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Washington State’s tech leaders look ahead

If you fear that the U.S. is less competitive globally, that Washington is a poor place to do business and that state schools aren’t producing enough skilled workers, you would have been in good company yesterday at the University of Washington.

By Brier Dudley
Seattle Times technology reporter

http://seattletimes.nwsource.com/html/businesstechnology/2002106568_technet02.html

A group of business leaders and elected officials concerned about these issues gathered to brainstorm ways to help technology companies grow and stay competitive.

Ironically, the group included representatives of world-beating companies doing business in Washington, including Microsoft and Amazon.com. But the message was improvements are needed to ensure economic growth.

Keynote speaker John Stanton, chief executive of Western Wireless, challenged the group to take action but he’s not holding his breath waiting for results.

He noted that businesses were saying the same thing 12 years ago when his company started: that their top legislative priorities were to improve the state business climate and education system.

"I have to confess that … I’m somewhat concerned about the ability of the group that’s represented in this room to really lead," Stanton said.

University research programs are strong and have helped create numerous companies, but money for undergraduate education has steadily declined over those 12 years, he said.

Stanton, a member of Gov.-elect Dino Rossi’s transition team, said he’s most concerned about the state’s business climate, including its high minimum wage, regulatory structure and worker costs. He also blamed educators and business leaders for not doing better in persuading voters to support measures such as tax increases to help pay for transportation and education.

John Stanton: "Lousy place to do business."

"Ultimately, as I complain about this being a lousy place to do business, business leaders — and all the business leaders in the room — have to take the blame," Stanton said. "We have to take the blame for not being more activist, for not being more aggressive and we have to take the blame for not selling our story to the voters."

Yesterday’s "policy forum" was a sort of Northwest debut for TechNet, a Silicon Valley-based industry group that hosted the event along with the Technology Alliance, a state organization formed in 1996 by William H. Gates, father of the Microsoft chairman. TechNet had similar events earlier this fall in Texas, Massachusetts and California.

One motivation for the forums was angst about outsourcing and concerns that "some of these jobs are going to go offshore."

"How do we continue to create jobs in the future?" asked TechNet President Rick White, a former congressman from Bainbridge Island.

Yesterday’s gathering was also a preview of the high profile the tech industry is expected to have in the Legislature and in Congress next year.

The industry’s state priorities include improving higher-education spending and improving transportation. Last year, it persuaded the state to extend tax breaks on research and product development.

Among the federal issues are immigration limitations, Internet taxation and regulation of emerging businesses, such as Internet telephony.

Sen. Patty Murray, D-Wash., said a particular focus next year will be the overhaul of the 1996 Telecommunications Act.

Murray told the group she’ll help the tech industry fight "taxes that stifle innovation" and "excessive regulations" that impede its growth. She also said she is working to expand broadband access in the U.S. and opposes requirements that force public companies to report stock options as expenses.

The cloudy outlook presented yesterday contrasts with the industry’s success in Washington. Last year, 44 percent of workers in the state were employed by technology-based companies, and their average income was more than $91,000, according to a study UW researchers prepared for the Technology Alliance.

The state’s education system needs to produce more computer-science graduates, said Jim Allchin, head of Microsoft’s platform group. He noted that Microsoft has to recruit outside the U.S., "looking for every individual we can get."

"It is the single core problem that will stop the industry from being able to reach its full potential," Allchin said.

Another concern is traffic congestion, said Allchin, who commutes from Seattle’s Laurelhurst neighborhood to Redmond.

"People don’t write code when they’re sitting on the freeway," he said. "Actually, maybe I have in the past, but it’s not a good thing."

Yesterday’s session was in part a regrouping after failures of Referendum 51, a transportation-funding package, and Initiative 884, an education-tax proposal, said Tom Alberg, a Seattle venture capitalist and chairman of the Technology Alliance board.

Alberg said the state’s tech industry has prospered but that it could grow even more if hindrances were addressed.

"On the one hand, we’re encouraged because a lot of good things have been happening — the growth of companies," he said. "On the other hand, we see there’s just a lot of problems."

Brier Dudley: 206-515-5687 or [email protected]

Copyright © 2004 The Seattle Times Company

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High tech still rules state economy
But business climate isn’t encouraging, says one leader

By DAN RICHMAN
SEATTLE POST-INTELLIGENCER REPORTER

http://seattlepi.nwsource.com/business/201967_stanton02.html

Technology-based companies still lead Washington’s economy even though, in the view of one chief executive, "this is a lousy place to do business."

That mixed message was delivered yesterday to business, academic and government leaders attending the 2004 Northwest Innovation Summit at the University of Washington, a gathering intended to help ensure that the United States remains competitive in the worldwide economy.

William Beyers, a UW geography professor, previewed a forthcoming study indicating that technology-based businesses — defined as those with at least 10 percent of their work force engaged in research and development — accounted for 44 percent of all jobs in Washington state last year.

That’s up from 38 percent in 2000.

About 300,000 jobs were directly involved with technology, with another 800,000 positions created by or related to those jobs, the study said. At an average salary of $91,000, tech jobs paid 93 percent more than the statewide average.

More than half the technology jobs are in King County, with a significant number in Snohomish, Pierce, Clark, Benton and Spokane counties.

Washington ranks third nationally as a high-tech business location, behind top-ranking Vermont and Massachusetts. The state falls to No. 12 when aerospace jobs are excluded but climbs to No. 2 for "very high tech," meaning companies where more than 30 percent of the employees are engaged in R&D.

Compared with 2000, technology companies in Washington generated 48 percent more revenues ($106 billion), produced 64 percent more income from labor ($29 billion) and paid 69 percent more taxes ($1 billion).

But that growth news didn’t much impress John Stanton, a Seattle native and a founding father of the cellular industry who now leads Bellevue-based Western Wireless Corp. and T-Mobile USA.

"I’ve seen a lot of change here in 20 years … but the issues in 1993 were exactly the same as in 2005: education and the environment for business," he said. "I have to confess that I’m somewhat pessimistic about the ability of the groups represented in this room" to fix those problems.

He said the state’s support for undergraduate education — "which our companies desperately need to fuel the next generation of growth" — has declined steadily over the last 12 years. Other funding sources should be considered if that doesn’t change, Stanton said.

He said Washington state has the nation’s highest minimum wage and unemployment-insurance rates, the seventh-highest level of mandated health coverage, a "horrendously underfunded transportation system that effectively raises the costs for every business in the state, and one of the most complicated sets of regulations in the United States."

Yes, it’s home to some of the nation’s most prominent technology companies, he acknowledged. But that reflects business leaders’ regional loyalties, not realities.

"As we saw with Boeing, as founders are replaced by professional managers, analytical decisions about business location are going to replace emotion," Stanton said.

He predicted that the "thousands of newly unemployed people" resulting from Cingular’s purchase of Redmond’s AT&T Wireless this fall will spawn many new high-tech businesses. Some of those companies will remain here because their families are here, but others will relocate to the best place to do business, he said.
ON THE NET: For the full Washington technology study, see http://www.technology-alliance.com

P-I reporter Dan Richman

can be reached at 206-448-8032

or [email protected]

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