Oakland amoung Calif. cities to lead tech industry growth

Bob Porterfield The Associated Press
Tuesday September 17, 2002

SAN JOSE — Despite a lackluster economy and continuing layoffs, California’s high-tech industry grew slightly last year with Oakland, Los Angeles and San Diego accounting for most of the new jobs, according to a report released Tuesday by an industry trade group. 

Overall, the industry grew just 1 percent, adding only 12,000 jobs to the state’s economy. Most of those jobs were created in Southern California, according to the report by the American Electronics Association. 

San Jose and San Francisco were hardest hit by reduced payrolls, although the Silicon Valley remained the nucleus of technology activity. Oakland and Sacramento saw the most growth in Northern California, generated largely by the influx of companies seeking less-expensive areas in which to conduct business. 

The American Electronics Association’s annual California “Cybercities report” surveyed eight metropolitan areas, and includes companies creating or producing high-tech products. It does not include biotechnology or the dot-com sector, which experienced a devastating implosion last year. 

The report confirms what economists and industry observers already knew: 2001 was a very bad year for high-tech. 

The survey found: 

n San Jose, which continues as California’s leading “cybercity” with 280,842 jobs, lost 4,961 high-tech jobs last year. San Francisco lost 2,139 jobs and Orange County lost 1,075. 

n Los Angeles and Oakland accounted for the largest increases in high-tech jobs with 2,764 and 2,140, respectively. San Diego saw high-tech employment jump by 1,038 jobs and Sacramento enjoyed an increase of 581 jobs. 

n San Jose, Los Angeles, Orange County and San Francisco accounted for 658,000 of the state’s 997,951 high-tech jobs last year. 

“This isn’t news,” said Tapan Munroe of Munroe Consulting in Moraga, who attributes the high-tech employment drought to the lack of sales. “Companies over-invested in technology going back to 2000, business isn’t buying any equipment and they don’t need these guys. We’re going to get back slowly but we’ll never see the heydays of the past.” 

Although the Silicon Valley and San Francisco took the brunt of the downturn, Munroe said, the East Bay area weathered the storm better because of a more diversified economy — everything from oil refineries to biotechnology. 

While the American Electronics Association survey focused on 2001 data, the negative employment trend continued into the first half of 2002. 

“Sadly, I’ve not heard a single CEO tell me they are seeing improvement in the economy on the horizon,” said Carl Guardino, president of the Silicon Valley Manufacturers Group, which represents 190 high-tech corporations. “Most of them are hoping to ride out the storm, but the storm continues. The water hasn’t stopped rising. We’re climbing in the boat.” 

“The outlook for high-tech jobs is pretty discouraging,” agreed Tom Lieser, a senior economist at UCLA’s Anderson School of Business. “There is some indication of improvement in semiconductor sales, but high-tech companies want to be convinced of a sustainable increase in demand for their products before adding jobs.” 

Richard Carlson, chairman of Palo Alto’s Spectrum Economics, calculates that a total of 100,000 Silicon Valley jobs were lost from the beginning of 2001 to June of this year. 

“The bottom of the job market was February,” said Carlson. “The worst has passed. It’s not coming up like a skyrocket, but it is coming up. It’s stabilized as compared to dropping like a stone.” 

Carlson monitors California Economic Development Department data, statistics that are more current than those used by the American Electronics Association.