Talent, Facilities and Market Access Drive NEST iON to Rochester, New York

April 3, 2017

(Episode 15 of “The Project: Inside Corporate Location Decisions”)

NEST iON Moves to Rochester

Welcome to our most international episode of “The Project” to date. NEST iON is a start-up company that manufactures specialized batteries for the law enforcement and security profession. The company was founded by a Spanish entrepreneur who relocated to Ireland, initially outsourced all of his manufacturing to South Korea and now has his sights on entering the U.S. market. In February 2017, the company announced plans to open a research & development/manufacturing facility at the Eastman Business Park, a 2.5 million square foot facility owned by Kodak. We interview company founder Boris Gragera, Matt Hurlbutt of Greater Rochester Enterprise and Matt Fronk of NY BEST (New York Battery & Energy Storage Technology Consortium) for the story behind NEST iON’s decision to locate in Rochester, New York.

Andy Levine (DCI): We all have a collection of extra batteries in our kitchen or basement. When our electric toothbrush or flashlight stops working, we simply replace it. It’s no big deal. But if you’re a police officer or a soldier, and the battery in your communications equipment goes dead in a crisis situation, it’s a huge problem.

Patience Fairbrother (DCI): Boris Gragera sought to solve this problem back in 2013. He first took the idea of batteries specifically made for law enforcement and security forces to his previous employer. When they said, “We’ll pass,” the Spanish entrepreneur started his own company. Back in 2013, he left Spain and launched NEST iON in Dublin, Ireland. When we asked why he and his wife moved from Madrid to Dublin to start the company, he gave us two reasons. Number one, Ireland is a business-friendly country and a great place for startups. And number two, my English isn’t very good, and this will be a terrific learning opportunity for me.

Andy: Now, as you’ll hear in a moment, Boris’s English has improved a great deal. Certainly, much better than what I learned in three years of taking Spanish in high school. Basically, here’s all I remember. Mi tío tiene, una verde caja de lápices. Now, Patience, did you take Spanish?

Patience: No Andy, I didn’t. I have no idea what that means.

Andy: Okay. Well, I’ll tell you. It means, my uncle has a green pencil box.

Patience: So, is that a phrase that you found to be useful in your life?

Andy: No, and I think it hasn’t been…in the history of the world, it has not been useful. But enough about my language skills and Spanish classes. Let’s get back to Boris and NEST iON. He wanted to scale up his company, he also wanted to enter the U.S. market. That brought him to Rochester, New York, where about a month ago he announced plans to open a research and development and manufacturing facility all under one roof.

Patience: So welcome to Episode 15 of The Project: Inside Corporate Location Decisions. I’m Patience Fairbrother of Development Counselors International.

Andy: And I’m Andy Levine also with DCI, and Patience’s co-host of The Project. Today we bring you the story of NEST iON. A startup company that builds lithium batteries for law enforcement and security forces.

Patience: Now, this is certainly the most international episode we’ve ever completed. The company is run by a Spanish entrepreneur who relocated to Ireland, initially outsourced all of his manufacturing to South Korea, and now has his sights set on entering the U.S. market.

Andy: So let’s meet Boris Gragera, who is the founder and CEO of NEST iON. So let’s start with a little about your own background and your work at NEST iON. Tell us a bit about your background.

Boris Gragera (Nest iON): I’m the CEO of NEST iON and the founder. My background is in business marketing and sales. And before NEST iON, I was working as marketing director in an energy storage company, where I had had the opportunity to develop a high performing battery for law enforcement agencies and military. And after presenting this project to the board of the company, they decide, don’t go with it. And this decision motivate myself to develop this business opportunity, starting my own company.

Andy: So NEST iON is growing, its product is being embraced by the law enforcement community in Europe, and he’s getting strong interest from the U.S. as well. So when we asked Boris about his decision to expand in the Rochester area, he said there were three primary reasons. Number one, talent, number two, facilities, number three market access. We’re going to look at each of these one by one.

Patience: Let’s start with number one, talent. Boris told us that he first lived in Europe in Ireland, Germany, France, and the U.K., but he just couldn’t find the talent he needed. What was that factor that you weren’t able to find in those European countries that you then found in the U.S.?

Boris: Okay. First is the talent because in Europe, to find people with battery knowledge, impractical, because in Europe, there are a lot of, in our technology, knowing all the technology, there are a lot of experience in theoric areas, but later when you want to transfer the theoric to the practice, this is very, very difficult. Yeah, this is the principal reason.

Patience: So there are two other people we interviewed for this story, and unfortunately, both of them are named Matt. We’ll start with Matt Hurlbutt, Executive Vice President of the Greater Rochester Enterprise. Here’s his perspective on the talent pool in the Rochester region.

Matt Hurlbutt Greater Rochester Enterprise: Well, the interesting thing about Rochester and it kind of goes back to the Kodak legacy, is the fact that we’ve got people with outstanding… People and facilities, especially the people, with outstanding material science capabilities. And that can be in chemistry, nanotechnology, optics, imaging, and the physical sciences.

Patience: So yes, Rochester has well-known companies like Kodak and Xerox that have downsized significantly. And in the battery and energy storage space, there are companies like Ultra-Life Battery and a General Motors fuel cell facility that have shed staff as well. So, there’s a concentration of available talent, really smart technical people that are actually a perfect fit with NEST iON’s needs, and that’s one of the key things Rochester talks with companies about like NEST iON.

Andy: And that brings us to the second item on Boris’s list, facilities. It also brings us to the second Matt in our story. An energy consultant named Matt Fronk. Matt Fronk has a deep knowledge of the battery and storage industry, but he also knows Rochester really well, where he was director of the General Motors facility here for 19 years. He met Boris when he was just starting to look at the United States through a program called New York-BEST, which stands for New York Battery and Energy Storage Technology Consortium.

Matt Fronk (Matt Fronk & Associates): So I’ve known Boris I’m gonna say about a year and a half or so, and first was introduced to me by some of the folks at New York-BEST. He was interested in coming to the United States and had… He was referred to me to really start some discussions on what he would need. So I think that’s really how the process really started, really trying to understand where he was in his development, what he would need when he came to the U.S., and he was looking for a particular set of clients in the U.S. and needed a U.S. presence. So, that’s really how the process got started and we spent a lot of time talking about what he would need.

So for example, I know he’s had some discussions with some of our local universities. We made the connections there for him. He has a spot at Kodak Eastman Business Park and has a laboratory there with some of his people, and he’s also gonna be taking advantage of some of the role to role coding capability that Kodak has from their film days. So many companies are starting to do that as well.

Andy: Matt Fronk just referenced the Eastman Business Park, a 2.5 million square foot facilities that is owned by Kodak. Of course there are literally thousands of business parks in America, but this one was really critical to Boris and NEST iON because it had the technical equipment he needed for both R&D, as well as small scale manufacturing.

It had things like a pilot coder, which is a \$20 million machine that puts wet electrode ladders down battery foils, a dry room that holds to less than 1% humidity, that’s part of a \$6 million upgrade that Kodak made with state support, and a \$6.9 million battery test durability facility that can assess everything from a single battery cell to a 240-kilowatt automobile pack. Now these price tags are big, but frankly, Patience and I have no idea what this equipment does.

Patience: Zero idea.

Andy: But to an entrepreneur like Boris Gragera, it’s super important.

Patience: And it means he doesn’t have to buy it because it’s already at the Eastman Business Park.

Boris: We have a very good team with experience in manufacturing, in equipment, in chemist, and of course, we are a startup and we need this kind of support to help us to grow. And this is the principal key, is that they have maybe 50% of the material that we have, we will use there, and they have the operators with experience, and for us, is great because the transition to scale up the production is a challenge, and with the knowledge that they have in Eastman Business Park, for us would be easier to scale up our company in the next step.

Andy: Matt Hurlbutt of Greater Rochester Enterprise echoed that perspective.

Matt Hurlbutt: There is a lot of research and development that comes in on the energy, especially lithium ion battery storage technology. There are a lot of folks across the country doing this work, and there are a lot of folks doing research in it, that I think the difference for Rochester is, we have the ability to pull it off in the sense of, we’ve got physical assets, equipment that can really help a company get just like Boris said, you know, where we’ve got equipment that you can utilize so you don’t have to spend \$1 million on equipment.

Patience: And that brings us to the final item on Boris’s list, market or market access.

Boris: There’s a factor, is the market size, because here is…we present the product two years ago in the most important urban in our sector, in law enforcement agency sector. And we receive a very good feedback for our customer and all is, we are looking for that and we need to start where would you buy the product? And we say, in our current facilities, we can’t produce more to supply enough batteries to the U.S. market.

And we sent some samples and we received very good feedback, but we don’t have enough production to supply. And this is reason to set up here the company, because the U.S. market is huge for us.

Andy: So let’s put this all together. In the United States, NEST iON believes it has a tremendous market opportunity. And in Rochester, New York, it has both the talent and the physical facilities and equipment that it needs to be successful.

Patience: One final point came from Matt Fronk. There are a lot of places in America that Boris could have put a research and development facility, and there are a lot of places that he could have conducted manufacturing. But there aren’t a lot of places that he could do both together, and that was a huge advantage for Rochester and the Eastman Business Park.

Matt Fronk: So for example, you might wanna station yourself near a national lab, but then that wouldn’t have the manufacturing capability. If you station yourself near a university, then you wouldn’t have the testing piece. And so, we’re kind of in an interesting situation if you were to draw the little diagram that has all the pieces, probably within a 15 or 20-minute radius of itself, to be able to accomplish all of those all of those things, and then also scale up. And I think that’s one of the parts that’s really difficult in the U.S. is finding a place that could actually manufacture the product, which would be the battery, and let’s say add volume, 500,000 units or more.

Patience: NEST iON announced its plans to set up a new facility in the Eastman Business Park on February 20th, 2017. Boris Gragera expects to hire 17 full-time employees in the coming months, and expects the first batteries to be produced by June 2017.

Andy: So we’re up to the takeaways portion of this episode. Patience, what stood out to you about NEST iON and their decision to set up operations in Rochester?

Patience: Well, we hear it over and over again and it always seems to come back to that one word and that word is, talent. Now, in regards to talent, Rochester is a great example of a location that really took lemons and made it into lemonade. So they saw all of these layoffs coming specifically from Kodak and Xerox, and obviously, that’s not the best-case scenario for them, but…

Andy: These are big, big companies that laid off a lot of people.

Patience: Exactly. So it’s not the best news, but on the flip side, they see that it’s actually an advantage to have all of this available workforce, not only that’s highly skilled, but that’s highly skilled in an industry that they’re actively trying to attract.

Andy: Right. A lot of the skill sets of the folks out of Xerox, the folks out of Kodak, very relatable now to the battery and energy storage industry. So, from someone like NEST iON’s perspective, that’s a huge, huge plus.

Patience: Exactly.

Andy: In fact, when we asked Boris about it, he said it was the number one thing. The number two thing that Boris talked about were the facilities. And in this case, really the Eastman Business Park. So, Boris and his top engineer go to the Eastman Business Park together and they basically see all this equipment that they need in one place, and they don’t have to buy it. It’s there, it exists.

Basically, they can have access to it, they can essentially rent it, and for a startup company, there are tremendous, tremendous savings in that. So, probably less important to him than the talent, which was the number one thing, but having all these facilities, all this great equipment in one place that he could benefit from, it’s a huge benefit to him.

Patience: So that is a wrap on Episode 15 of The Project: Inside Corporate Location Decisions.

Andy: Our special thanks to Boris Gragera, CEO of NEST iON. He was a bit nervous about doing an interview in English, which obviously isn’t his first language, but it worked out pretty well. We also need to thank the two Matts, Matt Hurlbutt of Greater Rochester Enterprise, and Matt Fronk of Matt Fronk & Associates. Matt Fronk is also one of the founding members of the New York-BEST program.

Patience: We also need to thank Stacy Henning of the Greater Rochester Enterprise who arranged these interviews, and made the episode a reality.

Andy: The Project is sponsored by DCI. We are the leader in marketing places and have served over 450 different cities, states, regions, and countries. You can learn more about us at aboutdci.com.

Patience: We’d love to hear your feedback on the podcast as always. So if you like what you’re hearing, please send me an email at patience.fairbrother@aboutdci.com. And if you don’t like what you’re hearing, please email my co-host Andy, at andy.levine@aboutdci.com.

Andy: It’s kind of a good cop bad cop thing, right? All right. We hope you’ll subscribe to the podcast on iTunes. Our next projects take us to North Carolina, Arizona, and Michigan. We hope you keep listening, there are many more projects to come.

Written by Andy Levine

Andy Levine is President/Chief Creative Officer of DCI. Since joining DCI in 1991, he has worked with a broad range of places from “A” (Alabama, Asheville, Australia) to “W” (Wales, Wichita Falls, Wyoming).

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