Technology, Innovation, and Growth in Colorado

Conclusion

At the time of this study, the Colorado economy was extremely strong and unemployment at an all time low. Overall, there were 375,800 more jobs in Colorado in 1997 than in 1994. The growth of technology industries represents slightly more than 25% of that growth. In 1997 the total number of technology jobs was expected to exceed 17% of total employment. Between 1992 and 1997 the number of technology employees increased by 36%, or almost 95,500 jobs. Total wages for technology employees in Colorado in 1997 is estimated at $16.8 billion or almost 29% of the state's 1997 wages.

Technology firms responding to the 1999 survey are very optimistic about future growth, projecting both increased annual revenue and increased employment. The performance of Colorado business and institutions as measured by indices such as patents, research activity and venture capital investment, demonstrate a current capability for technology-based economic growth.


Risks to Future Growth

Survey respondents showed strong consensus in identifying the factors that could jeopardize future growth, with the ability to identify new market opportunities rated highest overall, followed by availability of technical workforce, and financing for expansion. It should be noted that these needs were identified from a list of ten factors specifically relevant to technology industry. The list was not comprehensive and did not include regulations and taxes, factors that could be expected to effect all businesses.

The niche industries studied in this survey also evidenced strong agreement with these top risk factors, but indicated some differences in priorities as well as some specialized needs. This points out that not all "technology" industries are alike, and service, educational programs and support systems should be carefully targeted to meet the variety of requirements. As shown in the chart on the following page, Internet-related firms identified the need for an improved telecommunications infrastructure, while electronics needed product development and financing for R&D over financing for expansion.

  

 Colorado Technology Industry
Critical Factors - 1999

Overall

Internet

Materials

Electronics

Biotechnology

Markets

Workforce

Workforce

Product/process development

Markets

Workforce

Telecom infrastructure

Finance expansion

Financing R&D

Workforce

Finance expansion

Markets

Markets

Workforce

Finance expansion

Product Development

Product Development

Manufacturing Processes

Markets

Finance R&D

 


Workforce Scarcity

There is no doubt that general workforce scarcity is a problem for technology-based firms. About half of all respondents experienced some difficulty in 1998 in hiring employees in any category including administrators and "all others". 66% of survey respondents identified a trained technical workforce as critical to future growth. 36% of respondents also identified this factor as a potential barrier to expansion.

Planning for programs and resource allocations to meet industry workforce needs should consider that the type of worker needed varies depending upon the maturity of the industry, the type of company, and its stage of development. Overall our respondents reported the most difficulty in recruiting technicians and engineers, and over 50% of new Internet firms had extreme difficulty recruiting in these areas. Companies using advanced materials, however, had most difficulty finding scientists and information technology workers. As displayed in the chart below, Electronics companies had most difficulty finding engineers and scientists, while biotechnology firms found shortages of technicians, information technology and scientist.

Extremely Difficult to Recruit in 1998
Colorado Technology Industry - Percentage of Responses

 

Overall

Internet

Materials

Electronics

Biotechnology

Technician

38.2

52.4

18.2

30.8

30.8

Engineer

32.5

61.1

23.5

52.6

23.1

Information Technology

26.0

0

35.3

16.7

27.3

All others

21.4

6.3

35.3

10.5

18.0

Scientists

19.6

0

40.0

37.5

25.0

Administrator
manager

18.5

26.1

22.2

18.2

10.3

Production/
assembly

10.9

12.5

16.7

5.9

6.1

 

State Investment Strategies

In order to maintain its competitive position and ensure future technology-based growth, Colorado may need to reassess the amount of its investment in existing state technology growth, as well as the allocation of resources to education, research, and business support services including technical assistance to manufacturing and technology-based firms. Compared to other states in support for R&D and R&D plant, Colorado ranked 33rd in 1995 based on dollars invested per capita. In 1995, Colorado ranked 26th among the states in higher education current fund expenditures. Ohio recently announced a 35% increase in its investment in technology-based economic development with a budget allocation of $54.4 million for FY2000. Of this, Ohio allocates $14.75 million to technology action grants to fund collaborative partnerships between companies, and universities which leverage federal and industry support and provide a potential return on investment to the state's economy.

Colorado may benefit by exploring ways to more effectively link Colorado university research capability to in-state economic growth. Two-thirds of companies responding to the 1999 survey indicated that they conducted research and development activities during 1998, however there is very low recognition and use of industry-related university research centers. Almost 90% of these firms used internal financing supplemented by other resources such as industry partnerships and Small Business Innovation Research (SBIR) grants. Only about 2% of the respondents funded R&D activities through universities, however, 14% of companies developing new Internet products and services worked with university partners and 80% of these worked with in-state universities. 20% of electronics firms conducted research with universities.


Tracking Colorado's Technology Readiness

This report has focused on just a few of the indicators of Colorado's technology economic readiness using primary data from a current survey of technology industry supplemented by secondary data on a few selected indices of technology performance. Repeating the survey at regular intervals in the future, using the same SIC/NIAC codes to identify the population representative of technology, would provide some trend data that could be useful to measure the impacts of changes in state policies and programs.

In producing this report, Colorado is one of only a few states to formally assess and report on its overall technology readiness. Both industry and government organizations are beginning to realize the value of collecting milestone and trend data that helps assimilate information on all the factors pertinent to technology-based economic expansion. As of the completion of this report, the Office of Technology Policy within the U.S. Department of Commerce is contracting for a national report of science and technology indicators for all 50 states based on at least 34 performance indicators measuring funding, entrepreneurship, capital, human resources and outcomes. Once completed, this national report, will provide additional information by which to assess Colorado's technology status relative to other states and the nation as a whole.