LasVegas missing from tech listing

Michael White

Wednesday, July 14, 1999 | 11:49 a.m.

LOS ANGELES -- Cities that fail to attract high-technology industries risk being left behind in a new economy dominated by the Internet and industries such as telecommunications and biotechnology, a study of U.S. metropolitan areas concluded.

Areas best suited to lure new high-tech businesses, however, are those that already have them or have strong research facilities that could help nurture young companies, according to a study released Tuesday by the Milken Institute.

"High technology certainly will determine which areas of the country are succeeding. Areas without high-tech are going to be left behind," said Ross DeVol, the report's principal author. "There are still remnants of the old economy around, but the new economy is here."

Western metropolitan areas, led by San Jose, Calif., have become the strongest magnets for growth over the past two decades, the study found.

Western cities hold four of the top five positions in a study ranking 50 cities on the basis of their concentration of high-technology jobs and revenues they produce. Boston is ranked fourth after Los Angeles, with Seattle metropolitan area fifth.

Neither Las Vegas nor Reno were among the 50 cities in the list.

In 1978, the situation was reversed. Only one western city, San Jose, ranked in the top five. Rochester, Minn., Williamsport, Penn., and the Kalamazoo-Battle Creek, Mich. led the list, followed by San Jose and Sherman, Tex.

Rochester, where IBM built mainframe computers, lost ground when the company failed to anticipate the switch to personal computers. Williamsport fell off the top-50 in the early 1990s, when defense cutbacks led to a shakeup in the aerospace industry. Kalamazoo-Battle Creek fell in the rankings because its primary high-tech industry, drug manufacturing, has declined as a share of the overall national economy, said DeVol.

"We've had a massive migration west," said DeVol. "Overall what you see is either a combination of either being heavily concentrated in a product that waned in importance, like the mainframe computer, or with one firm that completely missed the boat in changes in technology, and generally higher business costs."

San Jose remains the undisputed center of technology development with a composite score of 23.6. Scores were based on a complex formula that considers several factors, including the impact of technology on the local economy and its contribution to the total revenue produced by the nation's high-tech companies. In 1998 San Jose accounted for 5.8 percent of a total national high-tech output of $1.5 trillion.

By comparison, Dallas scored 7 and Los Angeles 6.9.

Silicon Valley, which includes San Jose and surrounding cities, remains the world's technology capital despite an exceptionally high cost of living and problems like traffic congestion and housing shortages, DeVol said.

"It's a very high-cost location, and there is a lot of (traffic) congestion, but most major firms still want to have a presence there," he said.

Dallas benefitted from a diversified technology base that includes the world headquarters of GTE Corp. and the U.S. headquarters of Canada-based Nortel Corp., Stockholm-based L.M. Ericsson, Japan's Fujitsu LTD and the French telecommunications company Alcatel SA.

Los Angeles' No. 3 ranking resulted from the growth of multimedia entertainment, including small special effects companies that cater to the film industry. The figures for Los Angeles, however, are inflated because of the way the federal government compiles movie-industry data.

Because there is no separate category for multimedia, DeVol included all movie industry revenues as part of the area's total high-tech output. If non-multimedia could be filtered out, Los Angeles probably would fall to fifth or sixth place on the list, he said.

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