- H-1B Visas Halved So Far for 2002
- Growing a Bio-based Economy
- Useful Stats I: 2nd Quarter VC Data by State
- Do Non-compete Clauses Discourage Innovation?
- Tech Clusters in Southern Arizona Examined
- Useful Stats II: FY 2002 EPA SBIR Phase I Stats by State
- Council on Competitiveness Seeks Executive Director
- People
Copyright State Science & Technology Institute 2003. Information in this issue of the SSTI Weekly Digest was prepared under a cooperative agreement with the U.S. Department of Commerce, Economic Development Administration. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected. Any opinions expressed in the Digest do not necessarily reflect the official position of the U.S. Department of Commerce.
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H-1B Visas Halved So Far in 2002
The number of tech workers immigrating to the U.S. for jobs in the IT industry are down more than 50 percent compared to a year ago, according to figures released by the Immigration and Naturalization Service (INS) this week. With hundreds of dot-com closures and tens of thousands of layoffs in the information and communication technology industries, the drop was expected by many analysts.Increasing technology opportunities in home countries such as India – traditionally a major source of IT workers under the high tech H-1B visa cap – may also contribute to the slowdown. H-1B visas are good for six years.
The INS reported that during the first three quarters of fiscal year (FY) 2002, which began October 1, 2001, 60,500 individuals subject to the FY "high-tech" limit were approved to begin employment in H-1B status. The limit in FY 2002 is 195,000. By comparison, as of June 30, 2001, 130,700 individuals subject to the FY 2001 H-1B cap were approved by the INS. Pending cap petitions for FY 2002 were estimated to total 18,000 as of June 30, 2002.
The INS points out individuals counted against the H-1B cap comprise less than half of the total number approved for H-1B employment. The primary reason is that persons seeking extensions or modifications to current H-1B employment are not counted against the cap. In addition, persons working for employers statutorily exempt from the cap (such as institutions of primary, secondary, or higher education, or nonprofit research organizations) are not counted.
Increasing the number of high tech visas to its current level of 195,000 was a major legislative victory for the IT industry during the boom times prior to the dot-com crash and economic recession of 2000-2001. The need for the higher limit has been challenged by many domestic labor supporters, who cite the number of unemployed IT-skilled workers unable to find work around the country as evidence.
More information on the INS announcement is available at: http://www.ins.usdoj.gov/graphics/publicaffairs/newsrels/02.08FYH-1BProcessing.htm
Growing a Bio-based Economy
Recognizing the potential economic impact of biotech, nearly every state, most colleges and dozens of communities are developing programs to build bio-based economies. Everyone wants a piece of what may be the guiding field for industrial transformation over the next several decades. Is there enough bio for everyone? What strategies work for building bio-based economies? What approaches are states and localities taking, and what's working?The answers to these key questions can't be covered in an hour. As a result, SSTI's first one-day educational workshop, Growing Your Own: Building Blocks for Bio-based Economies, will focus on how to support and nurture a strong life science industry. The event will be held October 1 in Dearborn, Michigan, immediately preceding SSTI's 6th Annual Conference. Registration at the full conference is not required to attend Growing Your Own: Building Blocks for Bio-based Economies.
SSTI has assembled a crack team for the day, giving participants intensive preparation for how their state, community, university, incubator, or program can better position itself to join the bio-revolution. Through the day, participants will go from a macro look at what defines a successful biotechnology region and end the day with by learning about the drug discovery process with a hands-on tour through one of the world's leading research-based pharmaceutical companies.
- The morning starts with a discussion with Jennifer Vey, Senior Research Analyst at the Brookings Institution. Ms. Vey was Brooking' project leader for Signs of Life: The Growth of Biotechnology Centers in the U.S., a widely regarded, thoroughly researched and somewhat controversial characterization of the nation's leading biotech centers. The report was covered in the June 14, 2002 issue of the SSTI Weekly Digest: http://www.ssti.org/Digest/2002/061402.htm#Brookings
- Participants will then examine the elements of successful bio-based economic development strategic planning with the leading authority on the subject: Walt Plosila, Vice President of Public Technology Management, Battelle Memorial Institute. Dr. Plosila has led the creation of life science strategies for a number of communities, regions and states across the country.
- SSTI's research director, Marianne Clarke, who authored the seminal State Government Initiatives in Biotechnology 2001, the first exhaustive survey of states' efforts to build bio-based economies, prepared for the Biotechnology Industry Organization (BIO). Ms. Clarke will share insights into the variety of approaches states and communities are implementing to support and grow biotechnology.
- After lunch, participants will dissect one of the largest and perhaps most envied life sciences initiatives launched in the country — Michigan's. Raili Kerppola, Managing Director of the Michigan Life Sciences Corridor for Michigan Economic Development Corporation, will lead the exploration into this $1 billion initiative that already is bearing strong results for the state.
Most economic development, of course, takes place on a local or regional level. Therefore, much of the afternoon will be spent with key partners in other successful bio-based economic development taking place outside of the 51 centers identified in the Brookings report.
- Jack Sharp, President, Biomedical Research Foundation of Northwest Louisiana will present a look at the impressive results achieved through the unique approach the Shreveport region has developed to build a life science industry. The latest proof Biomed's approach is working: In June, a pharmaceutical product developer and manufacturer announced it will invest $25 million and create 175 high-wage jobs as the first tenant in the new $10 million Wet Lab Science Incubator located in inner-city Shreveport.
- Bob Skunda, President and CEO of the Virginia BioTechnology Research Park will share lessons learned on the research park's development and progress, which already includes 35 biotechnology companies, four VCU research institutes, four state laboratories and several not-for-profits, including the Virginia Biosciences Development Center. The park is adjacent to the medical sciences campus of Virginia Commonwealth University and the Medical College of Virginia Hospitals in Richmond. The seventh and eighth buildings in the park will open in early 2003.
The event concludes with an exploration of the drug discovery process with a tour of the R&D facility of Pfizer, Inc. With the purchase of Pharmacia Corp, Pfizer is Michigan's single largest bioscience employer. Combined, Pfizer and Pharmacia employ more than 10,000 people in their R&D facilities in Ann Arbor and Kalamazoo. Pfizer announced last November a $600-800 million expansion of its Ann Arbor facility.
More information on attending Growing Your Own: Building Blocks for Bio-based Economies is available by clicking on Pre-conference at: http://www.ssti.org/conference02.htm [expired]
Useful Stats I: Two sources for 2nd Quarter VC Data by State
Venture capital investment continued downward in the second quarter of 2002, according to the PricewaterhouseCoopers/Venture Economics/National Venture Capital Association MoneyTree™ Survey.Total disbursements, which dropped to $5.7 billion and the lowest level since the third quarter of 1998, reflected an 11 percent decrease from the first quarter of 2002. A total of 819 companies received venture funding — a small change from the 826 companies the previous quarter.
While the survey shows most industries continued declines evidenced in the first quarter, some industries improved. At $958 million, the second highest amount, the biotechnology industry showed a 15 percent increase in dollars invested. The medical devices sector also demonstrated growth over the previous quarter, with investment increasing 43 percent to $556 million. Overall, the life sciences industries accounted for 27 percent of all venture capital investing, the highest allocation in the last five years, according to the survey.
Despite suffering a 16 percent decrease over the previous quarter, the software industry remains the leader with $1 billion in venture capital investment. Similarly, semiconductor investments fell 31 percent to $284 million.
The second quarter 2002 MoneyTree™ survey results are available at: http://www.pwcmoneytree.com, http://www.nvca.org, and http://www.ventureeconomics.com.
SSTI also has prepared a table <http://www.ssti.org/Digest/Tables/081602t2.htm> to present MoneyTree™ results by state, including data for the number of deals, total amount invested, and average deal size.
Growthink Survey
The Growthink Total U.S. Venture Capital Report for the Second Quarter 2002 profiles 579 companies that received more than $6.2 billion in the second quarter of this year.The new report finds almost 76 percent of the total activity in the second quarter went to companies in the top 10 metropolitan areas. The San Francisco Bay Area led the U.S. in dollars invested, capturing $1.9 billion (30.1 percent) of the nation's total, according to the report. Boston followed with $763 million (12.2 percent) via 62 deals, while New York City had $457.5 million (7.3 percent).
The remaining top 10 metro areas were Washington D.C., San Diego, Atlanta, Seattle, Chicago, Los Angeles and Orange County, CA. Of these areas, Atlanta, Seattle, Chicago, and Orange County, CA, improved their ranks from the first quarter of 2002. Los Angeles dropped from sixth to ninth, and Denver and Dallas fell from the top 10. No city in Texas was represented in the top 10 for the first time in two years.
Growthink reports only private, U.S. based companies that receive equity investments of $300,000 or more. The company does not collect information on venture capital investments in public companies, debt financing or other areas. The fourth quarter survey, including data by geographic region, state, metro area, and industrial sector, is available in individual sections or in its entirety from Growthink at http://www.growthink.com.
Do Non-compete Clauses Discourage Innovation?
The legal ban on non-compete contracts may have played a role in and continues to affect the development of the high tech sector in California. This is the conclusion of Rob Valletta, Research Advisor, in the August 16, 2002, edition of the Federal Reserve Bank of San Francisco Economic Letter. The article, On the Move: California Employment Law and High-Tech Development analyzes the relationship between high tech development and states that do not legally allow non-compete contracts.Using at- least squares statistical analysis, Valletta concludes that when non-compete contracts are prohibited, employee mobility and knowledge transfer are enhanced. While employees may not be able to share specific trade secrets, general industry knowledge can be shared readily. This freedom can then play an important role in the advancement of innovating technology sectors.
The precursor to the California law dates back to 1872 and current law still prohibits these types of contracts. Colorado is mentioned as another state that does not allow "non-competes" and as one with a robust tech sector.
Valletta also found the relationship held for yearly salary growth but acknowledges that other factors also play a role in the development of high tech sectors.
The full article can be found at: http://www.frbsf.org/publications/economics/letter/2002/el2002-24.html
Tech Clusters in Southern Arizona Examined
Arizona was one of the first states to embrace cluster-based economic development in the early 1990s. While the formal clusters have had varying degrees of success since then, one of the challenges of a cluster-based approach to technology-based economic development is the fractionalized focus across sectors. Because of this, clusters can end up competing against each other for limited public resources, making cross-sector strategies difficult to identify or implement.Research and studies also are usually concentrated on a particular sector rather than looking at the similar needs and issues that arise in several clusters or span many clusters.
The University of Arizona released a study earlier this year that establishes for the first time in Southern Arizona baseline measurements for all six of the region's technology clusters: aerospace, bioindustry, environmental technology, information technology, optics/photonics, and plastics and advanced composite materials.
By designing a study that examines all six clusters using a consistent methodology, the University's Office of Economic Development felt the results would facilitate future evaluation of the health and progress of each of all clusters. The study captured primary data in many areas, including interaction between firms and clusters, workforce, finances, longevity, ownership and size. The impact of September 11 also is examined.
The results revealed that despite nearly a decade of cluster-based ED at the state level, there remained tremendous opportunity to strengthen the region's competitiveness through the benefits of partnering, strategic alliances, joint ventures and basic networking:
- The number of firms engaging in collaboration and joint ventures was very low — ranging from 8 to 22 percent across the sectors.
- Approximately 20 percent of the firms involved in the survey purchase R&D services, and two-thirds of those acquire some or all of that research in Southern Arizona. Only 12 percent of other procurement budgets is spent in the Tucson area.
- More than 50 percent of the industrial participants in the project did not belong to any of the cluster organizations currently; the prospects for greater alliances and partnerships is greatly enhanced, particularly in clusters with participation rates of less than 15 percent.
- A full 86 percent of the tech firms used the Internet for developing buyer-seller relationships.
The Office of Economic Development further points out the project yielded two additional and equally valuable resources for the region: a directory of profiles for more than 400 tech firms located in the area and extensive supply chain and procurement information for use in Tucson's business assistance efforts. The complete Industry Clusters in Southern Arizona 2001 Status Report can be downloaded at: http://oed.arizona.edu/updates.htm
Useful Stats II: FY 2002 EPA SBIR Phase I Stats by State
The Environmental Protection Agency has posted its selections for the FY 2002 Phase I solicitation of the Small Business Innovation Research (SBIR) Program.The Scientific Consulting Group, Inc., which provides contracted support for the EPA SBIR program, made available to SSTI the program's FY 2002 proposal statistics, allowing SSTI to generate a table presenting the state-by-state distribution of awards and proposals by number of each and number of firms. The statistical table presents how competitive the EPA SBIR program is — only 9.5 percent of the 370 proposals were selected for funding.
SSTI's table is available at: http://www.ssti.org/Digest/Tables/081602t.htm
The EPA award list is available at: http://es.epa.gov/ncer/sbir/sbirlist.html
Please note: the link on the EPA site for the 2002 FULL LIST currently is linked to the 2001 page. The links for the six separate research topics correctly take the user to the 2002 subsections.
Council on Competitiveness Seeks Executive Director
The Council on Competitiveness, a non-profit, Washington-based organization, is seeking an executive director for its new National Center on Regional Innovation and Competitiveness. The new center will identify and advance innovation-based regional development strategies, conduct regional workshops, and disseminate best practices in managing regional innovation. The successful candidate will have the vision and management experience to launch this new center.Responsibilities for the position will include setting agenda, overseeing funding, and working with a high-level advisory committee. Candidates should be able to interact effectively with private sector leaders and high-ranking federal, state and local officials. An advanced degree and a minimum of 10 years in economic development are preferred. Experience working with state and local government is a plus.
Candidates should send a cover letter and resume to: NCRIC Search Committee, Council on Competitiveness, 1500 K Street NW, Suite 850, Washington, DC 20005.
Charlotte A. Hayes, president of DCTech, the Washington DC Technology Council, has resigned to return to the private sector. John Sanders has been named interim president, while the council seeks a permanent replacement.
Jim Hayes is serving as interim president of the Economic Development Partnership of Alabama as the group works to fill the position. Hayes was a former director of the Alabama Development Office.
William Parsons is serving as acting executive director of the Rhode Island Economic Development Corp. Parsons is the vice president of operations.
Correction: Lara Vande Walle is the director of membership and business development for the Maryland Technology Council, not Maryland's TEDCO as was previously reported.
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