Cities scramble for the attention of moneymaking high-tech firms
As if it were a sure formula for solving their economic woes, cities all over the United States are trying to copy Boston's Route 128 and California's Silicon Valley in developing an industrial base in high technology.Skip to next paragraph
Subscribe Today to the Monitor
They are finding it's not always easy.
In Philadelphia recently, a group of influential business people, including the Pennsylvania secretary of commerce, gathered for a conference on how to attract new technology-oriented companies to the area.
In Dayton, Ohio, efforts to recruit high-technology firms ''are just beginning,'' says an official of the local industrial development council. One of the attractions: a 15,000-acre ''research park.'' The Albany-Troy area of New York, home of Rensselaer Polytechnic Institute, is using the same kind of lure.
''Which cities are trying to recruit high-tech companies?'' asks an industry analyst rhetorically. ''It's more a question of which ones aren't.''
Indeed, there would seem to be ample room for expansion of the dynamic and glamorous high-tech industries as the computer age continues to spread outward into such fields as telecommunications, robotics, new metals, and biotechnology. Many analysts of the high-tech industries project continued growth in this sector of the economy through at least the 1980s.
But there is more involved in attracting such firms to one's city than the simple expectation of growth, say industry consultants and analysts. Unlike many heavy industries, such factors as land costs, proximity to raw materials, a large pool of skilled labor, and a well-developed transportation network are relatively unimportant to most high-tech companies.
What is important, says Frederic Withington, a computer-industry expert at the Arthur D. Little research firm in Cambridge, Mass., ''is the quality of life.''
Entrepreneurs, engineers, computer programmers, and others with highly developed technical skills are the driving forces of the industry, Mr. Withington says. And they have developed tastes for such amenities as mild climate, recreational and cultural facilities, and a stimulating intellectual environment.
Moreover, such people are inclined to enjoy less traditional business environments - regions as well as workplaces - where they can feel free to dress and socialize as they please. And their first loyalty tends to be to their profession rather than to individual companies or locations, making them more mobile than other types of workers.
One ''must'' for any city hoping to attract high-tech firms is that it have a ''delivery system'' that includes top-notch universities to turn out bright young engineers and technologists, says John Spanos, president of Andros Boston, a consulting firm specializing in technology.
''You don't develop a basis for delivery systems overnight,'' Mr. Spanos says. ''It took Boston 30 years.''
Another factor complicating recruiters is that new ventures tend go ''where the (high-tech) people and schools already are, because there's a desperate need to remain current,'' says one analyst. ''It's very difficult to start a brand-new area.''
Another analyst comments: ''You want to be in one of the 'hot' cities - where the action is; it says you're doing something right.''
Of the expansion that has taken place in recent years outside the established centers, the major portion has been in Sunbelt states, notably the Tampa area of Florida and the so-called ''Research Triangle'' of North Carolina.
That doesn't discourage some recruiters, however. Developers in Dayton think they can capitalize on the fact that the city is home to Wright-Patterson Air Force Base as well as business machine, electronic component, and measurement-instrument firms. Wright-Patterson, with a work force of 30,000 people, is a major research and development center for the Air Force.
''Our market has for years been a center of innovation,'' says Tom Ferguson of the Dayton Development Council. ''There's no use our pretending that the temperature here is 70 degrees the year round. But we have a good variety of housing. We have abundant clean water. Our city government isn't in financial trouble. And an engineer's $100,000 a year (salary) is going to go 10 percent farther in Dayton than in Boston or San Francisco.''
Cities must also have a financial community willing provide venture capital to promising entrepreneurs. Philadelphia, with some defense plants, well-established chemical and electrical machinery industries, and a solid academic community, would seem a logical center for some new technological development. But one participant in the recent conference left complaining of the reluctance of conservative local lending institutions to invest in high-risk ventures, which is often the case with technology-oriented companies.
Says Mr. Spanos, who also attended the conference: ''If you're going to create a high-tech community, you've got to be prepared to lose money. Hundreds of millions of dollars were lost on Route 128 (the expressway around Boston that is the home of many of its high-tech firms), but nobody remembers that.''
Still, analysts agree that there is reason for cities in northerly locations or those without existing high-tech bases to hope they may yet be able to snag some new companies.
''There's also the manufacturing of the stuff, which is a little different,'' says Withington, referring to the computer industry. ''You can do that in some old building downtown that needs a little fixing up, and it doesn't require the same kinds of highly skilled people.''
Even so, he says, a city with such facilities had better be prepared to offer tax breaks to new entrepreneurs.
Adds another analyst: ''Perception is as important as reality in this business. So I think one thing a city could do is find ways to promote seminars and conferences - anything to create the impression that it's a place where that kind of activity goes on.''