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State Leads in Tech Posts; Valley Shows Strength

California led the nation in the number of technology jobs, the industry’s highest wages and exports, and the amount of venture capital, according to a study from the American Electronics Association, a tech industry trade organization. Locally, those who monitor the San Fernando Valley and the Southern California region’s economic health say the technology industry continues to show signs of strength. “The people I talk to are telling me it’s a lot like the time before the Internet bubble,” said Ben Kuo, operator of the SoCalTech.com website. “People are making investments.” Economic Alliance of the San Fernando Valley President and CEO Bruce Ackerman said the age and maturity of the tech companies in the Valley is what puts the industry in such good shape. “When we went through the dotcom bust we didn’t see as many cutbacks in services and employees as they did on the west side (of Los Angeles), San Diego and the Silicon Valley and that speaks to the strength of those companies,” Ackerman said. The AeA study listed the leading high-tech industry sectors as computer systems design and related services, telecommunications services and research and development and testing labs. The R & D; and testing labs employment held steady in 2004, the most recent figures available, compared to 2003. Telecommunications and computer systems employment saw a slight drop in workers in 2004 compared to the previous year. In the Valley, computer systems designs jobs increased in 2004 to 5,280 compared with the previous year, according to the Valley Economic Report issued in the fall by the San Fernando Valley Economic Research Center at California State University, Northridge. Jobs in the R & D; and testing sector and in telecommunications dropped in the Valley, according to the CSUN report. In the AeA study, the state had 904,000 technology jobs in 2004, a payroll of $81.9 billion and an average wage of $90,554. Those figures are for 2004. Matthew Kazmierczak, a researcher on the AeA study, said that nationally the tech industry has “turned a corner” and that while there were job losses, the number was down from previous years. In three of four tech sectors examined there was a gain of 61,000 jobs in 2005, Kazmierczak said. In 2002-03, there had been a loss of 333,000 tech jobs while in 2003-04 there had been a loss of 44,700 jobs. “The electronic manufacturing increased employment, which is something we did not expect to see,” Kazmierczak said. “We hear that the software service is an incredibly strong industry and that manufacturing is less so because of the cost structure and manufacturing centers being sent elsewhere.” The CSUN report, however, does not have a separate technology category but instead includes tech jobs in other categories, such as Information, Durable Manufacturing, and Professional, Scientific and Technical Skills. The lack of a technology category is due to not being able to strictly define what tech jobs are, said the center’s director Dan Blake. “A lot of us have an idea what (tech) is,” Blake said. “But there was no agreement among the various data providers what is high tech and what isn’t.” Areas with job increases were computer and electronic product manufacturing, Internet publishing and broadcasting, and computer system design and related services. Those with job losses included telecommunications, Internet service providers, Web portals and data processing services, and electrical equipment, appliance and component manufacturing. The AeA’s numbers do not reflect additional job losses in the tech sector following Tekelec’s shutting down of its Calabasas operations in April and relocating 45 employees in its finance, accounting and IT departments to North Carolina, Vitesse Semiconductor Corp. laying off employees in Camarillo, and 3D Systems Corp. moving its headquarters from Valencia to South Carolina. But researcher Kazmierczak said it was not necessarily a bad thing that some jobs, such as those in the semiconductor sector, go elsewhere. The people who are designing the chips are paid significantly more than those making the chips themselves, Kazmierczak said. “A lot of the high-end work is done in the U.S,” Kazmierczak said. “The design, the production, the testing, the building the initial factories to test the process before it gets sent abroad.” Still, that doesn’t mean there isn’t a call for some tech jobs in the region. “The demand for engineers is huge,” said SoCalTech’s Kuo, who includes job openings at the site. “There are more positions than there are people to fill them.” With so many existing innovative companies in the Valley and more always emerging, there is a large talent pool for employers to draw from, said Lief Morin, president of Key Information Services, a Woodland Hills information technology systems integrator. “I have several clients in what falls into the technology category where I would see an employee in the IT department move over to another company and then move on to a third company,” Morin said. The AeA put California number one in the nation with $10.4 billion invested by venture capitalists in 2005. More recent figures from The Money Tree Report by PriceWaterhouseCoopers and the National Venture Capital Association based on data from Thomson Financial had venture capitalists investing $5.6 billion nationally in the first quarter of 2006. In the Valley, there were six companies in the telecommunications, software, information technology services, media and entertainment, and electronics and instrumentation sectors that received $85.4 million in investments. Michael Leigh, president of the Los Angeles Council of the AeA based in Woodland Hills, said one difference in today’s investors compared with those from six or seven years ago is they are not so willing to take risks on potential technology. “Today a lot of the venture capitalists are not looking at that anymore,” Leigh said. “They are looking for a safe haven and low-risk investments.”

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