Area’s small companies can play big role in new national mission
Even before the Sept. 11 attacks, the tech downturn had turned ugly in many parts of the country. Little noticed was the relative calm in Southern California, whose tech economy some of us have characterized as the “dogged tortoise” (compared to the “exhausted hare” in the Bay Area).
In the aftermath of our Black September, the region’s tech industry has gone from quiet hope to desperate uncertainty. But despite increasingly tenuous economic forecasts, the prospects for holding our own are still quite reasonable.
With the implosion of the defense industry in Southern California in the early 1990s, many small companies emerged whose technologies were developed in a more closeted context. Between 1992 and 2000, some of these companies found success in the exploding world of network management, telecommunications applications (routers, switches etc.), encryption, and security solutions in such exotic areas as combinatorial chemistry and detection technologies.
More often than not, their visibility was slight, their success modest. In light of the Sept. 11 event, these technologies, talents and histories suddenly have become very relevant to a new national mission. The boundary between defense-specific work and commercially applicable technologies has been fuzzy in the last few years. Now it may be breached for good.
In this pursuit, we may have found a regional competence that actually is differentiated and competitive. The challenge for the region’s tech industry is to identify and address opportunities in this unfolding national concern. In this, we need to understand that the urgency will be with us for a long time.
More than ever, commercial industry is acutely aware of the need to maintain a robust and protected infrastructure, and the defense industry may be more open to the evolving technologies of the past few years.
The irony, of course, is that we must become more sophisticated in dealing with a national enemy that exploits simplicity. Thus, small may be quite beautiful because smaller innovations may actually work at the ignored edges of our national technology marketplace.
The region’s defense industry itself (in many ways, still a cauldron of our technology base) is much less dependent on large-scale manufacturing and assembly work. It is more oriented to satellite, navigation and communications components, high-tech weaponry and “digital warfare.” In light of the unfolding military mission, these activities are likely to be in greater demand.
Picking up the slack
Thus, a host of companies tied to the regional defense industry now are able to sell to an emboldened defense complex and should be able to pick up some of the slack in California’s challenged tech economy. Inevitably, mobile fighting units armed with high-tech gear, a more robust surveillance and intelligence complex, command and control technologies used to monitor and intercept dangerous communications, and identification and security technologies all will become cornerstones of national security policy. The technology and support for such functions will be enhanced with the skills of these regional companies.
Moreover, the region’s universities (and companies) are major recipients of public R & D; funding. In light of the dip in corporate R & D;, this is a not-inconsiderable advantage. Important innovations in nanotechnology, biosciences, engineering, and security and infrastructure technologies will continue to be generated at Caltech, USC, UCLA, the Jet Propulsion Laboratory and Hughes Research Labs. They also can be found at companies like Rockwell, Raytheon, TRW, Northrop, and Computer Sciences Corp. The reduction in corporate R & D; also leads to opportunities for acquisition or mergers for Southern California startups with strong intellectual property.
One should not dismiss the still-considerable challenges. Our high-school educational system and our physical infrastructure transportation, housing, traffic do not match the needs of an economy increasingly based on specialized information, knowledge and support. We may be able to import our way out of a scarcity of workers, but we become less attractive to them if these problems are not addressed.
The real danger for Southern Californians is that we mistake current body blows for system failure, that we focus too closely on economic forecasts that are themselves uncertain, and that we drop out from intelligent, long-term economic engagement. In renewing our commitment to building a solid technology base, we follow the lead of John Kenneth Galbraith, who, famously, said, “the only value of economic forecasting is to make astrology respectable.”-
Rohit K. Shukla is president and chief executive of the Los Angeles Regional Technology Alliance, a private non-profit organization dedicated to the growth of Southern California’s technology base.
