Monday, February 18, 2008

How I See It

Despite recession concerns, tech CEOs still bullish on Massachusetts

By Christopher R. Anderson

While economists are currently debating whether, or when, the U.S. economy will enter recession, there remains a surprisingly high level of confidence among many of Massachusetts' top technology CEOs. The Massachusetts High Technology Council's Annual Business Climate Survey indicates that technology leaders believe their sectors can continue to grow, but want to be sure that government leaders will stabilize the state's business cost structure and make the public education system more globally competitive.

The survey, released Feb. 15 at MHTC's annual meeting, revealed that 64 percent of participating CEOs expect job expansion this year, while only 7 percent anticipate their company to reduce work force. In addition, 76 percent of CEOs felt Massachusetts was an "outstanding" or "good" place to run a technology firm, up 1 percentage point from 2007.

While the national economy is struggling, the state's technology sectors seem to be performing well and adding jobs. Massachusetts-based companies like Thermo Fisher Scientific Inc. and Biogen Idec Inc. recently reported strong earnings, while tech bellwethers IBM Corp. and Microsoft Corp. -- both of which have growing footprints here -- have also shown increasing profits in recent months.

Still, if Massachusetts wants to foster homegrown employers and continue attracting out-of-state investment, there is a great deal of work to be done. The state's public education system needs to compete not just with other technology states, but with hard-charging global competitors such as India, Singapore and China. And while Massachusetts will never be a low-cost area to do business, state leaders must maintain a stable, predictable and competitive business cost structure.

The results of the survey, conducted each year since 1987, helps set the council's public policy agenda this year. The top five priorities for technology employers, as defined by the CEO survey are:

• Work to implement the consensus K-12 priorities established by the diverse group of education stakeholders convened by MHTC during the past two years;
• Work to oppose new taxes, protect existing favorable tax policies and make other tax policies more competitive;
• Support the continued development of a long-term, tech-based, economic development strategy for our entire innovation economy;
• Reform the state's unemployment insurance (UI) system to make it competitive with the structure of the other 49 states' systems;
• Focus state's work-force development programs to address the specific needs of varied technology sectors.

While education reform topped the list of technology CEO priorities, multiple policies that impact the state's cost climate also scored high on the survey. This is not coincidental because there is growing concern about specific tax policies on Beacon Hill. Gov. Deval Patrick intends to raise corporate taxes by closing so-called "tax loopholes," which MHTC has long urged must be accompanied by significant corporate tax reductions in order to mitigate harm to the state's economy. Only by definitive immediate action can the Legislature prevent a $150 million increase in employers' UI bills in 2008. Even if the current rate is frozen, it will only serve as a Band-Aid -- true reform is needed to make Massachusetts technology employers more competitive.

Even at the edge of a national recession, Massachusetts is still a great place to operate and expand a high technology company. But in an ultra-competitive global marketplace, state leaders must continually work with technology leaders to grow the state's economy and create new jobs.

Christopher R. Anderson is president of the Massachusetts High Technology Council, based in Waltham. He can be reached at chris@mhtc.org.