further Demonstration maximum Twente wledge fund notice projects, proto- loan per case Park.nl/do- types and proofs up to €250k business/proof- of concepts of-concept/

Twente 2010 - until 4.3 Fostering Between €2m Knowledge Park http://www.Kno Tech- now start-ups and and €3m in Twente wledge nology gazelles (in high total per Park.nl/do- Fund tech, sectors Clean company in business/finance Technology, different s-twente- Nanotechnology, investment technology-fund/ ICT and rounds Biomedical Technology) 4.1 Direct funding to business R&D and innovation (Twente and UT in particular) High Tech 2010 - until 4.3 Fostering Maximum High Tech http://hightechfa Lease now start-ups and amount Factory ctory.com/high-

80 http://www.oostnv.nl/news/sterk-startjaar-voor-boost

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Title Duration Policy Budget Organisation More priorities responsible information Fund gazelles granted to tech-fund/ 4.2 individual Organisational, businesses is process and other €500k; for a non-R&D collective this innovation sum can be as 3.3 Promotion of high as €1.5m science, purchase price education, PhD studies and S&T career awareness NanoLab 2013 - until 4.3 Fostering €7.5k per NanoLab NL / http://www.nano vouchers now start-ups and voucher MESA+ labnl.nl/news/na gazelles NanoLab nolab-nl/28-ten- 4.2 Twente innovative-nano- Organisational, companies-are- process and other awarded- non-R&D nanolabnl- innovation vouchers 3.3 Promotion of science, education, PhD studies and S&T career awareness Innovation 2013 - until 4.1 Direct funding €42m PPM Oost - on http://www.Kno Fund now to business R&D Maximum behalf of the wledge Overijssel and innovation credit 50% of province Park.nl/news/44 (Innova- 2.3 Knowledge total Overijssel 87-innovation- tiekrediet transfer and development fund-overijssel/ Overijssel) cooperation costs with a between firms maximum of (incl. technology €75k acquisition)

Innovation 2013 - 2016 4.1 Direct funding €15m in The innovation http://www.Kno Fund to business R&D addition to fund is financed wledge Twente and innovation Innovation by Region Park.nl/news/44 (Innovatie 2.3 Knowledge Fund Twente (Regio 87-innovation- fonds transfer and Overijssel Twente). PPM fund-overijssel/ Twente) cooperation Maximum Oost is fund between firms innovation manager. (incl. technology loan of €150k acquisition)

Innova- 2013 - 2016 5.1 Cluster Total budget: Open http://www.Kno tion development €500k. Innovation wledge vouchers Maximum Centres and Park.nl/innovate- Twente 50% of costs province of accelerate/region Region re-funded with Overijssel al-twente- a maximum of innovation-loans- €5k vouchers/ Cotton- 2014 – until 5.5 Seed and For Twente a Cottonwood http://www.Kno wood now early-stage capital fund of €10m Technology wledge Techno- vehicles, business is available Fund Park.nl/do- logy Fund angel networks business/cottonw 5.4 Innovation ood-technology- management and fund/ advisory services STW 2013 - until 3.3 Promotion of Maximum STW Technology http://www.Kno Demon- now science, request of Foundation wledge strator education, PhD €150k (national) Park.nl/news/45 studies and S&T 85-stw-grants- career awareness demonstrator- 2.4 projects-from- Demonstration twente/ projects, prototypes and proofs of concepts 2.3 Knowledge transfer structures between academia

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Title Duration Policy Budget Organisation More priorities responsible information and industry STW Take 2014 - 2018 5.5 Seed and Finance for STW Technology Off early-stage capital feasibility Foundation vehicles, business studies with a (national) angel networks maximum of €40k Start-up Between 5.1 Cluster Differs per Province of http://www.Kno support 2009 and development OIC Overijssel wledge for Open 2012 Park.nl/innovate- Innova- (depending accelerate/open- tion on year of innovation/ Centres start) (OICs) Zwolle 2014 - until 5.5 Seed and Loans of €15k Isala hospital, http://www.regio Incubator now early-stage capital to €100k Rabobank zwolleincubator. Fund vehicles, business IJsseldelta and nl (Zwolle angel networks the province Incubator Overijssel Fonds) MIT New round 4.1 Direct funding €55m in total Dutch http://www.rvo. measure opens 10th to business R&D in 2015 Enterprise nl/subsidies- May 2016 and innovation Agency regelingen/mkb- (national) innovatiestimuler ing-regio-en- topsectoren-mit Horizon 2014 - 2020 4.1 Direct funding Total budget European http://www.eu- 2020 to business R&D of €80b for Commission, opportunities.eu/ and innovation period 2014- regional eu- 2020. Two assistance to programs/horizo measures for SMEs from Oost n-2020 companies NV (Eastern with Netherlands disruptive Development innovations: 1) Agency) feasibility study subsidised up to a maximum of 70% and to a maximum of €50k and 2) phase 2 innovation actions to make products market ready: between €500k and €2m with a maximum of 70% Interreg A 4.5. Knowledge Maximum European http://www.eu- transfer and European Commission, opportunities.eu/ cooperation contribution regional eu- between firms 50% assistance from programs/interre (incl. technology Oost NV g acquisition) (Eastern Netherlands Development Agency) EFRO OP- 2014-2020 4.1 Direct funding 45M for sub European http://www.eu- Oost to business R&D programmes a Commission, opportunities.eu/ program- and innovation – e together: regional eu- me 4.5 Knowledge a) R&D assistance from programs/erdf- transfer and projects / SME Oost NV efro cooperation innovation, b) (Eastern between firms Large R&D Netherlands (incl. technology collaboration Development acquisition) projects, c) Agency) R&D collaboration

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Title Duration Policy Budget Organisation More priorities responsible information (combination with MIT measure), d) stimulate proeftuinen, e) stimulate cluster- and network activities Technopolis Group, 2016

2.4 Appraisal of regional innovation policies Multiple support measures have been implemented to boost SME entrepreneurship and innovation, which is an important challenge for Overijssel. These measures have a broad scope. The Innovation Fund Overijssel for instance focuses on SMEs in the Topsectors High Tech, Energy, Plastics/Chemistry, Health & Life Sciences and Agro & Food, whilst the newly formed MIT measure aims to encourage cooperation of SMEs across regions. Though the regional policy focus is on HTSM, there is yet no fund specifically targeting entrepreneurship and innovation in this sector. Support for start-ups and gazelles is provided through different channels, e.g. through the American Cottonwood Technology Fund and High Technology Fund in Twente and the Zwolle Incubator Fund. NanoLab vouchers and the High Tech Lease Fund give start-ups access to expensive research equipment (facility sharing) that start-ups usually cannot afford. Business coaching is provided by Cottonwood and via intermediary organisations like Oost NV. Nevertheless, as revealed in interviews with regional stakeholders, there’s a need for more advisory services and individual coaching to SMEs and start-ups when it comes to make successful business from new new technologies. Initiatives like the FieldLabs and S2M (see paragraph 1.7) are put in place to strengthen the competitive position of the manufacturing industry. In Overijssel, a lot of emphasis is put on supporting the Open Innovation Centres, i.e. through start-up support and partnership building. In terms of support measures less attention is given to cluster cooperation on innovative solutions for specific societal challenges using of Smart Industry concepts. Nevertheless, for the future the Fraunhofer Project Centre and Technology Base Twente might positively affect the valorisation of knowledge into societal relevant innovations. In order to stay up to date with international technology and industry developments there is a need for more international projects and cooperation across borders. In this regard, the recent decision of the province of Overijssel to sign an agreement with the Vanguard-network seems promising. Results of an evaluation of the regional economic and innovation policy A mid-term evaluation of the regional economic and innovation policy of Overijssel by research institute Decisio, assessed the effectiveness of support measures like Innovation Fund Overijssel, the innovation desks, innovation vouchers and the role of intermediary organisations like Oost NV. According to this evaluation, the Innovation Fund Overijssel has proved its effectiveness to realise regional innovation goals. The innovation vouchers are seen as an important instrument to encourage participation in the Open Innovation Centres (see also paragraph 2.5), however in times of economic uncertainty, their size is not sufficient. Oost NV attracts more than 40 foreign projects on a yearly base, which created an average of 1.000 jobs per year. In comparison with the provinces of Gelderland and Noord-Brabant the ecosystem in Overijssel, with its desks, centres and funds, is rather extensive, which enhances the need for strong management and focus. Generally, regional stakeholders appreciate the contribution of Oost NV. There is, however, room for improvement in the cooperation with the Open Innovation Centres

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and regional desks. The role of PPM Oost is rather unclear to regional entrepreneurs. Dissatisfaction lies in the area of the assessment procedure, criteria and lead times. Regional stakeholders value the cooperation with the province of Overijssel. However, because of lower innovation budgets, many stakeholders request for focus in decision- making on clusters and companies to structurally invest in. Moreover, stakeholders request for a more active role of the regional government in launching customership or facilitation through knowledge institutions. Assessment of synergies between the national and regional innovation support measures As revealed in interviews with regional stakeholders, the alignment of national and regional support measures is perceived as a rather challenging process. For instance, as part of the national ‘Topsectors’ policy the national government requested for new roadmaps, although Knowledge Park Twente already designed these roadmaps previously with the regional stakeholders. In an effort to harmonise national and regional innovation policies the MIT measure was implemented in 2015, with a total budget of €50m. In 2016, the budget has been raised to €55m. Due to its short existence, it is too early to assess the effectiveness of the MIT measure.

2.5 Policy good practice As mentioned in the previous section a significant challenge in Overijssel is to get SMEs connected to contemporary developments (i.e. Smart Industry) and provide them with sufficient support in the development of new products and services. Many SMEs have not enough capital to do in-depth research on new product ideas. Therefore, since 2012 entrepreneurs in Overijssel can apply for innovation vouchers that help to realise innovative ideas. With the innovation vouchers SMEs can either make use of the facilities of the Open Innovation Centres for research and development purposes or get support in developing their business case. Some facts and figures about these vouchers (factsheet, province of Overijssel, 2014) are put together in the figure below. Figure 10: Facts & figures innovation vouchers province of Overijssel

Target group: SMEs Targets: Increase investments in research and development activities of SME entrepreneurs. Encourage entrepreneurs to make use of OIC facilities. Expected effect: Minimum of 75 research projects. Basic rules: Focus on SMEs. Government facilitates, companies take up innovation activities. Low profile measure with minimum of administrative burdens. Execution: The entrepreneur submits a proposal to make use one of the OIC’s. The province provides a subsidy, which counts as ascertainment as well. Form: Vouchers, low profile subsidies Available budget: €750.000 for the period 2012-2015 Source: Province of Overijssel

After a slow start SMEs found their way to the Open Innovation Centres. By the end of 2014, 44 vouchers had been granted, 36 of them granted in 2014, 7 granted in 2013 and 1 granted in 2012. One example of a company who was granted an innovation voucher is Herikon. Herikon is specialised in the development and production of technical polyurethane (PU) products. Based on customers’ demand Herikon aimed to find a sustainable solution for recycling of PU products together with partners in the region. In the exploratory phase three approaches for solving the problem were distinguished. With the innovation voucher and in collaboration with the PSP (Polymer Science Park) Herikon investigated the feasibility of these three approaches. Prototypes were tested with 80% concentration of recycled PU. This has resulted in a

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proven successful approach for producing recycled PU products that Herikon could use to provide a sustainable solution to its clients. As revealed in interviews with regional stakeholders, the innovation vouchers have been successful for multiple companies. An important result has been the stronger connection of these SMEs with the OICs. The psychological barrier to go to these centres with questions or ideas has been reduced. The measure provides an opportunity to SMEs who usually do not have the money and facilities to invest in product testing and development. In this way the vouchers help to bring more clustering around specific application domains and to promote the region as a whole.

2.6 Possible future orientations and opportunities Based on the policy appraisal section above and the interviews held with regional stakeholders, future orientations and opportunities are identified. These are described below. • Stronger role for industrial companies through simplified platforms Overijssel is known for its strong tradition of collaboration between industry, science and government. In evaluations of the region’s innovation policy, a further strengthening of innovation clusters is recommended. To leverage the potential of these clusters simplified and more business-minded regional platforms are needed. As mentioned previously, the region needs a strong branding and focused approach towards industrial companies in order to intensify on cluster and value chain leadership. Both for HTSM and other sectors it is crucial to strengthen the industrial foundation in the region. • Build a strong logistics sector in Twente to create employment and strengthen the HTSM sector Though there’s a strong tendency to boost innovation in HTSM, Draijer (2014) recommends a broader focus to other sectors as the economy of Overijssel’s sub region Twente is challenged by high unemployment in the lower segments of the labour market. According to several strategic reports, the logistics sector provides opportunities for job creation. Twente could become a ‘logistical growth region’ with competitive services in water and road transport. A strong logistics sector would be beneficial to the HTSM sector as well, as it creates opportunities for crossovers (i.e. advanced packaging materials) and it facilitates better transport of goods. To realise these ambitions, it is crucial to develop long-term infrastructural policies. • Improve cooperation with cross border regions in Germany When it comes to the creation of employment and business opportunities, cross border cooperation with regions in Germany could be further improved. The German economy strategy is geared towards the attraction of entrepreneurship and favours cooperation across borders. In order to benefit from cooperation with Germany legal and practical barriers for cross-border workers should be tackled. The Twente Werkt (Twente Works) approach aims to encourage SMEs to export, to set up trade missions and to create a match between Dutch jobseekers and German vacancies. • Position and brand Eastern Netherlands as a region for Smart & Sustainable Industries From an international perspective Overijssel and its sub regions are small areas. One recommendation that has been given to the province of Overijssel is to position and brand Eastern Netherlands as a region for ‘Smart & Sustainable Industries’. In this light, there’s an opportunity to align the agenda and activities of the earlier mentioned Fraunhofer Project Centre and Technology Base Twente with this strategic focus. This opportunity was also identified in one of the interviews with regional stakeholders.

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• More active role of government as launching customers and involve high tech start-ups in regional clusters The low density of business and financial services in Overijssel, especially in Twente, makes it hard for SMEs to acquire growth capital. As was suggested in several interviews with regional stakeholders, Overijssel’s government should become more active in the role of launching customer. Considering the ambition of creating more dynamic and innovative clusters, strong ties between the University of Twente start- ups and the regional infrastructure and OIC’s are desired. Therefore, it could be beneficial to use regional funds for the involvement of start-ups in the further development of the Open Innovation Centres. Furthermore, such collaboration would stimulate sharing of technological knowhow and skills between technicians and researchers.

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Appendix A Bibliography

1. Attachment 3 of Operational Programme EFRO Eastern Netherlands (2013). Smart Specialisation Strategy Eastern Netherlands. Available at: 2. http://www.op-oost.eu/OP-Oost-2014-2020/Slimme-specialisatiestrategie-Oost- Nederland.html 3. Bodewes Beleidsadvies on behalf of Rathenau Institute (2014). Regional activities and investments in R&D and innovation. Available at: https://www.rathenau.nl/nl/files/inventarisatieregionaleinvesteringen- rathenauinstituutpdf 4. (2015). BOOST. Action agenda Smart Industry Eastern Netherlands. Available at: http://www.smartindustry.nl/wp-content/uploads/2015/02/150209- Actieagenda-Smart-Industry-Oost-Nederland.pdf 5. Broer, J., van Gent, D., Pertijs, J., Decisio (2014). Mid-term evaluation Regional Economic Policy 2012-2015, province of Overijssel. Available at: http://www.overijssel.nl/sis/16201441636554.pdf 6. Commissie van Wijzen (2014). Technology Base Twente – an iconic international development, demonstration and manufacturing zone for Advanced Materials and Manufacturing. Available at: http://www.bvr.nl/images/nieuws/CVW20141030 Rapport Technology Base Twente LR.pdf 7. DG Growth (2016). RIM Repository Overijssel. Available at: https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/base- profile/overijssel 8. Draijer, W., Buijink, C. & Roosegaarde, D. (2014). Strengthen economic power of Twente. Available at: http://www.raad053.nl/stukken/2031/1/pdf.pdf 9. Euregio (2016). Invitation Euregio-council 18 maart 2016. Available at: http://www.euregio.eu/sites/default/files/downloads/00_Agenda_toelichting.pd f 10. Eurostat (2015). Gross Value Added at basic prices by NUTS3 regions. Available at: http://ec.europa.eu/eurostat/web/products-datasets/-/nama_10r_3gva 11. Eurostat (2016). SBS data by NUTS 2 regions and NACE Rev. 2 (from 2008 onwards). Available at: http://ec.europa.eu/eurostat/web/products-datasets/- /sbs_r_nuts06_r2 12. GO (2013). Annual Report GO-EFRO Programme. Available at: http://www.go- oostnederland.eu/data//EFRO-Jaarverslag2013.pdf 13. Knowledge Park Twente (2013). Twente Innovation Route. Innovation Project 2007-2013. Available at: http://www.kennispark.nl/wp- content/uploads/2013/09/Twente-Innovation-Route-2007-2013.pdf 14. MESA+ (2012). MESA+ Annual Report 2012. Available at: https://www.utwente.nl/.uc/e19/MESA+_Jaarverslag2012_kompleet_LR- 53ab9f0102c9e81a0063e19b02a13a0b00d1257a0200.pdf?whs- download=MESA+_Jaarverslag2012_kompleet_LR.pdf 15. MESA+ (2014). MESA+ Annual Report 2014. Available at: https://www.utwente.nl/mesaplus/public/reports/mesa-jaarverslag-2014-lr.pdf 16. Minister of Economic Affairs (2016). Current state Smart Industry. Letter to the House of Representatives (Tweede Kamer) of the Dutch Parliament. Available at: https://www.rijksoverheid.nl/binaries/rijksoverheid/documenten/kamerstukken /2016/02/05/kamerbrief-over-stand-van-zaken-smart-industry/kamerbrief-over- stand-van-zaken-smart-industry.pdf

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17. Oost NV (2011). Innovation and Business in Eastern Netherlands. Roadmap High Tech. Available at: http://www.oostnv.nl/download/file/fid/3110 18. Panteia datasets (2016). SME sales volumes and growth in Overijssel. Available at: data.ondernemerschap.nl. 19. Province of Overijssel (2007). Innovation Route Twente. Available at: http://www.overijssel.nl/sis/14900721329934.pdf 20. Province of Overijssel (2012). Executive Framework Regional Economy 2012- 2015. Available at: https://www.google.nl/?gws_rd=ssl - q=uitvoeringskader+kerntaak+regionale+economie+overijssel+2012-2015 21. Province of Overijssel (2015). Overijssel Works! Coalition agreement. Available at: http://www.overijssel.nl/publish/pages/148572/overijssel_werkt_def.pdf 22. Province of Overijssel (2015). Executive programme Human Capital 2012-2015. Available at: http://www.overijssel.nl/publish/pages/135110/uitvoeringsprogramma_human_ capital.pdf 23. Province of Overijssel (2014). Factsheet Innovation Vouchers. Available at: http://www.ipo.nl/index.php/download_file/3536/132/ 24. Technopolis Group (2015). The composites sector in , Overijssel and . Available via Technopolis. 25. Techniekpact Twente (2013). Techniekpact Twente. Impuls for Netherlands and Twente. Available at: http://techniekpact.nl/cdi/files/ed7c01157ebbe5831801a90a5d906640aa06019b. pdf 26. Twente Region (2011). Innovation in Twente – Report of Progress 2010 - 2011. Available at: http://webcache.googleusercontent.com/search?q=cache:flnF3idG16cJ:docplayer .nl/7465857-Innovatie-in-twente-voortgangsrapportage-2010-2011- verantwoording-innovatiefonds-regio-twente.html+&cd=2&hl=en&ct=clnk&gl=nl 27. Twente Region (2005). Twente Index 2005. Available at: http://www.twenteindex.nl/twente-index 28. Twente Region (2012). Twente Index 2012. Available at: http://www.twenteindex.nl/twente-index 29. Twente Region (2013). Twente Index 2013. Available at: http://www.twenteindex.nl/twente-index

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Appendix B Stakeholders consulted

1. Joost Kuijper, strategist, province of Overijssel (08-03-2016) 2. Pieter Dillingh, director, Knowledge Park Twente (17-03-2016) 3. Harald Heerink, director, TPRC (22-03-2016) 4. Ronny van ‘t Oever, CEO, Micronit Microfluidics (23-03-2016)

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technopolis |group| Belgium Avenue de Tervuren 188a B-1150 Brussels Belgium T +32 2 737 74 40 F +32 2 727 74 49 E [email protected] www.technopolis-group.com