Tech a $3 billion industry
By Greg Wiles
Advertiser Staff Writer
A study attempting to quantify the economic impact of Hawai'i's technology sector says public and private technology activities account for $3 billion, or about 5 percent, of the state's economy.
The $200,000 report, released by a technology advocacy group and sponsored by a mix of public and private money, also says technology job growth will outstrip that of Hawai'i's overall economy in coming years, although both will grow at less than 3 percent annually.
"The key point is that the technology sector is a little larger overall than we expected it to be," said Ken Poole, chief executive officer of the Center for Regional Economic Competitiveness, an Arlington, Va.-based research outfit that supports development of innovative approaches to creating jobs.
"Public investments have helped to seed that but now we're starting to see the evolution on some emerging areas."
The report comes at a time when Gov. Linda Lingle's administration is contemplating a cut in tax credits that have helped high-technology investors save hundreds of millions of dollars. The technology industry has been vocal in supporting the credits, which allow investors to claim a credit for each dollar invested in a qualifying technology or other company here.
The credits were enacted to help attract and grow the state's technology businesses as Hawai'i looked for ways to diversify its economy. Lingle recently said she doesn't think the state may need to rebalance the credits as it tries to cope with tax revenue shortfalls.
The report released yesterday was an attempt to understand how technology contributes to the economy here and set a baseline analysis of the sector. Findings included:
Overall the study presents a bullish picture of the sector, but Poole, in Hawai'i to present the findings, acknowledged there were shortcomings to the effort and that getting a precise view of the activities requires a significant effort in terms of time and research.
As such, non-technology workers at technology companies were counted in the totals.
For example, field workers for seed research and development companies would be counted, as would sales representatives, secretaries and business managers who are crucial to operations.
The research methodology looked at industries where at least 15 percent of the workforce was classified as high-technology workers. Thus, dental laboratories, office equipment merchant wholesalers and landscape architectural services were classified as being technology sector industries.
Poole, who has done studies across the country and is frequently called upon to talk about job development issues, said other researchers have agreed with the methodology, since management and support workers in many technology companies outnumber science and tech workers.
While some may question the inclusion of dental laboratories, Poole said the operations require a host of technicians and biologists.
"We tried to be fairly conservative," Poole said.
At the same time, the study uncovered how Hawai'i's military presence has been an important factor in technology sector growth, as well as how developments in environmental businesses and renewable energy that are propelling the sector. Hawai'i also has a unique niche in astronomy.
Some of the study projections may be superceded by the national and local economic downturn. But Poole said the importance of having a science and technology industry won't be diminished and that people should be positioning themselves for when the economy picks back up.
"Now is exactly the time to be preparing yourself for that," he said.
Report sponsors included The Hawaii Science and Technology Council, a council-affiliated institute, the state Department of Business, Economic Development and Tourism, and the Center for Regional Economic Competitiveness.
Reach Greg Wiles at gwiles@honoluluadvertiser.com.
