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Business Observer Thursday, May 28, 2009 12 years ago

Search for Space

A growing $10 million Gulf Coast biotech company is seeking to double its space, in spite of the gloomy economy. Let the incentive games begin.
by: Mark Gordon Managing Editor

A growing $10 million Gulf Coast biotech company is seeking to double its space, in spite of the gloomy economy. Let the incentive games begin.

A business that uses 1,000-gallon drums to breed its own bacteria for treating wastewater isn't the typical corporate superstar.

But Vince Scuilla's company, which does just that from a non-descript building near a dog-racing track in Sarasota, is truly a beacon for Gulf Coast economic development organizations.

The company, Osprey Biotechnics, hits all the marks the agencies covet: It's growing, both in annual revenues and employees. Its salaries are above average. Most of its jobs are 'green,' skilled and high-tech. It's a good corporate citizen.

Nonetheless, the company might be on the verge of doing something much less appealing to local business officials: Moving, possibly out of Florida.

“I hope we don't have to move,” says Scuilla, which is pronounced like Shula. “But it's a costly undertaking to grow like we want to.”

Scuilla, the president and chief executive, says the company's situation is a real quandary and not simply a threat to extract the best incentive plan it can from a local government or economic development agency.

The company outgrew its 27,000-square-foot facility several months ago. Now it needs at least 20,000 additional square feet of space to follow through on its plan to grow its production line by five times over the next year.

Osprey Biotechnics' out-of-space predicament is a rare dilemma for Gulf Coast businesses these days, as the economic slump has significantly curtailed growth. But Scuilla says Osprey has succeeded in tough times through an old-fashioned business concept: Ultra-focus on a niche and sticking to what it does best.

The company, founded by Scuilla in 1990, uses its bacteria to create a line of products that can be used for a variety of wastewater-related tasks, including cleaning up marine spills, restaurant drains and industrial septic systems. Most of its products are made under private labels for other companies, such as CLR Septic System Cleaner, a well-known formula marketed and sold by national household cleaning firm Jelmar.

“We don't have a lot of customers,” says Scuilla, “but the ones we do have buy a lot of product.”

The company had about $10 million in 2008 revenues, up 20% from 2007. While Scuilla declines to release specific annual revenue figures, he says the company is poised to match that percentage growth in 2009, having already surpassed its year-out sales projections. It has 38 employees.

'Plenty of incentives'
Meanwhile, Osprey Biotechnics' search for space is setting off a recession-forced battle in and out of Florida, as cities and towns nationwide are clamoring for any business that is successful and growing. Groups and organizations from Iowa to North

Carolina have come calling on Osprey, dangling incentives and perks in front of Scuilla to lure the company out of the Gulf Coast.

One economic development agency in the Midwest went as far as offering 10 free acres for a new facility in addition to a bevy of tax breaks if the company would move to its area. Osprey executives say they field at least a call a week from an agency outside of Florida seeking to entice them away from Sarasota.

“We haven't seen [local agencies] come up with any incentives,” says Lauren Danielson, the company's executive vice president in charge of sales and marketing. “But plenty of others have.”
Sarasota officials, however, say they aren't going to let Osprey Biotechnics leave without a fight. “We will certainly do what we can to keep them in this community,” says Joan McGill, a project manager with the Economic Development Corp. of Sarasota County. “It's a great company.”

McGill's challenge, however, is that many states and counties outside Florida offer more tax cuts and perks than the Sunshine State does. Plus, the state's incentive package of tax breaks for companies with new hires are geared primarily toward recruiting new companies, not retaining old ones.

So McGill's strategy in enticing a company like Osprey Biotechnics to stay and grow locally is to combine the incentives she can offer with a pro-Florida message.

For the latter, McGill emphasizes that despite the state's ongoing struggles with insurance and taxes, “we are still considered a business-friendly state from a national standpoint.” She also pushes the area's intangibles, such as the beaches and high quality of life.

On actual incentives, McGill says the EDC can offer training grants, employee recruitment services and industrial development bonds, which are low interest loans available only to manufacturing companies or nonprofits.

There is also another possible source of incentives: Sarasota County officials are sitting on about $2 million it received from a land sale in North Port, in the southern end of the county. The money has been potentially earmarked for use in aiding existing businesses in local relocation and growth efforts, but nothing official has been set up yet.

Sarasota County has been in this spot before, most recently with Medical Education Technologies Inc., a locally based $63 million company that manufactures lifelike computerized mannequins for use in medical training and education. METI, in seeking a place to build a 70,000-square-foot headquarters last fall, received an aggressive last-minute proposal from a developer in Hillsborough County to move the company 60 miles north.

But in response to that offer, Sarasota County commissioners quickly approved a $330,000 incentive package for METI that included breaks on certain building permits, impact fees and taxes.

One final edge the county has in trying to convince Osprey Biotechnics to stay here is the company itself. Danielson says the company's current facility has been an ideal home for the past decade. “This building was built for a bacteria company,” Danielson says. Except for the size, “it's really quite perfect.”

Going green
Scuilla's search for a bigger home for his company is somewhat surprising to him, considering the serendipitous way he got started in the business. “In a million years,” says Scuilla, “I never thought I'd outgrow this place.”

An engineer by trade, Scuilla moved from his native Connecticut to the Gulf Coast in the late 1980s looking for a new line of work. He hit the chamber networking circuit for opportunities and at one event he met an entrepreneur who owned all the Wendy's restaurants in Sarasota and Manatee counties.

The restaurant owner told Scuilla he was having problems cleaning up drain and oil spills at his restaurants. Then, that night, Scuilla saw a news report about a cleaning solution that was a key part of the then ongoing clean up of the Exxon Valdez oil spill.

It turns out that product was made by a Sarasota company. “If it can clean up petroleum,” thought Scuilla, “it can clean up gas and oil spills in restaurants.”

So Scuilla met with the owner of that company, Microlife Technics, for help with the Wendy's drain systems. The pair eventually formed a new company with more consumer-related products and Scuilla later bought it outright, naming it for the bird, not the town in southern Sarasota County. “I was amazed at how well this worked,” Scuilla says.

Next came the company's foray into bacteria products. The goal was to find a natural, chemical-free solution for wastewater treatment, what today is fashionably known as 'going green.' Says Scuilla: “We were green long before anyone knew what it meant to be green.”

A key in the company's development was its discovery of how to use freeze-dried bacteria cultures and strains known as Munox in wiping out the grease and sludge found in wastewater. The compound, made inside the company's 500- and 1,000-gallon stainless steel drums, worked so well that the U.S. Environmental Protection Agency endorsed it in 2003.

Scuilla also discovered something else in growing the business: Fighting sludge is expensive. The company has more than $1 million worth of testing and production equipment at its facility, from a $150,000 centrifuge to a $500,000 lyophilization machine, which freeze-dries the bacteria. The company might buy a second lyophilization machine, too, after it expands.

More investment in the company is forthcoming, says Scuilla, past its potential move into a bigger facility. For example, company researchers are working with the U.S.D.A. on a line of fungal products that Scuilla says has the potential to “revolutionize the crop-protection industry.”

Adds Scuilla: “It's an exciting time to be in the biotechnology industry.”

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