Loss That Could Last

Triangle Business Journal | Lauren Rhodes

Paul Maddox waited for weeks to hear about federal grants for his research lab at UNC-Chapel Hill, where he studies cell division and the fundamental processes behind cancer.

And then came the stunning news this spring: His lab had lost a total of $800,000, about two years of funding.

Maddox was not alone.

 Shockwaves have rippled across the research and development industry following funding cuts by the Trump administration as it looks to slash federal spending. The administration’s proposed discretionary budget for FY2026 cuts almost $18 billion in National Institutes of Health (NIH) funding — approximately 40 percent of the institution’s 2025 budget. A Senate committee recently passed a bill that would give the NIH a slight funding increase.

 Laboratories across the Triangle are grappling with the aftershocks, from senior management at RTI International to undergraduates getting their starts in STEM.

 “You make plans around that funding to hire your people, and you sort of say, ‘OK, you’re going to work on this, you’re going to work on that,’” Maddox said. “And, then all the sudden, there’s no money to pay these people. And then you’re like, ‘now what do I do?’

“And the answer is, you have to let them go.”

Maddox had to cut his lab staff in half, including laying off postdocs and undergraduates in work-study positions — exactly the sort of young, aspirational people who soon become essential parts of a rising economy. And while the immediate cuts have been painful, Maddox and others are concerned about the long-term implications, especially in a market like the Triangle, where the economy is so dependent on research and innovation.

Sometimes, those investments take a while to pay off. But Wake Technical Community College President Scott Ralls noted that the benefits the Triangle has reaped from 30 years of investments has been apparent in the last four or so years.

He pointed to Holly Springs, where major investments from Fujifilm Biotechnologies, Genentech and Amgen (Nasdaq: AMGN) have transformed the job market.

Defunding can slow down the R&D pipeline and development, Ralls said, especially in areas that would have never existed without the development of that ecosystem. 

“Not every research project works out, and that doesn’t mean it was a waste of time or money,” he said. “It typically leads to the thing that eventually does work out, and when it works out and you have the infrastructure to produce it, then lots of people are rewarded as part of that process.”

Long-term investments in the Triangle have made it a top destination for researchers in different stages of their career. But many in the R&D industry have expressed concerns about what the long-term fallout of funding cuts might mean for an economy-built innovation.

 “If every lab in the area fired half the people who work with them, you can just imagine the sort of loss of the local economies that would go on,” Maddox said.

 And loss — of talent, innovation and infrastructure and more — is top-of-mind for many, especially for a market that gained a reputation for being a great place to live and work for young professionals.

 A study released by Automatic Data Processing (ADP) earlier this year found Raleigh to be the top of 55 metros across the United States for young people when looking at annual wage, hiring rates and affordability. Specifically, the study pointed to the Research Triangle region, listing job opportunities and strong hiring among its strong suits.

Maintaining that sense that the Triangle is a desirable and innovative place is critical, Maddox said.

“It’s hard to gain it, but it’s really easy to lose it,” he said. “And that’s the thing that scares me the most, is that if we blink an eye and we lose what we’ve worked so hard for.

“It could be something that you never regain.”

The Research Triangle began as a deliberate effort to diversify North Carolina’s economy in the 1950s. Now the largest research park in North America, Research Triangle Park has become an essential part of the state’s economy. The park now has almost 400 companies, startups and national labs, with a total of 55,000 employees.

In fact, when North Carolina regained its status as CNBC’s top state for business earlier this year, Gov. Josh Stein listed cuts to R&D as a key concern for his administration.

“We just need to keep investing in our people,” Stein told TBJ at the time of the announcement.

The federal cuts have been considerable. During FY2024, the NIH alone awarded $1.98 billion in grants and contracts, according to United for Medical Research, directly supporting 21,769 jobs and $4.85 billion in economic activity throughout the state. The top awarded institutions include the University of North Carolina system, Duke University and Research Triangle Institute – all rooted in the Triangle.

 But facing sweeping federal cuts, many large research institutions are facing challenges. As of late June, UNC-Chapel Hill and N.C. State University saw a combined $138 million loss in federal research grants.

Across the Triangle, universities are cutting spending. N.C. State has implemented a hiring freeze, UNC-Chapel Hill is tightening its spending, Duke University has offered buyouts and is cutting jobs and Meredith College is cutting about 6 percent of its employees.

 All this hits a university network that is a vital link in the Triangle’s research ecosystem, especially when it comes to creating new technologies, said Sheila Mikhail, a serial entrepreneur and co-founder of Asklepios BioPharmaceutical.

 Mikhail, chair of the North Carolina Board of Science, Technology and Innovation, points out that university research leads to innovations that are then adapted by biotech companies and commercialized by pharmaceutical companies. But none of that is possible without the initial findings from the basic research.

 Local chipmaker Wolfspeed — formerly known as Cree — is one such story. As the name hints, the company was born out of an N.C. State University lab, where the founders were working on silicon carbide projects in different capacities.

 “If the funding isn’t there for that basic research academic institution, the whole ecosystem is going to hurt,” Mikhail said. “There won’t be anything for biotech companies to pull out and to develop, and then there won’t be anything for big pharma to distribute — at least not things that are developed here.”

 Alfredo Romero, chair of the economics department at N.C. A&T University in Greensboro, said the problem with drastic funding changes in short periods of time is that it can accelerate the deterioration of an economic area. While it’s too soon for concrete numbers, uncertainty in funding has already led to hiring freezes, and in the short run can lead to economic loss.

 In the upcoming years, Romero said, this external shock will test how resilient the Triangle’s ecosystem is.

 “It’s really going to depend on how long the researchers think that the potential freeze on their grants is going to happen,” he said.

Loss of research talent

Consultant Eva Garland said when she moved first moved to Raleigh around 20 years ago to work in N.C. State’s chemistry department, many of her brilliant students would move to New Jersey because there was a lack of jobs in North Carolina for Ph.D. candidates.

 Since starting Eva Garland Consulting in 2013, and helping institutes identify and secure funding, her firm has been able to hire around 50 Ph.D.s, the vast majority of which are from the Triangle. She said many other local startups hire locally from the highly educated talent generated by North Carolina universities.

“I think the initial concern that I’m hearing is that if the companies don’t have the funds to retain the talent, or to hire new talent, then we’re sort of going backwards,” Garland said.

 “We’re going back to where there aren’t positions for talented scientists to be able to provide their knowledge to the benefit of North Carolina, and they’re having to move elsewhere or take entirely different careers.”

 One economist who studies the labor market also finds evidence of the state’s appeal. Johnathan Conzelmann, in a 2022 report, found North Carolina has an in-state retention rate of around 69 percent among graduates from a four-year institution – putting the state in the top third nationally. The state is training, and keeping, promising young people who flow into the workforce.

 Multiple factors influence the migratory patterns of graduates, he said, especially opportunity and demand. His research has also found that institutions close to vibrant economic areas have a higher rate of staying and working in the area.

 For example, at N.C. State, 51 percent of graduates stayed in the Triangle in 2022.

 Uncertainty from federal cuts can cause firms not to hire, Conzelmann said, especially for young graduates. And across the Triangle, the next generation of researchers is already being affected. Students throughout the state have reported having higher education offers revoked, internships canceled and research jobs vital to gaining hands-on experience lost.

 “What we’re concerned about is that there’s a lack of entry level jobs, or just jobs in general,” Conzelmann said.

Uncertainty around funding grows

Research isn’t the only loss felt by the local economy when projects are defunded. Intellectual capital, innovation and production are also at stake. 

Take Maddox’s lab, which has been around for almost 30 years. He has spent years training his staff, from undergraduates to his research technician, whose salary he is now “scrimping” to piece together through the end of the year.

Maddox said if he lost a year of funding and research completely, it would set him back a decade. Even if he started applying for government grants now, it would be more than a year before he received any money — if he was awarded funding at all.

 “I lose the people I’ve trained,” he said. “I lose internal knowledge. I have to regrow all that infrastructure that I had and so it’s very disheartening.”

 Garland said the biggest concerns she hears from clients is “uncertainty” and “fear.” Over the last six months, numerous grants have been frozen, cancelled and caught up in ongoing legal battles, leaving institutions unsure about what’s going to happen next.

 She’s found that across North Carolina, funds are already being dispersed at a much slower rate for FY25 than they were in FY24, leaving partially developed “great science” suddenly stagnant, and scientists on the hook.

 The real question, Garland said, is “What happens on Oct. 1?”

 That’s where there have been discussions at the federal level about really severe cutbacks to agencies, numbers that we’ve never seen before, numbers like 10, 20 percent which would just completely take the rug out of their ability to be able to further advance science,” she said.

The next generation of researchers

Over the summer, Maddox has written to private foundations, trying to find ways to accrue funding. He said he’s also been making alternate plans in case funds don’t materialize.

Across the Triangle, many of the institutions facing cuts are gearing up for the upcoming school year, when young researchers will return to campus labs and classrooms. While defunding has placed many students in precarious positions, some young scientists have been able to adapt.

At UNC, two young researchers – Sarah Giang and Ivy Nangalia – have both felt the fallout of federal cuts. Before Giang’s graduation last spring, all of the graduate schools Giang had been accepted to rescinded or changed their offers. Nangalia was supposed to work in a paid position in a lab at Duke before the program was cut due to hiring freezes.

Both Giang and Nangalia pivoted and found ways to chase their goals. They also both know of others facing similar struggles who haven’t been so lucky.

Mikhail notes that young people will be the most impacted by the impacts of defunding R&D. And she has concerns about taking away from investments that have dividends of “good returns,” both economically and in the benefits of the research itself.

 “What kind of future are we going to leave?” she said. “That’s how I see it for the next generation. Are we creating opportunities for you all so that you can become a biotech CEO like me?”

As long as companies continue to invest and the region keeps its momentum, Ralls said, the Triangle will continue to attract people and students. 

“The two things we have to be cautious of is complacency but also understand that you can stop something much faster than you can build something,” he said. “And in this region, I think we’ve demonstrated that we have built something."