High-tech Darwinism
By the late 1990s, the once-exclusive club of high technology became less exclusive, making tech a defining characteristic of economies in almost every region of the country. “There is no question we have seen a proliferation of high-technology centers,” says AnnaLee Saxenian, a UC Berkeley professor who has written a comparative study of Silicon Valley and Boston.
But when the tech bubble burst, club membership became an economic albatross for some regions. Not only did the Bay Area and Boston sink, but also Atlanta, Salt Lake, Chicago and Houston--cities that had emerged as vibrant centers for software, chips, personal computers, networking equipment, medical devices and a range of other products.
At its peak, the industry employed about 5.6 million U.S. workers, with a half million of those jobs in the Bay Area. The recession, as a result, has left widespread economic damage and no one can reliably predict which regions will come back strongly. Nearly a half million technology jobs were lost from January 2001 to August 2002, according to the AeA, the major high-technology industry association. Since the middle of last year, the industry has stalled and in many places continues to decline.
Large high-technology manufacturing centers have taken the biggest hit, accounting for 76% of job losses in the field, according to AeA President William T. Archey. California has taken the brunt of cuts because of its dominance in manufacturing, but similar centers also were hit.
Steve Kester, a tech expert for AeA, says that Austin was stunned recently when both Motorola and Advanced Micro Devices, which operate chip plants in the city, opted to expand abroad.
Even regions that do not manufacture products are hurting. Atlanta came roaring out of nowhere in the 1990s, pushed by the telecommunications services sector. Houston, Kansas City, Denver and Dallas also followed that path, says Ross DeVol, a Milken Institute economist.
Some cities have fared better, though. Los Angeles and Orange counties have escaped the worst damage, and San Diego--strong in biotech industries--has held up well. “On a proportional basis, Southern California hasn’t been hit that hard,” says DeVol. In the coming years, federal plans for a national missile defense system, new intelligence satellites and general defense electronics promise a robust future.
The Minneapolis metro area, a major center for electronic medical devices, also has fared better than some technology centers because the bust has hardly touched that industry.
Boston comes closest to matching Silicon Valley in terms of its breadth of technology and ability to reinvent itself. A onetime stronghold of the minicomputer, Boston has a broad base of resilient biotechnology and medical device businesses. The Washington, D.C., beltway flourished in the 1990s because of its sturdy foundation of information technology, biotechnology and Internet technology industries. With so much work involving federal agencies, the industry there is better insulated from the commercial tech downturn.
Silicon Valley dominates nine of the 10 critical sectors of high technology, from chip design to software. With 522,400 jobs, the region will be at the center of whatever products or concepts become the next hot trend. But whether the valley can continue its overwhelming global dominance is less clear.
Los Angeles and Orange counties are the nation’s often-overlooked second center for high-technology employment, with 498,800 jobs. The region is strong in entertainment technology, and the current emphasis on national defense and counter-terrorism should assure future growth, especially with federal plans for a national missile defense system and new intelligence satellites.
Boston is the closest thing to a second Silicon Valley, thanks to its tremendous intellectual resources and its proven track record of reinventing itself. With 340,800 high-tech jobs, Boston can count on its proximity to some of the country’s most prestigious universities to maintain a strong tech work force.
Washington, D.C., used to lament that government was its only industry, but the 1990s made the region one of the top Internet and biotechnology centers. It now has 306,400 tech jobs, and the area is well positioned for the next decade because the government is moving strongly into information technology.
Chicago doesn’t turn up on many lists of high-tech centers, but industry insiders say that’s an oversight. The city’s industrial might now embraces tech with 244,300 jobs, but its prospects aren’t clear. The flight of manufacturing to Asia remains a cloud over the region’s tech industry.
