17 January 2012

Consequences of Innovation and Aversion to Innovation

The Financial Times reports that BASF is moving its plant sciences research team from Europe to the United States, with consequences for employment:
BASF, the German chemical giant, is to pull out of genetically modified plant development in Europe and relocate it to the US, where political and consumer resistance to GM crops is not so entrenched.

The headquarters of BASF Plant Science will move from Limburgerhof in south-west Germany to Raleigh, North Carolina, and two smaller sites in Germany and Sweden will close. The company will transfer some GM crop development to the US but stop work on crops targeted at the European market – four varieties of potato and one of wheat.

The decision, which involves the net loss of 140 highly skilled jobs in Europe, also signals the end of GM crop development for European farmers. Bayer, BASF’s German competitor, is working on GM cotton and rice in Ghent, Belgium – but not for European markets.
The move, according to BASF, is the consequence of aversion to genetically modified crops in Europe. Setting aside whether such aversion is appropriate or justified, it exists and has consequences, just as the aversion to stem cell research by the administration of George W. Bush during the last decade prompted relocation of researchers in that field.

Innovation means change, and change is not always welcomed amongst the public and their represenative. But the perversity of the innovation economy is such that resisting innovation does not mean that things will stay the same. Innovation has consequences and so too does aversion to innovation.

15 comments:

  1. Roger -

    "The move is the consequence of aversion to genetically modified crops in Europe."

    Do you have proof of that conclusion? Corporate decisions about headquarter locations are usually a pretty complicated mix. Bayer remains in Belgium. What's the reason for the difference?

    Obviously, the decision to stop work on crops targeting the European market would be attributable to aversion to genetically modified crops.

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  2. -1-Joshua

    That is the reason given by BASF in the article:

    "“There is still a lack of acceptance for this technology in many parts of Europe – [by] the majority of consumers, farmers and politicians,” said Stefan Marcinowski, board member in change of plant biotechnology. “Therefore, it does not make business sense to continue investing in products exclusively for cultivation in this market.”"

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  3. Roger -

    Sorry - I hadn't read the article.

    Certainly the discussion in the article of the need to put test sites under constant guard might explain a decision to relocate headquarters, but most of the rest of the article - including the comment you quoted in your follow-up post - are relevant to the decision not to continue product development for the European market, not necessarily the decision to relocate their headquarters.

    And the public statements made by corporations about such decision-making is often carefully crafted for public consumption and not necessarily accurate or comprehensive.

    I suspect that there is more at play than simply an aversion in Europe to GM crops.

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  4. Perhaps your example of Stem Cell research might provide an indication that even good things can come from restrictions. The Bush administration did not have an aversion to stem cell research in general, just embryonic stem cell research. The embryonic cells had the advantage that they were "pluripotent" meaning that they could become almost any type of cell but the adult stem cells could lead to organs or tissues that would not be rejected by the body if the donor and receiver were the same person. Later research lead to the development of induced pluripotent stem cells from adult stem cells which have the potential to be the best of both worlds.
    Is there a potential for this type of outcome for GM crops?

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  5. In this case it looks like that absence of a market for its products is enough for BASF to move its GM operation to a friendlier environment where it can sell its wares.

    Bloomberg reports that BASF is relocating its GM operations because European consumers resist GM technology.

    Stefan Marcinowski, the BASF board member who oversees plant biotechnology, said this: “There is still a lack of acceptance for this technology in many parts of Europe from the majority of consumers, farmers and politicians. It does not make business sense to continue investing in products exclusively for cultivation in this market.”

    The $12B market for GM plants is expected to grow 5% annually over the next five years, but this move may shut Germany out of this market. BASF will focus its GM efforts on the Americas and Asia.

    According to the Raleigh News & Observer North Carolina is home to more than 70 agricultural technology companies, including Bayer CropScience, Novozymes and Syngenta. The Triangle in particular has become a hub for the industry.

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  6. Hi,

    This would tend to make BASF's softball team better, which I would tend to oppose. ;-)

    But they're Division C, so I don't care. :-)

    http://rtpsoftball.clubspaces.com/TeamsClub_css.aspx?programid=118452&divisionid=289252247

    Mark (Keeping track of what's important in technology policy)

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  7. Roger,

    I commented, a few hours, ago.

    Was I censored?

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  8. -7-John

    Your comment was rejected. I am happy to publish your complaints, but you'll have to drop the insults and add substance. Otherwise, you should go to the rejected comments thread. Thanks!

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  9. - 5- Mike

    "In this case it looks like that absence of a market for its products is enough for BASF to move its GM operation to a friendlier environment where it can sell its wares. "

    Maybe - but I think that your reference to the popularity of the Research Triangle area at the end of the post suggests another rationale.

    My point is this - there may very well be positive factors that are pulling BASF to the U.S. in addition to, or as opposed to, negative factors that are pushing it. If the point of interest is in increasing economic growth in this country, then it is important to identify, accurately, all types of forces in play.

    For example, is there something about the infrastructure of that region that serves as an attractor? In this day of calls for a reduction in funding for education, and a reduction in funding for scientific research - is it important to identify whether or not the academic fertility of that region is an attractor? I would suggest that PR statements by company officials are not sufficiently comprehensive evidence for drawing conclusions.

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  10. "Setting aside whether such aversion is appropriate or justified,..."

    That's a fairly large set-aside. I'm sure that some/many people in Europe are glad to be rid of the GMO research "evildoers." (I think they're wrong, but that's just me.)

    "...it exists and has consequences, just as the aversion to stem cell research by the administration of George W. Bush during the last decade prompted relocation of researchers in that field."

    The article you link to talks about relocations, but the relocations it's talking about seem to mostly be relocations to other states within the United States. So it's not clear how G.W. Bush's aversion to embryonic stem cell research affected relocations from the United State to other countries.

    Also not clear is whether the Bush administration's aversion to embryonic stem cell research caused a boost or a decline in adult stem cell research in the U.S. (Or whether that would be a good or bad thing.)

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  11. Roger,
    President Bush read his national constituency correctly; he relied on Christian ethics to answer the moral question. "Should tax payers fund research which interrupts the continuum of life, i.e., embryonic stem cell research?" His decision led to expansion of stem cell inquiry. The utility of this act is incontrovertible.
    I think 'whining' accurately describes your repeated citations of the President's acts. Citing a single Web-based survey proves nothing. Each of us makes economic decisions. [My decision to respond more fully to your beating of that dead horse - after it has been buried - shows how little I value my resources.]
    Denial of National research funding is the default position: we now suffer the consequence of poor economic decisions. An ethical choice eliminated one small waste, while honoring adult morals, the proof of which is growing legislative support for restrictions on abortion.
    If one chose to explore morals common to humanity, this link poses intellectually challenging questions:
    http://onecosmos.blogspot.com/

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  12. -11-John

    Thanks for the comment, though this post isn't about abortion, George W. Bush or even stem cells.

    If you'd like to read some of my thoughts on the politics of the stem cell debate circa 2004, see this op-ed:
    http://cstpr.colorado.edu/admin/publication_files/resource-1619-2004.16.pdf

    Thanks

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  13. "1 million Europeans can't be wrong"

    How many live in Greece? Spain? Portugal? Italy?

    Didn't Germany just set itself up to lose a couple of trillion on a solar scheme that doesn't work because they don't get much sun in winter?

    That greenpeace sign may be the dumbest I've ever seen.

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  14. GMO's in Europe have been having a hard time because they have actually done studies showing how harmful they are. Given how genetic engineering is done that should be no surprise really. We are already seeing the bad side effects here in the US as well.

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  15. We are already seeing the bad side effects here in the US as well.

    Cites?

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