Peaks, Valleys, Parks, Turnpikes and Zones

Peaks, Valleys, Parks, Turnpikes and Zones

Building Your Technology Corridor

Despite the dot-com boom and bust of the late 90s, the technology industry has re-introduced one economic theory that is likely to stick around: the cluster.

Even today, many states in the U.S. and many countries around the globe are positioning themselves as havens for hosts of technology-based companies. It seems that any area with a mid-size city population, a few major universities, legislation aimed at business development and quality of life for young professionals can make a pitch to recruit techies.

So how does one stand out from the crowd?

This Thing Called Tech

“Clustering,” as it’s known in the economic development world, is exactly what it sounds like: stockpiling companies that specialize in a similar discipline in order to promote competition and innovation. Clusters are localised accretions of people, infrastructure and finance that, in sum, can develop a world-leading industry capability. Thus, the companies in the cluster push each other and work with each other to become the forerunners of their industry. In turn, they and the region they’re located in gain a reputation as the place to be for that industry.

While high-tech clusters tend to get the most press, the principal reaches across all industries: be the best at what you do. For instance, a cluster of 700 companies in northern Italy makes half of Europe's socks. Medina, also in Italy, has a high-level sports-car cluster that makes all the Ferraris, Lamborghinis and Maseratis. Doltan, Georgia, a town of 45,000 people near Atlanta, makes 45% of the world's carpets. Even Hollywood could be viewed as a movie-making cluster.

No clusters better exemplify the tech version of this principal better then the two most famous stalwarts of the 90s tech economy: Silicon Valley in California and Route 128 in Massachusetts. But there are many more throughout the country. Here’s a look at how three different communities are “going tech.”

Denver’s mile-high pitch

By all accounts, Denver appears to have succeeded in establishing a beachhead in the tech world. With Denver as its focal point, along with help from Boulder, Ft. Collins and Colorado Springs, Colorado has an estimated 7,500 high-tech establishments employing over 183,000 workers. As a state, Colorado placed first in the nation in concentration of high-tech workers for the third year in a row in 2001, with 98 high-tech workers per 1,000 workers.

Denver is ranked seventh in the nation among “New Economy” cities in a study by the Progressive Policy Institute and consistently ranks in the top ten in Fortune magazine’s “Best Cities for Business” list.

So how did it happen?

“As far back as the mid-80s, we recognized that we needed to diversify the local economy in the metropolitan Denver area,” says Robert Blankenship, COO, Denver Metro Chamber of Commerce. “At that time, we were dependent on oil, agriculture and tourism, but then the oil market suffered a downturn so we started to focus on establishing a high tech industry presence. For us, that’s everything from telecom, computer software and storage to bio-medical products and devices to the space industry.”

In a breakout session called “Going Global” at the Power of Partnership Conference in August, Blankenship describe how the chamber markets the Denver area as the cultural & recreational capital of the Rocky Mountains. According to the presentation, Denver offers “world-class arts, cultural, sports and outdoor attractions.

The active outdoor lifestyle of Metro Denver translates into a high degree fitness, which means less illness and lower employee absenteeism.

Metro Denver averages over 250 days of sunshine a year.

From national and state parks to skiing and winter recreation, from golf and water sports to hunting, fishing, fowl and big game activities, Colorado has it all.”

Blankenship also called it the “pro sports capital of the west,” now with a team in all five major sports (football, baseball, basketball, hockey and soccer).

But relative to a pro-business climate, Denver has much more going for it these days than the weather. Blankenship cites Denver’s International Airport (DIA) as the newest, most technologically advanced airport in the nation and tenth-busiest in the world. The FAA rated DIA the least delayed major airport in the nation in 1997, 1998, 1999, 2000 and 2002. And on the subject of research and development, the Denver area has one of the highest percentages of college graduates in the country – of the adult population, 38.7% are college graduates. In all there are 15 four-year colleges and universities in the greater Denver area.

Using what Colorado already had going for it and what it has managed to build along the way, it’s hard to argue with the results.

Getting into Waterbury’s Zone

Waterbury, Connecticut (the fifth largest city in the state) had a reputation as the brass capital of the world from World War II through the 1970s. Manufacturing and financial services dominated the regional economy throughout the 70s and 80s. But, with the closing of many brass mills in the 70s and the consolidation of financial institutions that occurred in the early 90s, Waterbury’s economy was hit hard and the need for a new direction was obvious.

As Waterbury began proactively planning for downtown economic revitalization, a key requirement was to attract information technology companies. Through locally sponsored state legislation and state funding, Waterbury developed an aggressive approach to information technology industry recruitment. They created an incentive package for IT companies and launched an aggressive marketing campaign. Included in the package were personal and real property tax abatements, access to loans and grants and the establishment of a high-speed internet fiber optic ring.

“We actively supported the formation of the Information Technology Zone in downtown Waterbury,” says Steve Sasala, President of the Greater Waterbury Chamber of Commerce. “Meetings were held with the legislative delegation as well as the Governor, who happens to be a Waterbury native.”

But in order for companies to have access to these incentives, they had to agree to locate in a 42-block zone that mirrors the boundaries of Waterbury’s Central Business District. This 42-block zone became known as the Information Technology Zone (ITZ). After a market study of the ITZ was conducted and showed considerable business potential, the Greater Waterbury Chamber of Commerce was awarded $250,000 in state money to begin aggressively marketing the Zone to IT companies.

“The ITZ is being marketed through the Waterbury Economic Resource Center,” continues Sasala, “which is a unique partnership among the city, the chamber and the Waterbury Partnership for Growth. The reason to locate in the ITZ within Connecticut is also what is special about it: it’s the only ITZ in the state.”

In turn, the ITZ marketing campaign also allowed Waterbury to recruit “complimenting businesses” (new restaurants, advertising firms, etc.) to the downtown. At the end of the first year, over 60,000 square feet of new space had been leased. Despite the economic downturn, fifteen information technology companies and as many non-IT businesses have located to Downtown Waterbury.

“Over the next year or year and a half, we hope to double the number of companies in the ITZ,” says Sasala.

From the ground up in the Hudson Valley

Let’s say you’re essentially starting from scratch in high-tech recruitment. No large metropolitan area, no pro-sports team, no immediate identity. Can you still compete with the bigger, more established players? Perhaps a regional approach could counter this? Well, in upstate New York, chambers of commerce are banking on that premise.

In June 2002, a coalition was formed by the Schenectady, Rensselaer and Albany-Colonie Regional chambers of commerce with the specific purpose of developing programs to market and improve the business climate in the region. In short, they are looking to build their “Tech Valley” from the ground up, a daunting yet interesting premise.

The Tech Valley Chamber Coalition, as it has become known, is a prime example of chambers of commerce looking beyond their county borders to promote their region as a whole, knowing that the benefit will be increased economic opportunity for everyone. Since the initial partnership was forged, the coalition has grown to seventeen chambers, representing 18,500 companies and 416,800 employees.

“Each chamber sees an opportunity to market its business community in the larger context of a vibrant, rapidly expanding high-tech economy,” saysLyn Taylor, President of the Albany-Colonie (NY) Regional Chamber of Commerce. “The coalition recognizes that individuals and companies look at the assets and advantages of an entire region -- as opposed to county-by-county comparisons -- when deciding where to locate a company orseek employment.You may live in one county, shop in another, eat in another, recreate in another, but it's all part of one region.”

The chambers, which stretch from Plattsburgh to Dutchess County, have agree to use the Tech Valley logo and incorporate the motto "Serving New York's Tech Valley" on all communications. By pooling their resources – or by clustering their counties, perhaps – the chambers feel they can better recruit thriving companies. From a marketing standpoint, the coalition began by promoting its quality of life, much like Denver.

“There are a host of assets in Tech Valley that set the region apart from other high-tech areas,” says Taylor. “Two dozen colleges and universities; the region's current work force is nationally recognized as among the most skilled in the country; education, both primary and higher education, is nationally recognized as among the best in the country; the cost of doing business is much more economical; housing costs are far more affordable; the quality of cultural and recreational attractions are outstanding; the transportation infrastructure is updated and effective.Tech Valley is a place where a person can buy a home, drive 20 minutes to work, build a career and raise a family; the quality of life is one of the region's strongest attractions.”

Taylor and the coalition have launched this message with a million-dollar ad campaign, created pro bono by local ad agencies which media partners are airing/printing pro bono. There are a host of innovative marketing tools, including license plates, a CD-ROM and a quality of life magazine set to debut late this year -- which will be used by each chamber in the coalition to promote the region.In addition, dozens of Individual companies use theTech Valley logo on their Web sites, stationery, etc. topromote the region.

The hard work has definitely paid some dividends. In July 2002, it was announced that International Sematech -- a consortium of the world's major computer-chip manufacturers -- would set up a new R & D facility at the University at Albany. The $400 million Sematech project is the biggest fish Tech Valley has landed, attracting national and international attention. As a result, other companies are following suit. IBM has opened a $2.5 billion computer chip manufacturing plant in Fishkill, the largest facility of its kind in the world. Tokyo Electron Ltd. is locating its first R & D facility outside of Japan at the University at Albany, next to Sematech. Tokyo Electron Build builds the tools to support Sematech's work, and that $300 million project, announced four months after Sematech, is a great example of the spin-off nature of high tech.

Future plans include recruiting a developer to build a technology park. The county has earmarked $1 million toward the park that hopefully will become home to small and medium-size technology firms that follow International Sematech and Tokyo Electron Ltd. into the region.

“We need to market the region creatively and effectively to ensure that Tech Valley is seen as a viable location for both employers and employees,” says Taylor“We also need to plan adequately so the region can show growth at the same time it maintains the quality of life that makes it so attractive. Thefact that chambers of commerce from such a large region are all on the same page, speaking with one voice on behalf of the entire community, gives us great hope for the future of this region.”

Driven to succeed

The concept of clustering for the technology industry is well entrenched. It is a proven success for strengthening an area’s economic development program. Many states have an established cluster or one on the rise. Any chamber interested in pursuing technology clusters must consider the following question: what does your town or region have to offer the tech industry? A strong educational system, a developed workforce, a favorable business climate and a high quality of life are all big pluses. For areas such as Denver, Waterbury and Albany, these are key factors in making the cluster work. Underlying these advantages, however, is a drive and determination to grow their technology assets and make a real name for themselves in the technology arena.

- Greg Roth