Southern Research Institute’s new building sets incubator to boost revenue

BIRMINGHAM, Alabama — The construction of a new, $4.6 million engineering building by Southern Research Institute signals a change in emphasis at the nonprofit’s engineering and defense contracting arm, the head of the division says.

About a third of the new building and its laboratories will be used as an incubator for spinoff businesses as the company moves to boost the amount of revenue it gets from the intellectual property it develops, said Mike Johns, vice president for the division.

Intellectual property revenue now represents a small minority of total revenue at the engineering division, which this year is expected to reach about $32 million, he said.

While Southern Research is best known for drug development, the engineering division develops technology for utility companies, the military, NASA, the U.S. Department of Energy and aerospace companies, among others.

Foundation work recently began for the new building, which will be built adjacent to the existing engineering research facility at 757 Tom Martin Drive, just off Lakeshore Drive in Birmingham. The new 18,000 square-foot building will sit on 44 pilings that go as deep as 56 feet to support a “large structures lab” where scientists and engineers will test everything from satellite hardware to utility poles. The lab will be large enough to accommodate large sections of aircraft, an unusual feature for labs outside of university settings.

“This is going to allow us to keep expanding at the rate we’re expanding now,” Johns said. “We’ve pushed the boundaries of this (existing) building. Right now, if I were to hire a top level person, I’d have to put them in a cubicle.”

Unlike the well-known drug division, which operates from a very visible Southside campus, the engineering division has escaped the notice of many because of its location and the nature of its work, Johns said.

Much of the division’s business is sensitive work on military contracts, including the development of sensors mounted on aircraft. That work has its roots in the 2003 Columbia space shuttle disaster.

The Columbia was destroyed on re-entry because of damage to a wing caused by a piece of insulating foam that broke away from the craft on launch. Southern Research helped NASA develop imagery equipment that was placed on an airplane and used to look for similar damage during the ascent of the shuttle Discovery when launches were resumed two years later, Johns said.

The institute also is working on development of heat-resistant materials that likely will be used on the next-generation spacecraft that ultimately will replace the shuttle, he said.

The engineering division sits on a spacious, tree-lined 52-acre campus that leaves room for considerable growth, and plans call for the construction of a third building in five years should revenue meet expectations of 10 percent annual growth. The division now employs about 130 of Southern Research’s total workforce of 530, which is scattered among facilities in Alabama, North Carolina, Maryland and Louisiana.

As a nonprofit, the institute relies in part on grants and charitable contributions, Johns said, but in part because of hard economic times also intends to better capitalize on the intellectual property that results from its research.

“We’ve done that very well over the years on the drug development side,” he said.

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