Benchmarking of Business Incubators Section

Incubator: Fazat Steyr

1. Background and Regional Context

Following the establishment of the first centres in 1986 in Graz and Linz, there was a
rapid expansion of business incubators in Austria during the 1990s. According to the
Austrian association (VTÖ), there are now 75 business incubators in the country that are
either already operating or in the process of being established. Some 18 of these are
technology centres and around five demonstrate the full set of business incubator
characteristics.

Fazat (Research and Training Centre for Labour and Technology) was established in
1992 and was one of the earlier business incubators in Austria. It is located in refurbished
factory premises previously owned by SteyrDaimerPuch close to the centre of Steyr,
which are shared with a Fachhochschule (technical high school). Traditionally, Steyr, a
town of some 45,000 people, was a major engineering centre. However, during the 1980s,
the area saw a decline in traditional industries with unemployment rising to above 10%.
Since then, there has been considerable success in attracting inward investment. Amongst
the companies with operations in the area are BMW (which manufacturers all its diesel
engines in Steyr) and SKF.

The development of business incubators (‘Impulse Zentren’) is being co-ordinated at a

regional level by the Technology Marketing Group (TMG). There are currently 12
centres operational with plans to increase this to a network of 23 covering each of the
districts. The centres are seen as playing a very important role in the development of
Upper Austria’s regional technology strategy as a whole (see Section 3).

2. Incubator Operations

Fazat occupies 6,500 m² of modern office accommodation of which 4,000 m² is in the

form of office units for tenant firms. The development of the centre cost some ATS 150
million and was supported by a partnership consisting of the city authorities, Upper
Austria regional government, two Federal Ministries (for Transport, Innovation and
Technology, and the Economic Affairs and Labour ministry), and ERDF, the European
Regional Development Fund.

The centre currently has 10 client companies. They are involved in a variety of activities
such as production research, industrial safety and environmental control, Internet
services, and software design for automotive companies. A number of the firms are
working for larger companies in the area. For example, one tenant provides services to
BMW in designing diesel engines. In addition, there are a number of organisations that
play a role in local development such as the Steyr Correspondence Course Centre and
Upper Austria Vocational Advancement Institute. Rentals for incubator units are around
 Benchmarking of Business Incubators Section

the market rate. So far none of the companies have left the centre. Fazat provides a range
of services to its clients including advice on business planning, counselling, networking,
together with office facilities, a conference room, restaurant and other services. High-
speed Internet access is provided by one of the tenant companies.

A major development is currently underway to develop a technology park on the outskirts

of Steyr and Fazat is responsible for the project management of this initiative. When
complete, this will provide 20.5 hectares of space for companies and include a full 4,500-
m²-business incubator. This is due to open in the autumn of 2001 and will allow Fazat to
substantially expand its operations. It is envisaged that the incubator and technology park
will target business activities in areas such as motor vehicle components, mechanical
engineering and automation techniques, medical science, and environmental technology.

3. Good Practice Examples

Role of incubators in regional development/clusters strategy: Upper Austria’s ‘impulse

centres’ are a key element of a wider regional development strategy and are closely
involved it its formulation. The strategy focuses on:

· Competence Centres – these are organisations (companies, public entities, R&D

centres, etc) that demonstrate excellence in particular fields of technology and
have a strategic role to play in relation to the wider economy. So far, four centres
have been identified. TMG is a member of each centre.

· Clusters – six clusters are being developed covering areas such as diesel
technology, plastics, wood, food production, and eco-energy. In total, over 1,000
mainly smaller firms are participating in the initiative which involves activities
such as collaborative projects (e.g. in the marketing field. Each project must have
at least three partners), technology transfer from R&D centres to firms,
conferences, etc. Firms pay a fee to be a member of the clusters (euro 1,000 for
larger firms). Each cluster is supported by full-time staff from TMG, which has a
total of 20 people working for it on this and other schemes. A recent initiative
involves linking up venture capital firms with the clusters. An internet site,
newsletter and conferences are held to facilitate communication in and between
the various clusters.

· Impulse centres – the aim is to set up a network of 23 centres each with a focus on
particular technologies and clusters. TMG helps to co-ordinate the development
of the centres, networking between them, and is currently engaged in an exercise
to define quality standards.

Upper Austria’s cluster strategy is seen by its promoters as the most ambitious in Europe.
It illustrates the importance of business incubators being integrated into a wider regional
development strategy and playing an active facilitating and networking role in it.
 Benchmarking of Business Incubators Section

Survey of business incubator clients: The Austrian association has recently completed a
survey of its members. An interesting aspect of the survey (seldom found elsewhere) is
the emphasis on obtaining feedback directly from client companies (just over 600
responded). A lot of detailed information has been collected on the companies including,
e.g. an estimated 79% are engaged in high tech activities, 48% of employees have at least
a degree (HTL), 51% of firms employ less than five people, and 61% were established in
a business incubator. In total, it is estimated that there are some 1,050 tenant companies
in Austrian incubators employing around 8,500 people. As far as the incubators
themselves are concerned (52 responded to the survey), according to the survey they have
an average of 23 tenants. A third are privately owned, a quarter not-for-profit and the
remainder are ‘mixed’. (Note: a similar follow up survey is being planned by the German
ADT).

4. Views on Key Issues

Amongst the key factors stressed by the incubator management are:

· The importance of a broader regional technology strategy – Fazat’s activities

need to be seen in the wider context of Upper Austria’s regional development
strategy (see above). The centre is closely involved in the formulation of this
strategy.

· ICT infrastructure – feedback from one of the tenant companies emphasised the
importance of access to high speed internet access. In this particular case, the firm
is involved in software design for major companies in the automotive field.
Having just started operating, it could not afford to arrange high-speed access
independently. The availability of this facility at Fazat was a major factor leading
the company to locate at the centre.

· Networking between tenant companies – several of Fazat’s tenants work closely

with each other. For example, one firm is involved in the design of air filtration
systems whilst another provides specialist R&D advice on the technologies
involved. Already mentioned are the services provided by the internet provider
located at Fazat.

· Quality of business support services – there is a recognition that whilst physical

space is important, the distinctive feature of a business incubator lies in the one-
stop-shop and quality of business support services. The development of business
incubator services is a priority for Austrian centres generally.

5. List of Interviews
Name Position
 Benchmarking of Business Incubators Section

Walter Ortner Managing Director, Fazat

Franz Filzmoser Managing Director, INNA Network Austria
Dr Therese Stickler Project Manager, INNA Network Austria
Manfred Eder Managing Director, TMG
Johann Kastner Managing Director, Profactor
Peter Fischer Managing director, dTech Steyr