Vermont's tech industry strong, but cautious

Vermont Business Magazine, Jul 01, 2003 by Edelstein, Art

Bruce Gardner, at Janos Technology, a Townshend company designing and manufacturing precision optics and electro optical systems, looks at the current economy with a fair amount of optimism.

"Our products and applications are broad so they are not all down or up at the same time. We have a very broad product mix."

Gardner sees an economy where the university market for the company's infrared optics is soft, but the push to upgrade Homeland Security, which also uses infrared technology and optics, is soaring.

"There are good signs for segments of our technology," he acknowledged. "The application for infrared optics is growing," Gardner's company, with 80 employees despite the recent layoff of nine, which he expects to rehire soon, closely mirrors the Vermont technology sector. It is diverse, relatively strong, fairly optimistic, and an industry not always under the spotlight until there are layoffs.

"Research, Innovation and Vermont's Economy," a report issued in mid-2002 for the Department of Economic Development, remains the best overall indicator of how well the state's technology sector is doing. The report points to a sector of Vermont's economy growing rapidly.

Although based on figures supplied until 2000 (and therefore before IBM in Essex Junction laid off almost 1,500 in 2001 and 2002), the report is revealing. In 2000 there were 556 high-tech firms employing 14,892 and paying $722 million in annual wages in the state. There was a 30 percent increase in the total number of high tech jobs from 1994 to 2000.

Vermont is the ninth most concentrated technology state. The state's high-tech industry workers earn an average of $21,595 more per year than other private sector workers. The average high-tech wage was 47 percent higher than the average private sector wage in 1999.

Also of note, Vermont has the second highest concentration of technology exports in the nation at 83 percent, which is 54 percent above the national average. This was acknowledged this year when NRG of Hinesburg, a manufacturer of wind turbine products, won the Exporter of the Year award at the Vermont Expo in May.

The report reveals a growing technology industry From 1994 to 1999 there was a 60 percent increase (208) in new high-tech firms created. If technological growth is based on invention, then the state does very well. Between 1996-2000 the number of patents issued annually in Vermont grew 49 percent. Vermont ranks second for the number of patents issued per million inhabitants. Of course, the bulk of the patents and exports are thanks to IBM. But IBM is not the only technological force in the state.

An important engine of technological growth is the University of Vermont. Since 1995 UVM has generated $1.5 million dollars licensing intellectual property.

Within New England Vermont ranks 2nd in the percentage of its citizens holding a PhD. From 1990-2000 Vermont firms received $24 million in Small Business Innovation Research (SBIR) awards.

Computer-related businesses (software, hardware, E-commerce) have attracted over $42 million in private equity from 1994-2000. Also important is where technology is concentrated in Vermont. Over 80 percent of all private equity dollars invested here have been invested in the northwest quadrant of the state, with Chittenden County the main recipient.

"Vermont has a wide variety of technology companies," agreed Janice St Onge the Director of Technology Business Development at the Department of Economic Development. 'There is a lot more innovation happening within the borders than people think."

According to St Onge, Vermont's technology industry is comprised "primarily of research and development companies at the high end in the semi conductor and engineering fields." Also included under the technology umbrella are manufacturing companies using technology to improve efficiency and reduce cost.

What's drawing all the PhD's to the state and helping to propel the industry?

"Vermont is a very attractive place," said St Onge. "We have an educated workforce and a high quality of life."

That said, no state with a budding technology sector could avoid the dot.com implosion of the early millennium years. Vermont was no exception.

"The information technology sector in Vermont has taken a big hit with the dot.com bust," said David Binch.

Binch directs the Vermont Information Technology Center at Champlain College. The Vermont Technology Council created the center in 2000. Former Governor Howard Dean created the council in 1993. Binch looked back at the recent past and observed: "In 2001 the information technology sector was an employees job market. People bid for services, now that has flipped around and IT career people are under- or unemployed." However, there is not all dark in the tunnel according to Binch.

"On the good news side, everybody is bullish about IT career path prospects. The industry is just going through a cycle, as are many other industries. It's still a good idea to get into the IT profession."

Paul Hale at the Vermont Technology Counsel sees the university as a primary economic engine moving the state"s technology industry. There has been a dramatic increase in federal research monies to UVM, over $100 million in recent years.