High-tech industry growing in all fields: State is expanding sector at third-quickest rate in the country
By TYLER CHRISTENSEN of the Missoulian
estern Montana's small but powerful high-tech sector is rapidly gaining ground. Encouraged by the region's relatively low costs, high quality of life and ready access to resources, high-tech businesses representing every field from biotechnology to telecommunications are either setting up shop or making plans to expand.
In fact, according to the international research and analysis firm Global Insight, Montana is growing high-tech jobs at a rate of 20.9 percent. That means Montana's is the third-fastest growth rate in the nation, outpaced only by Nevada's 21.2 percent increase and a nearly 28 percent increase in Washington, D.C.
Still, Montana's tech sector is miniscule compared with most other states, said Susan Ockert, senior research economist at the Montana Department of Commerce. The Treasure State currently counts only about 10,000 high-tech jobs, which puts it in 45th place nationally. Idaho, by comparison, boasts more than 55,000 high-tech positions but shows a growth rate of less than 1 percent.
Nationally, the total number of high-tech jobs peaked at more than 8 million in 2000, then declined by almost 800,000 jobs through 2005. Yet during the same five-year period, Montana added more than 2,000 high-tech jobs.
What's more, Global Insight predicts the state will continue adding high-tech positions at a rate of about 11 percent, or 1,300 jobs, through 2010, with the strongest gains falling into the scientific research and development, management consulting, and architectural and engineering sectors.
Most of Montana's high-tech businesses can be divided into two broad categories, said John O'Donnell, founder and chief executive officer of the Bozeman-based TechRanch. One division includes Internet, software and information-based technology. The other includes businesses involved in life sciences, biotechnology or medical devices.
These are probably the two largest high-tech sectors in Montana, though there are other companies that fall outside these categories, as well as some overlap between the two, O'Donnell said. In fact, bioinformatics a field in which biotechnology and information technology converge is one promising new arena that may be soon take center stage.
"There may be some really good opportunities for Montana where those two worlds overlap," he said.
Western Montana in general seems to be gaining traction in the high-tech world, and all signs point to continued growth, he said.
"I'm pretty bullish about the high-tech sector, and I'm pretty bullish about the biotech/life science sector in particular," said O'Donnell, who is also founder of the Bridger Private Capital Network and founding board chairman of the Montana Bioscience Alliance.
Traditional biotechnology is a "small but impressive" piece of the state's economy, he said. However, in its broadest sense, biotechnology includes not just pharmaceuticals and medical devices, but also bio-based solutions for agriculture and energy.
Biotechnology is a promising field, but the industry tends to be one of the more expensive to break into, O'Donnell explained. New biotech companies need lab space and expensive equipment. They tend to have higher payrolls and very little in the way of collateral. A typical biotech startup also faces years of research and development before it produces a marketable product, meaning any income could be a decade or more away.
That's why Montana will probably see more growth in its information-based high-tech sector, at least in the short run, O'Donnell said.
"It's a lot less expensive to launch and build software-type companies," he said.
Still, almost any high-tech start-up in Montana requires venture capital, and until recently the state hasn't had much to offer, he said. However, that situation seems to be improving as more funding groups within the state get experience and use their reach to connect with other venture capitalists.
TechRanch was launched toward the end of 2000 to help high-tech entrepreneurs get a foothold in Montana. The high-tech industry is somewhat unique among the state's industries, O'Donnell said, and it often takes a specialist who understands the complexities of the business to come up with an appropriate funding strategy for any new high-tech start-up.
TechRanch also maintains a network of angel investors and hosts an annual conference aimed at bringing a higher level of exposure to the Montana market. The state may never catch up to the nation's major biotech centers, such as Boston and San Diego, but so long as it plays to its strengths, Montana can offer a competitive edge, he said.
Western Montana's obvious advantages include its universities, medical centers and research facilities, said Russ Fletcher, founder of the Montana Technology Associated Roundtable and a consultant to various startup organizations.
But a less tangible advantage is the region's quality of life the kind of benefit employers can't make up for in wages, and one that's increasingly important given the nation's looming work force shortage, Fletcher said. Some large companies are also drawn to smaller communities because they offer more access to whatever resources and funding might be available.
However, the state is still lagging in some important areas. It does not, for example, offer a competitive communications infrastructure an amenity many high-tech companies consider a must-have. While some places in western Montana offer Wi-Fi hot spots, other states offer citywide Wi-Fi. Indeed, California is discussing the possibility of statewide broadband.
Education also plays a key role in attracting highly skilled workers and entrepreneurs, Fletcher added, and national companies looking to expand give education and that means K through 80 high priority.
Western Montana's education institutions must turn out a work force prepared to meet the labor demands of an emerging high-tech economy, and businesses have to provide ongoing educational opportunities to maintain a high skill level among their employees.
"The overriding thing is education," he said. "Without that, you have a big problem."