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New Silicon Valley mushrooms in shadow of US capital

By David T. CookBusiness correspondent of The Christian Science Monitor / June 27, 1983



Washington

The Washington area is often seen as a place dominated by battalions of bureaucrats, diplomats, and legislators. The major local business sometimes appears to be finding new ways to spend taxpayers' money.

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But the capital area is now attracting scores of new companies, especially those in the fast-growing high-technology fields of computers, telecommunications, and biotechnology.

The lures include a pleasant life style, a highly educated labor force, proximity to other technology-based companies - and the presence of a potential customer with deep red, white, and blue pockets.

So when California-based Tandem Computers Inc. was looking for an Eastern base of operations it picked Reston, Va. Last October the company moved into a 255,000-square-foot facility where it's testing and assembling computer systems.

''I was looking for a pool of high-tech people . . . and a campuslike setting away from urban congestion,'' explains Tandem vice-president George Eckert.

And GTE Corporation's new Business Communications Systems unit is just moving into its headquarters building in Reston. GTE already had other operations in the area, explains William Kennedy, the unit's marketing communications manager. And Washington ''is becoming recognized as a major center in the United States for high-technology businesses,'' he adds.

Of course, corporate America has long been aware that it can be profitable to have an office near the fount of federal spending. But an increasing number of the businesses now locating here are not producing goods or services - like weapons systems or certain types of consulting - that can be sold only to Uncle Sam.

More companies coming to the area ''are viewing the federal government as a big market for something which is salable to any business,'' says April L. Young , executive director of the Fairfax County (Va.) Economic Development Authority.

The influx of new businesses is fastest in Fairfax County, which covers 410 square miles south and west of the District of Columbia and includes Reston, Tysons Corner, and McLean. Since 1971 the number of high-tech firms in the county has soared 134 percent, to 424.

As a result, Fairfax is the second-fastest-growing high-tech area behind northern California's Silicon Valley. In the period from July 1981 to July '82, 177 companies announced expansions or relocations in the Fairfax area, which now enjoys an unemployment rate of only 3.2 percent. The national rate is 10.1 percent.

''One reason we are so successful in attracting high-tech companies,'' Ms. Young says, ''is that Fairfax is less expensive as a living environment than most of our competitors in California or Massachusetts. And there are lots of low-cost environments outside the county.

Other Washington-area jurisdictions are also drawing new companies or seeing others expand. In the past three years ''a little over 100'' companies have either moved into Montgomery County, Md., or expanded operations, notes Jeffrey Burt, operations manager in the county's Business and Industrial Development Division. The county is just over the district's northwest border.

''It has been more of a steady growth in the last five years, as opposed to the heated and rapid pace [in] Fairfax,'' he notes.

Unlike Montgomery County, Fairfax County is in a right-to-work state, which increases its appeal to businesses concerned about unions. And Fairfax has also profited from the antibusiness reputation which Maryland is trying to shed. Still, Montgomery County, with roughly 300 high-tech firms, has attracted enough business to post an unemployment rate of only 3.8 percent.

Meanwhile, Alexandria, Va., is enjoying marked success in drawing a bevy of trade associations as well as some financial services and high-tech firms. The city is a 20-minute drive to the south of the district, so it can offer lower rents with easy access to government offices.

''Two years ago we had 45 associations; now we have 97,'' says F. Daniel Montague, director of the Alexandria Economic Development Program, run by the local chamber of commerce.

Ironically, the private sector's presence in the District of Columbia itself has not been growing, says Lawrence Thurston, a labor economist with the district government. ''The private sector in general has done very little in the district in the past year,'' he says.

In fact, in April private companies accounted for 56.3 percent of the city's employment, down fractionally from 56.6 percent for 1982 as a whole. Most of the private-sector growth in previous years was in services.

Since employment is growing in Maryland and Virginia, ''I am not sure (the slowdown) is all due to the recessison,'' Mr. Thurston says. District development officials did not return repeated calls seeking their views.

Although corporate executives seem pleased with their decision to move to the Washington area, they often complain of traffic congestion in business areas. ''The major downside I see is a lack of adequate road systems,'' says Tandem vice-president Eckert. ''The universally held opinion is that the roads are atrocious,'' adds Mr. Kennedy at GTE.