Friday, October 14, 2005

Tech pay rises, despite job losses

Companies in Metro area are continuing to grow during state's tough economic times; field employs 1 of every 6 workers.

By Nick Bunkley / The Detroit News

Charles V. Tines / The Detroit News Barrie Vince, who joined Plexus Systems of Auburn Hills nearly six years ago, felt secure in his job even as Michigan became mired in a recession and unemployment climbed. Comment on this story Send this story to a friend Get Home Delivery

Southeast Michigan's high-tech consortium says a new report showing that wages at technology companies increased even as a sluggish economy forced layoffs is evidence the industry can drive the state toward a brighter future.

High-tech employment fell from 361,900 in 1998 to 337,787 in 2003, according to the report released Thursday by Troy-based Automation Alley. After losing technology jobs in 2001 and 2002, the region gained about 21,000 positions in 2003, the most recent year with available statistics, suggesting the 2001 recession only dealt the industry a short-term setback.

Most of the jobs lost were in advanced automotive and manufacturing, caused by cutbacks in vehicle production and slow sales.

But some of the layoffs were offset by growth in life sciences and tech-oriented service businesses, and fewer jobs were eliminated within the technology industry than outside it.

The technology industry accounts for one out of every six jobs in Metro Detroit and the surrounding counties, and high-tech workers collect one quarter of the region's payroll. The sector's average wage rose 4.4 percent annually, more than double the rate of inflation, from $52,904 in 1998 to $65,722 in 2003.

"There's a very big light in the tunnel," said economist Patrick Anderson, principal of the Anderson Economic Group in East Lansing. "That light is a high-tech set of companies and a technology industry that is vibrant and growing even in tough economic times."

Anderson, whose firm was paid $25,000 to assemble the report, and Automation Alley see promise for the region in businesses such as Plexus Systems LLC, a 10-year-old Auburn Hills Internet software company that helps manufacturers cut costs by managing their operations online. Plexus has been growing quickly, allowing it to hire more programmers and engineers and to compensate them more generously.

Plexus CEO Robert Beatty said many employees took a pay cut to join the company but now earn well above the industry average. Yearly profit-sharing bonuses have risen from $300 to about $3,500.

It's the type of company that would fit perfectly in southern California: workers wear T-shirts and sneakers, enjoy free food and drink, and have a say in decisions that managers would normally make. Everyone gets the day off whenever a new science-fiction movie opens.

But Plexus, which employs 70 people, easily prefers Automation Alley to Silicon Valley. "We want to be right where the manufacturers are," Beatty said. "We don't think the people in Silicon Valley necessarily know what the issues are for companies in this area."

An abundance of nearby companies like Plexus meant Barrie Vince, 42, didn't have to leave his home state to find software development jobs after earning a computer science degree from Oakland University.

"It's nice that you can stay here and do this job," said Vince, who joined Plexus nearly six years ago and felt secure in his job even as Michigan became mired in a recession and unemployment spiked. "I never really worried about it. We're always busy here."

The Automation Alley report suggests the region has some advantages over Silicon Valley, Boston's high-tech Route 128 corridor and North Carolina's Research Triangle, even though few people think of Michigan as anything but a "Rust Belt" state. Southeast Michigan's technology companies cover a wide spectrum within the industry, including biomedical, alternative energy, engineering and telecommunication.

"This isn't a dot-com marketplace," said Ken Rogers, Automation Alley's executive director. "Our tech industry is diversified."

The report gives Gov. Jennifer Granholm fodder for her mission to broaden the state's auto-centric economy, making technology a cornerstone. Although auto-related high-tech jobs disappeared, other sectors kept the technology industry strong, Anderson said.

More than nine out of every 10 technology companies in southeast Michigan have fewer than 100 employees, the report shows. The number of large high-tech businesses declined 2 percent over the five-year period studied, from 590 to 536.

Some of the state's new small businesses are the product of research at the state's universities. In the past five years, the University of Michigan has spun off 45 new businesses based on technology developed there.

"Innovation-driven companies and jobs are definitely the wave of the future," said Kenneth Nisbet, executive director of the University of Michigan's Office of Technology Transfer. "Trying to substitute the loss of manufacturing jobs with technology-driven new jobs is not going to be an easy process. It takes a long time and lot of investment. But it's quite clear that it's the path we must follow."

You can reach Nick Bunkley at (313) 222-2293 or nbunkley@detnews.com.