IT industry up in Utah, report says

The Internet bubble never popped for Utah’s information technology companies.

At least that is what a new Utah Information Technology Association (UITA) report suggests.

By Steven Oberbeck
The Salt Lake Tribune

The trade association on Tuesday said 2,777 technology companies were operating in Utah at the end of 2002, a 13 percent increase from 1999. In addition, it said the number of information technology jobs in the state increased 34 percent to 57,442 positions.

UITA chairman Greg Butterfield, of Altiris Inc., said in a news release citing the numbers that Utah continues to stand out as a premier location for new IT companies and existing business expansion. "The strong infrastructure Utah is able to provide, together with a skilled IT work force, makes Utah an ideal place for IT companies to thrive and grow," he said.

There is only one problem with that assessment: The data may be off.

"I have some issues with the numbers," said Mark Knold, the chief labor market economist for the Utah Department of Workforce Services, which provided UITA with the raw data for its study. "What I suspect, without having talked with them, is they may inadvertently be trying to compare apples and oranges."

Knold said the federal government last year switched to a new business classification system known as the North American Industry Classification System (NAICS). The new system replaced the Standard Industrial Classification codes in place since the 1930s.

But when the Workforce Services department gave UITA the statewide employment data it provided only "double-coded information" using the government’s old and new classification systems starting in 2000, Knold said.

UITA’s study, though, uses 1999 numbers as its launching point. "There are categories in the new NAICS system that never existed. And since the old and new systems are incompatible, we are probably getting a distorted picture," he said.

Knold also said two of the largest NAICS sector categories that include the IT industry — information and professional and technical services — show a decrease of approximately 3,500 jobs in Utah over the past two years.

Yet UITA President Richard Nelson said Tuesday he stands by the numbers.

"We can give you the names of every one of those IT companies," he said.

As for the employment numbers, Nelson said UITA spent weeks on them. "We scrubbed them down. This wasn’t an afternoon, back-of-the-envelope exercise," he said.

Nelson said the important message from the numbers is that Utah continues to be a technology center.

Anecdotally, the IT industry in Utah suffered along with the rest of the country, with layoffs hitting some of the state’s major players hard.

Layoffs in Utah over the past several years have occurred at Novell Inc., Evans & Sutherland Corp., Intel Corp., Iomega Corp. and Gateway Inc., which completely closed down its Salt Lake City plant in 2001.

"Our high-tech sector was doing real well up until 1999," said Dave Douglas of the Utah Department of Community and Economic Development. "Unfortunately the higher you go, the farther you have to fall. We got hit pretty hard but we did have a few successes along the way."

Over the past six months, though, job prospects in the state’s high-tech sector appear to be improving.

"Things are definitely picking up, but they are nowhere near back to what they were in 1999," said Travis Lawrence, who manages the Utah offices of Addecco Technical Services, a temporary-employment firm that provides software engineers, programmers and other workers to high-tech com- panies.

Addecco is seeing increased demand for network engineers and programmers. "We are starting to see a few thumbs going up, but if you’re a person right out of technical school, it is still rough out there," Lawrence said.

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http://www.sltrib.com/2003/Sep/09032003/business/business.asp