Advanced technology Archives - Colorado-based Business and Economic Research

Advanced Technology Cluster Contributes 17.8% to GDP Growth

July 6, 2015July 26, 2015 horvath Leave a comment

In early June the Bureau of Economic Analysis released Gross Domestic Product at the state level for two-digit NAICS Codes.

Since 1997 Colorado Real GDP has grown at a faster rate than the Real GDP for the U.S. (Sum of States) in 11 of 17 years. The 2014 U.S. rate of growth was 2.2% compared to 4.7% for Colorado.

Since 1997 Colorado Real GDP has grown at a faster rate than the U.S. (Sum of States), 2.8% vs. 2.1%.

There were 12 sectors that lost share in 2014, i.e. their percent of contribution for these sectors was less than their percent of the 2014 total. Collectively, they accounted for 72.9% of the 2014 GDP and 53.5% of the change in the GDP. It was disappointing that the proxy for Colorado’s advanced technology cluster only contributed 17.8% to state’s GDP.

The following table shows the sectors, their percentage of the 2014 GDP and their contribution to the GDP.

Sector	% of 2014 Total	% of 2014 Contribution
Educational services	0.7%	0.6%
Agriculture, forestry, fishing, and hunting	1.1%	0.3%
Other services, except government	2.3%	1.8%
Administrative and waste management services	3.0%	2.9%
Retail trade	5.4%	3.9%
Finance and insurance	5.6%	3.1%
Health care and social assistance	6.0%	5.8%
Manufacturing	7.1%	6.8%
Information	7.2%	2.9%
Professional, scientific, and technical services	8.9%	8.1%
Government	12.1%	4.8%
Real estate and rental and leasing	13.5%	12.4%

There are concerns regarding the level of contribution for the five sectors that have the greatest share of the state’s GDP. The top sectors are:
• Real Estate 13.5%
• Government 12.1%
• Professional, scientific, and technical services, 8.9%
• Information 7.2%
• Manufacturing 7.1%
These five sectors accounted for 48.8% of the 2014 GDP; however they only contributed 35.0% of the 2014 GDP growth.

Of specific concern is the fact that PST, Information, and Manufacturing accounted for 23.2% of the state’s 2014 GDP, yet these 3 sectors only contributed 17.8% of the growth of the GDP. These three sectors are a proxy for the state’s advanced technology cluster, a cluster that is supposed to provide the state with a competitive advantage.

Despite these concerns, the level of Real GDP Growth in 2014 provided significant momentum for the Colorado economy moving into 2015.

Colorado High Tech Job Growth Flat for Past Year

July 9, 2012July 9, 2012 horvath Leave a comment

Colorado’s high-tech cluster played an essential part in the growth of the state economy for the past 20 years, particularly between 1994 and 2001. At its peak in 2001, it employed more than 216,000 workers, or 9.67% of total employment.

Today that number is roughly 175,000, the same that it was when the recession officially ended in mid-2009. High-tech employment accounts for 7.67% of total workers.

The cluster, as defined by Colorado’s Labor Market Information agency, actually continued to decline after the recession. It bottomed out in March of 2010 at 169,300 workers. Over the next 15 months more than 6,000 jobs were added and 176,000 high-tech workers were employed in July 2012. Cluster employment has been relatively flat since then.

Colorado’s telecommunications sector continues to experience declines resulting from consolidations. As well, it has recently been announced that Abound Solar is going into bankruptcy, the addition of a proposed General Electric facility will be delayed and another GE facility will reduce its workforce. In addition the Aerospace and Clean Energy Park in Northern Colorado was scrapped. Unfortunately, the volatility associated with the fledgling renewable energy cluster comes as no surprise. Proposed defense cuts could play havoc with the state aerospace industry.

Current projections for Real GDP growth are less than 2.0% for the next year. Continued lackluster job growth in the high-tech sector is likely.

Murnane Picked to Chair Committee on the National Medal of Science

January 4, 2012January 4, 2012 horvath Leave a comment

On December 31st the Boulder Daily Camera announced that President Obama had named Margaret Murnane to fill the position of chairwoman of the National Medal of Science. Murnane is the Chair of the Board of KM Labs, a Boulder laser company she and her husband, Henry Kapteyn, started in 1994. In addition she is a JILA Fellow and a Professor of Physics and ECE at the University of Colorado.

The National Medal of Science is a program administered by the National Science Foundation. It is awarded annually to individuals who have made outstanding contributions to science and engineering. In late October Murnane was also awarded the Royal Dublin Society’s Irish Times Boyle Medal for Scientific Excellence for her work in the field of laser physics. Murnane was the first woman to receive this prestigious award.

Murnane is the second woman scientist from Colorado’s photonics cluster to be recognized by the Obama administration within the past three years. The first was Kristina Johnson, who served as the undersecretary for Energy at the DOE for about 18 months. Johnson grew up in Denver and was director of the National Science Foundation Engineering Research Center for Optoelectronics Computing Systems Center at CU. Johnson has over 40 patents and helped form multiple startups in Colorado. During her tenure at CU, she and her staff worked with the Business Advancement Center and the private sector to form the Colorado Photonics Industry Association (CPIA). For the past 13 years the group has promoted the cluster of companies which produce precision optics, lasers, optical instruments, and modeling and simulation software.

The achievements of both women have raised Colorado’s standing as a global leader in science and engineering.

ATFilms – CPIA Company of the Year

October 31, 2011October 31, 2011 horvath Leave a comment

The Colorado Photonics Industry Association (CPIA) hosted its 14th annual membership meeting on October 25 to showcase photonics research being conducted at Colorado’s universities. As well, CPIA also recognized Advanced Thin Films as its Company of the Year.

ATFilms specializes in advanced coating technology available, ion beam sputtering (IBS), and mastering the deposition of precise, dense, and durable films. As well they manufacture a full line of superpolished optical substrates with less than one angstrom RMS micro-roughness.

In addition to hearing presentations by each of the state’s research universities, there was a poster session that featured 26 research projects being conducted by students. Last year, CSU swept the top spots in the poster session; this year the top finishers were from CU and CSU. This year’s winning posters were:

First   “Photolithography Process using Extreme Ultraviolet Lasers”/Wei Li
Second   “Surface Acoustic Wave Metrology using EUV Light” /Kathleen Hoogeboom-Pot
Third   “The Development of Multiparametric Microfluidic Flow Cytometry for Directed Evolution of Red-Fluroescent Proteins” Kevin M. Dean.

For the uninitiated, photonics is an enabling technology that is a driver of the state and national economy. The technology is the foundation of the aerospace, biomedical, homeland security, and medical device industries.

Photonics-based technologies impact our daily lives, although we may seldom recognize it. Something as simple as a mirror is a photonics device. Twenty years ago devices such as infrared remote controls, light-emitting diodes, sensors, and laser printers were novelties. Today they are common place. To learn more about the prevalence of photonics in our daily lives click here.

10 Years After 9/11 – Summary of Impacts on Colorado

September 14, 2011May 20, 2014 horvath Leave a comment

This is the final post summarizing the way the economy has performed in the 10 years after 9/11. The series of posts began in early August and has included a review of tourism; construction, housing, and financial activities; retail sales and personal services; high tech and the military.

Tourism

• From an employment perspective, tourism (accommodations and food services) has expanded in Colorado since 2001. Competitiveness within the industry has increased, as evidenced by the flat growth in output.

• In Colorado, the airline industry was “restructured” after 9/11.

• The impact of 9/11 was short term. These declines may have been offset by gains in emerging industries,
such as teleconferencing and other means of communications.

Construction, Housing, and Financial Activities

• Construction, housing (prices and foreclosures), and finance are all interrelated. A portion of today’s
problems can be tied to 9/11 and the 2001 recession. There was a mindset that the country could “spend” its way back to prosperity. That mindset created problems when overextended consumers lost their jobs or saw declines in the values of their houses.

• Construction output peaked in 2000 and has dropped-off since. From an employment standpoint, there was a slight decline during the 2001 recession. A much more severe drop-off began in 2008.

• Creative financing allowed financial employment to grow throughout the 2001 recession. Some of the
products that spurred that growth were problematic in the second half of the decade. In turn, layoffs in the
financial sector began in 2007 and have continued since. These declines are a function of lack of activity,
consolidation, automation, bank failures.

• Year-end equity market values are about the same in 2010 and 2000.

Retail Sales and Personal Services

• Sales of retail goods and personal services has become more competitive during the past decade, yet
employment has remained relatively flat. Increased savings in recent years may be an indicator that consumers learned from the 2001 and 2008 recessions that they have limited resources that can be allocated to the consumption of goods and services.

High Tech (Manufacturing; Information; and Professional Technical Services)

• Employment has dropped significantly as a result of increased efficiencies, outsourcing, and offshoring. At
the same time output has risen dramatically. MIPTS is the driver of the state economy. 9/11 played a role in the adoption of high technology goods and services (surveillance, security, teleconferencing, etc.)

Military
• The U.S. military has increased their dependence on Fort Carson since 9/11.The movement of troops in and out of the base have had a noticeable impact on the El Paso County economy.

The “Lost Decade” was a turning point in the structure of the U.S. and Colorado economies. While 9/11 did not cause this transformation, it played a role in accelerating the change that occurred in some industries.

For additional information, see The Colorado Economy Ten Years After September 11, 2001 at cber.co in the Special Reports section.

10 Years After 9/11 – High Tech Employment Falls Off

September 8, 2011May 20, 2014 horvath Leave a comment

For the past 20+ years, Colorado’s high tech cluster has been a driver of the state economy, creating high-paying primary jobs that spawn growth in other sectors of the economy. During much of that time Colorado has been recognized as one of the top states in the country for its number of high tech workers, on a per capita basis.

There is no NAICS code that reports advanced technology employment. Rather than being called an industry, it is technically a cluster because it’s companies crosses a number of sectors. They vary from goods producers and extractive industries to service providers, such as engineers and architects. The high tech cluster has varied in size from 120,000 to 220,000 workers over the past two decades. Currently it employs about 172,000 people.

Because it is a cluster, special calculations are necessary to determine employment levels. Rather than perform these calculations, a good proxy of the presence of high tech or advanced technology, from both an employment and output perspective, is the performance of the Manufacturing; Information; and Professional, Scientific, and Technical Services (MIPTS) sectors.

The two recessions during the past ten years provided advanced technology companies with motivation to increase productivity through outsourcing and investments in capital. As a result employment declined precipitously, while output showed impressive gains.

In 2000, MIPTS employment was 451,100 workers. About 87,400 jobs were lost by 2010, or an annualized decline of -2.1%. At that point, the MIPTS sectors accounted for 363,800 workers or 16.4% of total employment.

It remains to be seen what impact the sharp decline in employment will have on Colorado’s MIPTS and the high tech cluster. There are concerns that its dropoff will adversely impact the supply chain within the state as well as the base of trained workers. Can Colorado maintain its innovative edge? Time will tell.

Manufacturing, Information, and Professional Business Services Drive Colorado Economy

June 11, 2011May 31, 2014 horvath Leave a comment

All industries play different and important roles in our economy. Some pay high wages or create new jobs, while others provide services that generate tax revenue.

Economic developers welcome the creation of any job, but they emphasize the recruitment and retention of companies that have primary jobs. A primary job brings in money from outside the local community and often pays higher than average wages. As a result, these jobs create wealth and other local jobs.

In Colorado most primary jobs are in the Manufacturing, Information, and Professional Business Services sectors. They account for about 29% of total state private sector employment and 35% of the state’s private sector Real GDP. Colorado’s Advance Technology cluster is a subset of these three sectors.

In recent years, the Mining and Logging sector has employed about 1.5% of total private sector workers, yet it has accounted for about 6% of the state’s private sector output. The Real Estate and Finance group of sectors are also small from an employment perspective; however, they make a significant contribution, 23%, to the state’s private sector output.

Tourism and retail are important for different reasons. First, they touch the economies of all 64 counties.
Colorado’s scenic mountains provide the state with a distinctive competency, that cannot be replicated. Sales tax from the retail sector are a funding source for special districts and state and local governments. These sectors are important because they employ about 1 out of every 4 workers. Combined, they are responsible for about 11% of the state’s private sector output.

Finally, industries such as health care, personal services, utilities and the remaining sectors are important
because they add to the quality of life. These and the remaining sectors employ 35-40% of private sector workers, while being responsible for about 25% of private sector output.

The above analysis is based on 2009 data. The Bureau of Economic Analysis is scheduled to release its 2010 data within the month. Watch for more in-depth analysis at www.cber.co.

Got Jobs? Colorado Economy Stalled

May 28, 2011May 31, 2014 horvath Leave a comment

Got jobs?

The Colorado Office of Labor Market Information recently released data that shows that four-month average employment for the state was 12,500 workers above the same period in 2010. The private sector posted a gain of 14,700 employees while total government employment decreased by 2,200.

Over the past four months, a group of industry sectors have increased their payrolls by 32,800 jobs (see chart below). These sectors account for 60% of total employment.

At the top of the list of gainers are tourism (+10,300) and private education and health services (+9,900). The next three sectors are the extractive industries (+2,800), wholesale trade(+1,900), and higher education (+1,800).

Nationally, the recovery is shaping up differently than in Colorado. The leading U.S. sectors are professional and business services (PBS), tourism, health care, and manufacturing. Job growth in the Colorado PBS and manufacturing sectors seems lackluster compared to the U.S.. Companies in both sectors are part of the state advanced technology cluster, a key driver of the economy.

Meanwhile, the other 40% of the sectors has shed 20,300 jobs. Construction jobs continue to top out the list of industries shedding jobs (-8,800), followed by financial activities and the information sector, both posting losses of 3,600 jobs. Local education, PK-12, has dropped 2,200 workers while the federal government payrolls are down by 1,700. The decrease in federal employment is an anomaly. A number of temporary jobs were added in mid-2010 to complete the decennial census.

Fortunately, the movement of the state economy is different than movement of an airplane, where “stalling out” can have disastrous consequences. At the moment, a recession is unlikely; however, it is frustrating to endure a two-year recovery (jobs and output) that is moving forward at a “stalled pace.”

Colorado Photonics Cluster Outperforms Job Growth for State

May 23, 2011May 31, 2014 horvath Leave a comment

Can you remember the names and order of all the planets?

Ball Aerospace announced that task just got tougher. In a presentation at the May 18th meeting of the Colorado Photonics Industry Association (CPIA), the local aerospace company discussed their role in the search to find habitable planets.

Pictures taken from a satellite built by Ball, as part of the Kepler project, have confirmed 15 new planets and their composition. That is just the beginning. About 1,000 additional potential planets have been discovered and are being evaluated. Expectations are that 80% will be classified as planets.

A second segment of the CPIA program included a presentation on the performance of the Colorado economy and a review of the Governor’s Bottom-Up Economic Development plan. That discussion focused on the importance of Advanced Technology in Colorado and the growth of the photonics cluster.

The AT cluster is a subset of the Information; Manufacturing; and Professional, Scientific and Technical Services sectors. About 20% of the state’s private sector workers are employed by companies in these three sectors, yet they account for about 35% of the state’s private sector Real GDP.

By comparison, tourism accounts for about 5% of Real GDP and retail is 6%. Both sectors are important to the state in different ways.

The tourism sector is an important part of the economy for the state’s 64 counties. Major attractions include Rocky Mountain National Park, Mesa Verde, mountain sports, and shopping at Cherry Creek mall.

Retail is important to local governments. They derive between 50 to 75% of their total revenue from retail sales taxes. As well, the state and special districts rely on retail sales taxes as their primary source of revenue.

The economic review concluded with a look at an analysis of data that showed the growth of the photonics cluster between 2004 and 2010. Cluster growth for this six year period exceeded total state growth in all but one employment size category.

In short, the cluster benefitted from growth of renewable energy companies, but suffered from the decline of the state’s semiconductor industry. The analysis illustrates the importance of enabling technologies and how they play a key role in the success of companies in a wide array of industries.

Do Colorado Companies Receive Their Fair Share of VC Funding?

May 12, 2011May 31, 2014 horvath Leave a comment

Colorado policy makers and business leaders take great pride in the state’s innovation and cowboy entrepreneurial spirit, but do Colorado’s innovators receive the funding or venture capital necessary to take their companies and ideas to the next level?

Most business leaders and policy makers answer the question with a resounding “No!” It is their belief that the local entrepreneurial community would be stronger if Colorado innovators had greater access to local capital.

On the other hand, the National Federation of Independent Business (NFIB) research resoundingly states that most businesses are adequately funded and that their greatest need is to have more customers. Admittedly, the NFIB customer base includes small businesses other than those who seek VC funding, so their results may not be totally representative of the VC community.

Some venture capitalists claim that Colorado lacks the critical mass of companies in any one cluster to warrant the attention that companies and policy makers feel they deserve. It is their belief that quality innovation will attract sufficient funding, no matter the location.

Price Waterhouse Coopers (PWC) Moneytree conducts research regarding the number of VC deals and investments for the U.S. and the states. Since 1995:
• Colorado companies have received 1.6 to 4.2% of total U.S. investment.
• Colorado companies have received 2.2 to 3.4% of total U.S. deals.
• The average size of an investment per deal is similar for Colorado and the U.S.
• Colorado has approximately 2.0% of total U.S. private sector firms.

Based on the number of companies in Colorado, the state typically receives more than its share of VC funding. The question is, “Do Colorado companies receive their fair share of VC funding?”.

For additional slides about Colorado’s VC funding go to the PWC website.