A natural fit

Why hundreds of Minnesota ventures have partnered with the Natural Resources Research Institute in Duluth — and hundreds more likely will

This summer marks the 30th anniversary of an organization unique to Minnesota that's helped hundreds of small and midsize businesses. Founded in 1983 — in the midst of a recession — the Natural Resources Research Institute's (NRRI) mission is to foster the economic development of Minnesota's natural resources in an environmentally sound manner to promote private sector employment.

Here, we look at the history of the NRRI and at some of the companies that have recently benefited from its services.

Between 2009 and 2012, the organization worked with more than 400 companies and entrepreneurs on small and large-scale projects, says Don Fosnacht, director of the NRRI's Center for Applied Research and Technology Development. Over the years, it's secured more than 75 patents. At the same time it's been helping to create new jobs, it's also been conducting a host of environmental research.

Part of the University of Minnesota, the Duluth-based institute has never been an easy one to categorize. "We were signed into legislation, and then the university had to figure out what to do with us," says spokeswoman June Kallestad. "As our director who just retired liked to say, we are a square peg in a round hole in the university system, because we just had such a unique mission to really address the recession of that time with an environmental focus."

Today, the NRRI helps Minnesota companies with, among other things, research, product testing, and technology validation.

"The collaborative agreements and partnerships it creates help small businesses, such as ours, gain access to information, research, and opportunities that we would not have otherwise likely been able to reach or afford," says Kirk Kjellberg, head of sales and marketing at Microwave Utilities Inc., a Monticello-based venture focused on innovative road repair techniques that's benefited from NRRI research. (See "Filling a hole in the market," March 2013.)

You don't have to be a big corporation or deal in natural resources to get the institute's attention. Businesses that are linked to wood, chemicals, minerals, metals, and related industries tend to benefit, but so do companies involved in other areas — medical devices and aeronautical devices, for instance.

Small businesses don't normally have a research department, notes Fosnacht. "We are sort of a bridge organization to bring an idea to market," he says. "We do some fundamental science that leads to opportunities."

Businesses typically pay the NRRI a fee to cover the cost of the equipment and researchers' time, and they may be asked to provide in-kind services. In some cases, the institute may help them secure grant money for specific research purposes.

Smart manufacturing

It's hard to imagine having made much progress without the NRRI's support, says Greg Benson, who together with his partners Dave Benson (his brother) and Tony Ciardelli owns three growing Duluth-based companies employing about 80 workers.

The three companies share the Hawksboots Sustainable Manufacturing Facility, a sharply designed space on a forested hillside in Duluth.

Epicurean is known for its eco-friendly cutting surfaces and kitchenware. Loll Designs makes outdoor furniture using recycled materials (milk jugs, for instance). Intectural is a distributor of innovative architectural materials such as bamboo plywood and paper composite. Their total annual revenue is more than $15 million, Benson says.

The NRRI's help with the rigorous testing of materials and products led to improved designs, Benson says, and the organization introduced the companies to lean manufacturing and a system of continuous improvements, helping them cut waste and generate greater efficiencies. "We work with employees as a team to identify problems and find solutions," Benson says. "It's a mind-set we've developed, thanks to the NRRI training."

Core competency

Brothers Charlie and Richard Mizia of Grand Rapids have had a long relationship with the NRRI. In 1993, the duo created, with the organization's help, the world's first veneered foam-core (VFC) technology for a resource-efficient log siding product.

"Our commercial success with that VFC technology made us appreciate the importance of having ‘technical credibility' coming right out of the starting blocks," says Charlie Mizia.

In the past few years, the Mizia brothers have successfully engineered a large-diameter hybrid log using small diameter trees. They handcrafted a strong wooden arch with dimensional lumber and injected spray foam into the core. Their patented technology can make half logs or full logs with the same authentic curb appeal of natural logs used in high-end construction. Their product, made of Idaho white fir, was extensively tested by NRRI researchers.

"We needed to find the right adhesive, right machine tolerance for the dimensional lumber, make the finished product weather-resistant, and ensure everything fit together," he says. "The NRRI built the initial clamping system that could hold the components together while the glue finished curing."

Following NRRI's prototyping feedback, their company Grand Log Homes has made numerous improvements to the product at their plant, and it's now busy ramping up sales, having garnered favorable attention at trade shows.

Compound interest

To get a sense of how NRRI research can help lead to business opportunities — and ultimately jobs — consider birch bark. Birch trees are abundant in Minnesota. While their wood is used to make paper and cabinets, the bark is often burned for heat and steam. Yet it has potential health benefits and uses in dietary supplements, cosmetics, and pharmaceuticals.

Brian Garhofer, a business consultant in Minneapolis, aims to put the bark to good use. Last year he licensed 15 NRRI patents related to the processing and use of active ingredients from birch bark.

The Actives Factory, Garhofer's venture, is now busy testing birch extracts for new products. It plans to identify natural birch compounds, with the help of the NRRI, and sell them wholesale to the $35 billion global natural products market. Garhofer hopes to start production at a facility in Two Harbors within a year and employ five to 10 people.

"The NRRI is invaluable as a resource for small businesses," he says, noting that it has technical know-how, labs, and a group of dedicated researchers focused on helping businesses. And, he adds, "the NRRI's reach is global. It's working with foreign companies to look at technologies being developed." It's also tied to economic development in the North Shore, he adds.

Hot idea

Michael Horvath used suggestions from NRRI experts to fine-tune a system he developed for recycling wasted kitchen heat to warm up buildings and water. As a new restaurant owner in Meadowlands in 2007, he discovered the high cost of heating an eatery. Each time someone opened the kitchen door, cold air came in.

Horvath decided to use the concept of heat exchange to make his own heat recycling system. He fashioned a working prototype and sought help from the NRRI for validation: "They verified my data and that the system works as well as I say."

In 2009, he and a friend set up Green Heat Corp. in Duluth to make the Heat to Energy Recycler System, which captures waste heat and recycles it, working in conjunction with conventional heating systems.

Horvath, who has applied for patents on his technology, is now finalizing the sixth-generation system, notes Tim Hagen, a chemical engineer and coordinator at the NRRI who helped verify Horvath's concept.

Green Heat estimates that if half of the 1.3 million–plus food service establishments in the U.S. and in Department of Defense facilities around the world were to cut their annual fuel consumption by 3,500 gallons using its system, about 23.2 million tons of carbon dioxide would be removed annually from the atmosphere — the equivalent of removing more than three million cars from the road.


For Clint Deraas, founder of Olaf Industries, NRRI research into mattress recycling turned out to be a business opportunity. He and his retired mechanical engineer friend Eugene Luoma designed and made a compactor — after six weeks of research and three weeks of testing — to help crush and bind springs into a form that made them usable for a foundry.

It was important that their 12,000-pound machine produce a bale that was at least 50 pounds per cubic foot in density, to make it efficient for a foundry to melt after buying it as scrap-iron. The process was refined through time and trial, with size and shape input from NRRI and foundry ME Global, recalls the NRRI's Hagen, who worked on the mattress recycling project.

In 2012, more than 35 million mattresses and foundations were sold in the U.S., according to the International Sleep Products Association. But mattress recycling is not particularly developed in the U.S., Deraas says. He's had a few enquiries about his machine, but no U.S. sales, except one sold to Goodwill Industries in Duluth more than three years ago.

Recently, though, Deraas licensed his patented technology for use in Australia. His machine, which can compress four mattress springs every four minutes, will be made and used Down Under.

Deraas calls NRRI a hidden gem that could immensely benefit the business community, particularly in northern Minnesota. It is, he says, a tremendous source of knowledge and abilities that can help develop an idea and test it. 
When it was founded three decades ago, the NRRI was unwittingly ahead of its time. It was focused on "sustainability" before it was a movement.

Plenty of legislators at the time argued to just create jobs and not worry about the environment, notes spokeswoman Kallestad. "We held true to what we were charged to do," she says. "We were put here on this planet to help Minnesota make the best use of its natural resources for economic growth, but then also we have this whole center that focuses on sustainable natural resources. We have tree huggers and tree cutters working together."

Today the NRRI isn't sitting still. Within its patent portfolio are new iron ore conversion techniques, specialty chemicals, and road repair compounds.

In the future, Fosnacht expects a wider reach for the NRRI's collaborative research through marketing and word-of-mouth efforts. "We are all for the adoption of new ideas for prime economic development," he says. "We want to see the ideas put in practice."