NetworkNH, Business and Academic Leaders Working Together To Build a Strong Economic Future for New Hampshire.
Executive Summary:
NetworkNH White Paper
High Technology in New Hampshire: The Future is Now
4/8/2005
High technology employment started to decline in the nation and New Hampshire in December 2000. The decline in the State lasted almost three years, until October 2003. During that time period, the State lost more than one of every three high technology jobs, compared to the national average of one in five, and New Hampshire’s percentage decline was higher than any state with significant high technology employment concentration.
The main reason for the pronounced decline in high technology was the State’s high concentration in commodity-like technology product manufacturing. About 1/3rd of total technology employment in New Hampshire in 2000 was in two highly vulnerable manufacturing sub-sectors - instrumentation and semiconductor manufacturing. These industries in the late 1990s and early 2000s were not only adversely affected by the cyclical and post-Y2K downturn in the demand for technology products, but also severely impacted by the increased outsourcing of high technology component parts to lower cost nations.
The good news currently is that, once again, the technology sector in New Hampshire is a national leader. After having the sharpest decline, New Hampshire has experienced the best “recovery” of any high technology state. While not yet recovering all the jobs lost, New Hampshire has had the highest percentage increase in total technology employment. This is as measured from the low point in the most recent tech downturn in the State (October 2003) to June 2004 (the latest month for which data is available for all the states). In that time period, technology employment has increased over 9 percent in New Hampshire.
There are sectors within high technology in the State that are leading the growth. Defense-related industries represent about one-fifth of high technology employment in the State, and they provided a stable base of employment during the early 2000s decline. There are opportunities to enhance and leverage high technology defense-related industries and employment in the State, most notably with commercial spin-offs and Homeland Security contract work. The service sector within high technology, and in particular, computer system design, computer software development, research and development services, and engineering and related services, have grown significantly in employment over the last two decades. This includes growth rates over the last decade similar to or greater than other high ranked technology states, and relatively strong performance during the early 2000s technology downturn.
The movement of high technology employment concentration to new growth sectors can be facilitated by the strong entrepreneurial culture in the State and a high level of entrepreneurial activity. However, while companies are started, they do not seem to be making it to the phase with significant employment. This is primarily a result of gaps in new venture financing, private investment in research and development, and technology workforce development.
NetworkNH’s overall objective is to help focus economic development efforts throughout the State on the high technology sector, and to build on technology strengths and address weaknesses. The goal is to retain the State’s position as a desired destination for capital investment and employment and to brand the State nationally and internationally as a desirable location for high technology companies. New Hampshire does have a high technology future and the future is now.
1. This report was prepared by NetworkNH board member Ross Gittell, James R. Carter Professor, Whittemore School of Business and Economics, University of New Hampshire, with contributions from another board member, Jeff Sohl, Professor of Decision Sciences, and also the assistance of Jason Rudokas, economics student at UNH.
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