Business Columns & Blogs

Innovation is great – but it’s not easy

If you haven’t yet had your fill of “innovation” as the all-too-ubiquitous buzzword of the moment, don’t worry, you soon will.

If anything, innovation long ago moved from mere cliché to a magical word that, by clicking our heels three times while reciting it over and over like a mantra, will miraculously cure all that ails us economically.

There are multiple hazards to relying on innovation to bail us out of our various predicaments.

Innovation requires more than repetitive incantations of the word.

But as annoying as we might find the incessant mentions of innovation, there’s a reason we have to put up with the noise: When you get down to specifics, innovation matters.

It’s what generates the next round of products, technologies, companies, jobs and entire industries. It’s what keeps your company, your industry or your country at least on pace with, if not ahead of, everyone else furiously looking for that next generation of products, technologies, companies, jobs and industries.

Weyerhaeuser Co. has been in the news – mainly for trying to cope with a nasty slump in the housing market. It has done a sweeping corporate restructuring that includes selling major operations, closing mills and converting itself to a real estate investment trust.

But the company is not merely hunkering down and retreating to the woods until this whole thing blows over. Chief Executive Dan Fulton notes the joint venture Weyerhaeuser has with Chevron, known as Catchlight Energy, to develop liquid transportation fuels from biomass (such as switchgrass grown on the company’s timberlands).

“We’re attracting a lot of interest from third parties that have intellectual property to share with us, but they need someone to commercialize it,” Fulton said, following the recent annual shareholders meeting.

Weyerhaeuser has another potential joint venture with Mitsubishi, with which it is studying using wood pellets to displace some coal consumption in power plants.

Composite materials are big in the news these days, from Boeing’s 787 to the new BMW-SGL carbon-fiber plant to be built in Moses Lake, to the application of advanced materials in the marine and wind-energy industries. Weyerhaeuser could have a hand in that too. Fulton said resins derived from cellulose could displace petroleum-derived products in composites. Carbon fibers can be made from lignin, the material that holds fiber together in wood.

Bellevue-based truck manufacturer Paccar has brought on a manufacturing plant in Mississippi to build its own truck engines (it already does so in Europe). Its Kenworth and Peterbilt subsidiaries have both introduced new models in the Class 8 segment (what most people refer to as semis or the tractor portion of tractor-trailer rigs).

Paccar Chief Executive Mark Pigott says the new Kenworth T700 “will do very well because fuel prices continue to creep back up. It’s the most aerodynamic vehicle in the industry, and people are going to be more conscious of their operating costs.”

With the engine plant ready to start production this summer, Pigott says the company will shift its capital spending emphasis to refining current models and developing new trucks for introduction.

Paccar has also been investing in development of alternative energy vehicles including diesel-electric vehicles and trucks that run on compressed and liquefied natural gas. Alt-energy fuels have been of particular interest at West Coast ports interested in reducing emissions that come from the volume of container-hauling trucks operating in and around them. Whatever the standards various governmental agencies decide, Pigott says, Paccar will have products to meet them.

So if two old-line industrial companies have been able to invest in innovation in the midst of the broadest and deepest recession in half a century, why shouldn’t we put our unwavering faith in innovation’s ability to save us?

Because there are limitations and difficulties in getting even promising technologies to full-scale revenue generation stage, as both Fulton and Pigott acknowledge. For alternative fuels, “Commercialization is still some time away,” Fulton cautions. “It is highly related to oil prices.”

For alternative-fuel trucks, there’s the technological hurdle of adapting technologies currently suited to short hauls and centralized fleets to interstate transportation, as well as having the refueling infrastructure in place – not to mention the cost of both.

Some of these technologies will fall by the wayside as being impractical, too costly or delivering too little benefit. Some will reach commercialization. None will arrive in time to help us in our current calamity.

Which, it should be noted, is still calamitous. Fulton said Weyerhaeuser entered the year with an expectation of 600,000 single-family housing starts this year nationally; year-to-date, housing starts are behind even that pace.

Industry sales of Class 8 trucks in the U.S. and Canada are expected to be 110,000 to 140,000 this year, a slight improvement over 2009 but nowhere near the record 322,000 in 2006. Paccar only recently resumed building on-highway trucks at the Kenworth Renton plant.

“The consumer is still concerned about unemployment,” Pigott said. “That affects every community. Housing starts are at a 50-year low. Car production is improving slightly. But people are cautious, as they should be. We’ll work our way out of it. I think we’re past the most challenging part of the recession, but it’ll take some time to work through.”

What will get us out of this calamity are the innovations that have been in the works for a decade, like the 787. Today’s innovations might – we hope – dampen the impact of the next economic ditch we happen to drive into.

Better still, we might even innovate a way of avoiding the ditch altogether, such as by keeping Wall Street as far away from the economy as possible.

Now there would be a bit of technological achievement worthy of all the hype we can muster.

Bill Virgin’s column on business and economics appears Sunday in The News Tribune. He is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at