Today’s pathways to financial success lie in innovative, intellect-driven fields. In the South, our heroes are frequently found on the college gridiron. But can entrepreneurs and technological innovators be heroes too? Can our brightest techies make it here at home, or must they travel to California or Massachusetts to seek their fortunes?
Almost 10 years ago, I and other members of the Southern Technology Council encouraged branding the South* as a national and international location famed for its vibrant technology environment.
Last week at a meeting, I heard the identical idea proposed. Everyone nodded — yes, we need to do this. The idea has endured, yet its lack of progress illustrates the difficulties of a high-tech image — both real and imagined — in the South.
What is true about the environment for technology in the South? Let’s start by debunking some myths about the South.
Myth #1: The Southern economy is based on low-value production.
The private sector is voting on the South’s technology environment by investing in high-tech and advanced manufacturing facilities in the South. Much of the investment in new facilities and expansions in the South is in high-technology, knowledge-intensive and advanced manufacturing industries. Corporate project information from Site Selection’s proprietary New Plant Database shows about a third of the investment is flowing into these industries. It also shows that foreign companies are among the leading investors in these high-tech enterprises.
Myth #2: It’s all a bunch of branch plants.
According to Conway Data’s New Plant Database, the percent of total corporate facility projects in the Southeast over the past decade that included a headquarters component was 6.5. What was it nationally? Approximately 8 percent.
That’s an indication of a slight lag, but given the growth rate of the region, it’s not an indication of a laggard as much as a challenger gaining fast on the leaders.
Meanwhile, a look at overall New Plant figures (comprising all types of corporate facilities, from call centers to manufacturing to R&D) shows that the seven states of the Southeast (or 14 percent of the nation) carry much more than their weight, representing 22 percent of all projects tallied in the United States since January 2002.
Myth #3: Southern workers are mostly unskilled.
The South is hardly a backwater of high-tech employment. The average percent of high-tech employment in total employment is about 10 percent for the South — less than the national average of 12 percent, but not by much.
Scientists and engineers comprise 3 percent of the total work force — below the national average of 4 percent, but still significant. The rate of increase is higher than the national average in most of the Southern states, running at 13 percent versus 10 percent nationally.
Myth #4: The South conducts scant research and development.
It is true that the South has a lower percentage of R&D compared to gross domestic product than the nation, 1.55 percent versus 2.61 percent. But the growth rates in the South are truly impressive. The growth rate from 2000 to 2008 was 5.2 percent in the U.S., but 30.4 percent in the South. Remove Florida (where the percentage dropped) from the equation, and the rate jumps to 37.2 percent.
In 2009, the South conducted 7.5 percent of the nation’s private sector R&D. The academic percentage was higher — 12 percent in 2008.
Myth #5: Education in the South is uniformly bad.
Let’s pick an educational statistic: percent of students proficient in math in 8th grade. Sure, the South had a lower percentage rate in 2009, 33 percent versus a national rate of 26 percent. But look at the improvement. The national improvement from 2000-2009 was 32 percent, vs. 47 percent for the South. Many of the states achieved incredible improvement: 76 percent in South Carolina, 66 percent in Mississippi, 56 percent in Tennessee.
The region is home to, among other areas, Research Triangle Park, Atlanta, Oak Ridge, Nashville, and Huntsville. The 2011 Cyberstates report released last October by the TechAmerica Foundation ranked Florida fifth in high-tech employment for 2010, and South Carolina fifth in net tech job creation in 2010 with 300, among only eight states that added net high-tech jobs. Here are the rankings for the only Southeastern states for which TechAmerica issued state-level reports:
An earlier report on tech employment at the city level, published in 2010, found that Huntsville, Ala., was second only to Silicon Valley in concentration of tech workers, with 23 percent of its private-sector work force in the tech industry. Boulder, Colo.; Durham, N.C.; and Palm Bay-Melbourne, Fla., rounded out the top five cybercities with 22, 17, and 15 percent of their private-sector work force in the tech industry in 2009, respectively.
The South may not be Silicon Valley, but many Southerners themselves would be surprised by the vitality and potential for high-tech enterprises in the region. With continued high rates of improvement and investment, the South will increasingly be known as a destination for all facets of high-tech operations.
After building technology companies for almost 20 years in Silicon Valley, Dr. Dirk Brown, who was recruited from California last year to be the director of the Faber Entrepreneurial Center at the University of South Carolina’s Moore School of Business, moved his newest startup, interactive media firm Pandoodle, to Columbia too.
His firm was helped by a check from SC Launch, an affiliate of state-funded research corporation SCRA. Since its inception by SCRA in 2006, SC Launch has supported and funded 188 companies in SC, helped draw 11 relocations to the state, provided business services to 230 early-stage companies and helped position emerging South Carolina companies to secure more than $130 million in follow-on funding from angel, venture and other private capital sources.
Brown’s reaction to moving to the South?
“It’s a hidden gem,” he says. “I can get very talented engineers, marketing support, and a world class business environment and still have a great quality of life for my family. The Southeast is quietly reaching the critical mass required to support the next generation of high-growth, technology companies.”
Scott Doron serves as Director of the Southern Technology Council for the Southern Growth Policies Board. Previously he served as associate manager for strategic research in the South Carolina Department of Commerce.
*For the purposes of this article, the South is here defined as Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee.