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Industry Focus: COMPUTERS

These seven factors are critical to making the best location decisions in the rapidly changing world of high-tech.

  [ 11/1/1999 ]  By: Roy Harryman   Print This Article  Reprint/License This Article  E-mail This Article To A Friend  
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Nearly every part of the United States and the world has labeled itself “Silicon” something.

Valley, Alley, Prairie, Forrest, just to name a few.

Maybe they think that, if they name it, you will come.

But it takes more than slogans and marketing to make a location the right destination for your expanding high-tech company. Nope, you need a dose of “Dragnet” Sgt. Joe  Friday’s “the facts ma’am, just the facts,” before you settle on a site.

Expansion Management Magazine has consulted experts and companies on the move, and offers these seven essentials for expanding computer and high-tech firms.

Your location decision won’t be truly successful without:

1. The right work force

“The geeks have inherited the earth,” Lee Sutterfield, president of SecureLogix Corp., told the San Antonio Express-News.

That means it’s important to choose a location with enough techno-geeks, or at least potential nerds, to support your firm.

Dell Computer Corp. knew Nashville, Tenn., was not a leading technology center when it chose the city for its first campus outside of the Austin, Texas, area.

But the company has been flooded with applicants since it announced plans in May for its multi-plant and service campus. The operations will likely employ 5,000 within five years.

“We found the employee base matched our needs well,” said Kip G. Thompson, vice president of worldwide real estate and facilities for Dell. “We did a lot of research to understand that our pioneering efforts would be ... pioneering with good results.”

The Nashville area offers a large pool of manufacturing technology employees who are looking for a job or a job change. Dell officials were also impressed with local schools, technical colleges and universities.

The Nashville area boasts 85,000 post-secondary students with 17 universities and colleges, including Vanderbilt and Middle Tennessee State — the fastest growing university in Tennessee with an enrollment of 20,000. 

“That ... led us to believe that while there wasn’t a technical work force already in place, that work force could be developed quickly,” Thompson said. “So the groundwork was in place. 

“Our sense was that there was a good strong work ethic in the area. We conducted extensive interviews of current companies and inquired as to the work ethic of the people.”

 Interactive Pictures Corp., known as IPIX, is also expanding rapidly in Tennessee. The firm, which went public this year, has grown from 20 employees in 1997 to 200.

In 1997, IPIX, a leader in interactive imaging for the Internet, outgrew its Knoxville facility and moved to Oak Ridge, in part, to be near Oak Ridge National Laboratories. IPIX was launched to commercialize technology developed at the laboratories.

“It (the move) was important from an image perspective and also from a practical and pragmatic perspective to be near its scientific roots,” said IPIX spokesperson Robert Cathey. “There’s such a wealth of highly technical talent in that area.”

2. The right education

Universities and technical training programs are engines for the growth of the computer industry.

They provide not only employees, but opportunities for collaboration, points out Dennis Donovan, a principal of the Wadley-Donovan Group, a site selection consulting firm based in Morristown, N.J.

Software firms, in particular, can benefit from a university presence.

“They’re locating around a lot of university areas that have real strong computer science programs,” said Dan Rogers, a former Motorola executive who runs Rogers Consulting Group in Austin.

Education is making a difference in areas not traditionally associated with high-technology.

For example, Arkansas’ high-tech sector has high hopes that a new college will improve the state’s technical environment.

The University of Arkansas-Little Rock’s new College of Information Science & Systems Engineering consolidates previous technology curriculum and offers new major and minor programs. 

The new systems engineering degree includes an emphasis on telecommunications, partly because of the demand from Little Rock-based Alltel, a rapidly expanding telecom company. Other large information technology players in Arkansas include ESI Group and Arkansas Systems Inc.

The new programs address an instructional void and will help to speed the attraction of high-tech companies to central Arkansas, said Mary Good, interim dean. “Central Arkansas is a wonderful place to live,” she said. “It beats Silicon Valley all to pieces.”

In South Carolina, companies including Policy Management Systems Corp. are taking advantage of the technical training the state offers to expanding firms.

PMSC, a software and electronic commerce systems firm based in Columbia, partnered with the state’s technical college system and Midlands Technical College to receive training through the Special Schools program.

Midlands instructors provided two-years worth of instruction for 40 hires in an intensive nine-month period. 

“They are just totally immersed in software development,” said James L. Hudgins, executive director of the South Carolina Technical College System in Columbia.

PMSC provided a stipend for the students, provided they agree to join the firm upon completion of the program. The state pays for the training, provided the company meets job creation requirements.

Other cities, like Abilene, Texas, have educational programs in place and are actively recruiting firms as an incentive to keep their technical graduates at home. Abilene has three private universities offering information technology degrees. 

In Richmond, Va., White Oak Semiconductor began production last year at its $1.5 billion plant. Motorola also has plans for a $3 billion semiconductor facility in the area, with construction expected to begin by next year.

Supporting the growth of technology industries is a new school of engineering opened in 1997 at Virginia Commonwealth University. In addition, the Work Force One program gives executives input into curriculum development in high schools, vocational schools and colleges.

Some of Northern Virginia’s high-tech employee shortage is beginning to be filled by Richmond workers as firms move south.

3. The right infrastructure

If you’re a high-tech manufacturer, infrastructure can be crucial to your success.

New York state has taken the initiative to ensure that requirements are in place for semiconductor firms through its SEMI-NY program. SEMI-NY pre-qualifies and pre-permits sites, speeding the location and construction process. Thirteen locations were selected, all having met strict criteria for infrastructure, land, power, transportation, work force and higher educational institutions.

For Internet-based firms, an advanced telecommunications infrastructure is critical.

In Pennsylvania, the state has given data-driven companies a head start with its Technology Atlas, which outlines the high-tech data, voice and video infrastructure in the state. Nearly 11,000 organizations were surveyed to collect the data, which will be continuously updated. The database can be accessed on the Internet (www.technology.state.pa.us/atlas) and supports the creation of customized technology maps.

In Virginia, Intel Online Services has chosen Fairfax County for its first East Coast location, a $130 million Internet service center. The company will occupy a 73,000 square foot facility near Dulles Airport.

“A large and growing proportion of the world’s Internet traffic flows through Virginia,” said Mike Aymar, vice president and general manager of Intel Online Services. “That made Virginia a natural location for Intel’s expanding Internet services hosting business.”

4. The right logistics In any industry it’s important to determine how a location will facilitate the movement of people and goods.

San Antonio’s presence on Interstate 35 was important to Amnitek’s capability to serve customers in Austin and Houston. The company chose San Antonio this year for its 90,000 square foot computer casings plant and headquarters.

In New Jersey, NextVenue announced its headquarters would move to New  York City, bringing 100 employees and an investment of $5 million. The company expects to grow to 300 workers in two years. The new media company is relocating, in part, to be closer to its Wall Street customers. 

“We will be able to better serve the financial community’s business-to-business needs,” said Nicholas Balletta, president and CEO.

5. The right quality of life

If you’re planning a facility that will need personnel from other locations, then make sure it’s hip for the crowd that likes hip hop.

“The location needs to ... maximize a company’s ability to recruit and retain those hard to find technical skills,” said Donovan. “It’s got to be a location where a company will receive unsolicited resumes.”

NewTek, a software company that develops applications for video and film editing and special effects for movies, moved to San Antonio from the Midwest, in part, to appeal to young high-tech workers.

“We have to be in a place where we can attract young people to our industry and San Antonio is one of those places,” NewTek President and CEO Dwight Parscale told the San Antonio Business Journal.

6. The right industry mix

States with concentrations of high-tech employment offer a strong foundation for newcomers and expansions. No company wants to be a high-tech loner that lacks  operating support and a supply of local manpower.

A “critical mass” of computer industry firms, higher educational institutions and a talent pool within 100 miles are important for software and R&D firms, said Donovan.

California, the leading state for the computer industry, has already seen 152 computer and Internet technology companies expand or move in this year, and more than 300 during the past two years.

7. The right business climate

As with any type of company, operating costs are important. So is the reception from state and local leaders.

Cost-cutting was a factor in Frost & Sullivan’s move to San Antonio. The company, an international research and consulting firm that focuses on technology, opened its Texas office in June. It has U.S. offices in Mountain View, Calif., and New York City.

“Our other two U.S. locations are in the most expensive places in the country to live and do business,” Troy Kohut, managing director of the San Antonio office, told the San Antonio Express-News. “The costs are much lower here.”

Be sure to find out what incentive programs are available and how state and local taxes will impact on the specifics of your operation.

The facts are in, ma’am

Well, those are the facts, ma’am. Although your firm has its own unique needs, your expansion won’t be a true success unless you’ve addressed these seven biggies.

Sgt. Friday says the case is closed. The facts have been presented, Perry Mason style. Now it’s up to you to decide which location is best.

 

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