Hazards on High-Tech Highway : Cities Play the Luring Game
For city planners boosting the high-technology business in Dayton, Ohio, San Diego--because of its Sun Belt location--represents a prime competitor for any company looking to expand or relocate.
“The San Diegos of the world, the South and West, have been taking business away from the Midwest for quite a while,” Steve Stanley, an official with the Dayton County Economic Development office, said the other day.
“Frankly, we’ll grant San Diego the ocean and nice weather. We can’t do much about our Midwestern climate.”
Nevertheless, Dayton is doing quite well in the high-tech competition, Stanley said, by emphasizing its proximity to Wright-Patterson Air Force Base, the primary research and development (R&D;) center for the Air Force.
“We’ve got a lot of engineers and scientists here as a result of companies wanting to be close to the base,” Stanley said.
As the concentration of companies in Dayton shows, San Diego’s competition for high-technology business today ranges far beyond the Silicon Valley near San Francisco and Route 128 around Boston, the nation’s traditional high-tech centers going back to the days immediately following World War II.
Among today’s key players in the competition are Dayton; the Research Triangle Park in North Carolina; Austin and San Antonio, Tex.; Colorado Springs, Colo., and Portland and Corvallis, Ore. In addition, states from Louisiana--with a hoped-for Silicon Bayou--to New Hampshire and South Carolina are bidding to cash in on high-technology jobs. A recent marketing survey turned up 78 university-related research parks nationwide.
Even places unknown among the high-tech competitors puff themselves as advanced centers a la Silicon Valley. The latest promotion came only Friday, when the Great Valley Corporate Center near Philadelphia was lauded by President Reagan as “an advanced technology center” during a pep talk for his new tax plan.
“Sure, it’s intense competition,” Jim Devine, head of the Colorado Springs Economic Development Council, said. “We don’t downgrade our competitors, but we sure try as hard as we can to sell what works for us.”
Devine’s city, along with Texas and North Carolina, is “hot,” in the terminology of industrial planners looking to expand or relocate companies around the nation.
“It’s high stakes since companies may make only one or two location decisions in their lifetime,” Devine said. “We’ve got a good life style--the amenities of the Rocky Mountains--and we’ve also got cheap power, which attracts semiconductor industries.”
About one-third of the hi-tech companies in Colorado Springs are defense-related, keying off the Air Force facilities in the area, including the North American Air Defense Command inside Cheyenne Mountain. An early head of the local economic development council was a former Air Force general. In addition, Colorado Springs has been named as the center for the government’s new unified space command operations.
“Lots of military money flows into this community as a result of foresight 10 to 15 years ago,” Devine said. “But we’ve also got a lot of consumer-oriented companies as well. We’ve become the second seat of optical computer disc drive equipment behind Silicon Valley.
“And through the space and military efforts, we have created considerable spinoff opportunities for entrepreneurs.”
Devine said that Colorado Springs goes after companies pretty much on its own, with little assistance from state officials. But he said the city has taken to heart the lessons of Silicon Valley--where there now exist transportation and housing problems--in order to learn from the mistakes of rapid growth.
“Growth planning is real important here, and we know what an industrial park is going to look like from its first plottings, before it is built out,” he said.
In contrast to Dayton and Colorado Springs, the research triangle in North Carolina has almost no direct military relationship. What it does have is more than 20 years of strong state backing geared toward creation of a multifaceted research and development cluster. Today, the area features more than 50 companies with more than 25,000 jobs.
“We don’t put San Diego in the back seat ever in thinking of competition because of its attractive life style and climate,” Robert E. Leak, president of the Research Triangle Foundation, said. “But we’ve done pretty well for ourself.”
Research Triangle Park sits between three key cities in the state: Durham, Raleigh and Chapel Hill. The foundation, established in 1960, does the key recruiting of new companies, and has landed large operations such as IBM, Northern Telecom and Sumitomo Electric. A state-funded Microelectronics Center has $30 million to specialize in the development and manufacturing of advanced integrated circuits.
“Our strategy is to go after the bigger companies,” Leak said. “We’re tending to concentrate recently on telecommunications research, including fiber optics and computerized switching gear.” One requirement for locating in North Carolina is that a company carry out some R&D; activity in addition to manufacturing.
Leak said that North Carolina promotes marketing advantages as a result of its southeastern location, close enough to New York and Washington but within the nation’s fastest growing area. It also stresses the strong university base in the state, including Duke University, the University of North Carolina and Wake Forest University, all within commuting distance of the research park. With the aid of the universities, North Carolina is also operating a bio-technology center.
Indeed, Leak said that San Diego must share its reputation for biotechnology research prominence with North Carolina, especially in the area of agriculture. North Carolina has landed several companies, including Union Carbide and Geigy Pharmaceuticals.
One thing that the area has not done successfully, however, is nurture entrepreneurial ventures, where scientists from established companies take an idea and spin off a new company. Such spin-offs are the primary reason for the dominance of Silicon Valley, and the hopes of places such as San Diego.
“We hope that at some point it will happen here, but so far it just has not,” Leak said. “Perhaps entrepreneurials need that California life style, where you can wear a sports shirt to work, go to the beach or drive a Porsche.”
Leak called the North Carolina area conservative, with little venture capital available, in contrast to the risk-taking common in the Silicon Valley and on the increase in places like San Diego and Colorado Springs.
North Carolina did not vigorously pursue the two well-publicized multi-company consortia, the Microelectronics & Computer Technology Corp. (MCC) which located in Austin, Tex., or the Software Productivity Consortium, which picked Virginia’s Fairfax County, Leak said that consortia require a tremendous amount of preparation time to compete for and may not bring all the benefits that they advertise.
Further, North Carolina was not prepared to enter a bidding war with Texas for the MCC.
Texas promised to substantially boost its research development in computer sciences and electrical engineering at the University of Texas, to offer easy access between MCC scientists and the university, to subsidize rental and building costs for the consortium, as well as a variety of other public and private capital support totaling some $30 million. In the view of Texas officials, the consortium was a quick way for the state to move to a world-class status in electronics, and create a cluster of high-tech industry.
As Bobby R. Inman, the head of MCC, explained it to The Times last year, “You establish an environment where you can exchange ideas on how to attack (high-tech) problems.” Texas Gov. Mark White noted that Austin has already been put on the map, with MCC known nationwide. And IBM, Motorola, Westinghouse and Lockheed are among firms choosing the Austin-San Antonio area for new plants as a consequence of the MCC activity.
Given all the competition, industrial planners say that the country is unlikely to spawn another Silicon Valley, with the high concentration of companies.
“That phenomenon is just never going to occur again,” Quentin Hoch, vice president of Fantus, a New Jersey consulting firm, said. “The future is instead going to see specialized areas across the nation.”
