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High-Tech Trends Have Global Effect

It seems that nanotechnologies are becoming integrated into every U.S. industry - but the nation does not have a corner on the "high-tech" market.

Susan Avery (Oct/Nov 07)
"The Future is Coming Sooner Than You Think" - the title of a special report on nanotechnology released earlier this year from the Joint Economic Committee of Congress - could apply to all high-tech industry segments right now. From biotech to consumer electronics, former science fiction scenarios are quickly becoming reality as the pace of technological development accelerates.

Rapid prototyping systems that can build parts molecule by molecule, biofeedback-based sensors that allow users to control computers with the power of thought, data storage devices containing the entire Library of Congress in a space the size of a sugar cube, photovoltaic paint, insulation that generates electricity based on the temperature differential between the inside and outside of a building, nanodevices programmed to destroy specific DNA segments of cancer cells, and tiny chips implanted into real insects that can be used to gather intelligence information for the military are just a few examples of real high-tech advances in various stages of development.

American innovation is alive and well, despite the fact that most Americans have no idea how any of this technology works and just want their iPhones or whatever the latest, hottest, high-tech gadgets happen to be. Fortunately, an elite segment of the U.S. population does know how it works, and that demographic segment is in increasingly high demand.

Wanted: Qualified People
"Companies of all sizes continue to have problems recruiting highly qualified and educated individuals to work for them, whether those individuals are foreign or domestic," says William T. Archey, president and CEO of the American Electronics Association (AeA). He notes that in 2006, the unemployment rate for computer scientists was 2.5 percent, and for engineers it was below 2 percent.

Qualified business managers who can understand the technologies and also navigate the complexities of ever-changing global high-tech markets are in highest demand, adds Jim Poage, president and CEO of the San Antonio Technology Accelerator Initiative (SATAI), which has assisted more than 600 local clients - individuals as well as startup companies - with their commercialization efforts since 2003. Of these, thus far, fewer than 50 have managed to acquire investment capital.

"We don't see the shortage of qualified scientists and engineers," says Poage. "What we do see is a shortage of experienced entrepreneurs - people that have started companies and run them up to be successful. That's a hard skill set to find anywhere."

The most common obstacles to success in high-tech startups, he observes, are "the lack of a good management team, the lack of a clear business plan, and the lack of what I would call a maniacal focus on raising money and making sales." Also scarce, he says, are "the mid-career IT professionals, project managers, and customer-support people who have both the interpersonal skills and the technical background to really bridge the gap between the technical community and the business community."

Many state and federal government initiatives have been launched to help bridge the knowledge gap. Concerns about declining math and science test scores among U.S. students - combined with the rise of China, India, and other countries as major contenders in high-tech - prompted the 21st Century Competitiveness Act, which Congress passed almost unanimously and President Bush signed into law in August. This legislation authorizes increased federal funding for research and development, plus $43 billion for improving public education in science, technology, engineering, and math (STEM) subjects.

Cyberstates
According to "Cyberstates 2007," the tenth anniversary edition of AeA's annual report detailing national and state trends in high-tech employment and other key industry factors, total U.S. tech industry employment increased by almost 150,000 jobs in 2006 to 5.8 million.

The fastest-growing industry segments were software services, which added 88,500 jobs; and engineering and tech services, which added 66,300. Communications services was the only segment that showed a decline in employment, and electronics manufacturing had only a slight net increase. Within the manufacturing segment, some sectors lost jobs while others, including the semiconductor industry with a gain of 10,900 jobs, showed strong growth.

State-by-state data in AeA's "Cyberstates" report, based on 2005 numbers from the Bureau of Labor Statistics, showed California, Texas, New York, Florida, and Virginia to be the top-five states for high-tech employment. Florida had the highest growth rate at 4.1 percent, followed by Virginia at 3.0 percent. The state with the highest concentration of tech workers as a percent of its private-sector work force was Virginia, with 8.9 percent.

Considering that, as Archey points out, "the average tech industry wage is 86 percent more than the average private-sector wage," state governments are becoming increasingly sophisticated in their efforts to promote high-tech development. State initiatives have moved far beyond merely providing direct funding to university R&D programs or offering incentives to companies that bring in high-tech (and high-paying) jobs. Instead, they are targeting specific technologies and industries based on the strengths of existing university programs and industry clusters, and also investing in initiatives that will foster collaboration between universities, industries, and government. California's $3 billion commitment to stem cell research is probably the most famous example, but there are many others.

Almost every state has at least one biotech-related initiative, including state-funded stem cell programs in Maryland, Connecticut, New Jersey, and New York (although on a smaller scale than California's). A growing number of states are also now investing in alternative energy and nanotechnology development, usually through university-state partnerships. A report earlier this year from the National Governors Association and the Pew Center on the States - entitled "Investing in Innovation" - notes that although state investments in R&D are dwarfed by total R&D spending by industry and the federal government, these kinds of well-planned initiatives can make a dramatic difference in future high-tech developments.

In Texas, the state's two-year-old Emerging Technology Fund, in addition to offering incentives to attract high-profile researchers to universities, also provides matching grants to high-tech startup companies in order to help expedite commercialization of new products. This initiative "has had a beneficial effect throughout the state," says Poage. "There are now a whole bunch more companies that are commercializing products than were there a year ago. It has also helped to level the playing field somewhat because areas that previously had almost no technology coming out now have tech companies starting up."

Nationwide, high-tech venture capital investments increased 2 percent in 2006 to $12.7 billion, with software services the largest sector at $5 billion, according to AeA.


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