1. Digital Dialogue: New Hampshire High Technology Industry August 27, 2002 Ross Gittell, James R. Carter Professor Whittemore School of Business & Economics, UNH

2. High Tech: Includes American Electronics Association Definition + Biotech

3. NH Retains Strong Position: Ranks 3rd (of 50 states) in High Tech Concentration tied with California and behind CO and MA. About 1.5 times US average, but decline in rank from 1st, to 2nd to 3rd in last 4 years

4. NH Ranks #1 in Concentration of High Tech Manufacturing, 2/3rds of NH high tech employment is in manufacturing compared to a little over 1/3rd nationally

5. NH Venture Capital $s growing faster (1995-2000) than US ave and faster than other NE and leading HT states

6. High Tech Employment in NH has strongest concentration in Electronics and Computers & Communication Equipment Manufacturing, still below national ave concentration in software

7. Composition of High Tech Employment in NH change from 1988 to 2000, manufacturing still strong and increased concentration in software & communications equipment

8. Biotech in NH: Not a leading high tech sector currently Employment of 4,300 Less than 1% (.8) of total employment in NH and less than 10% of high tech employment –This is below the US (1.1%) average and low compared to leading Biotech states …MA at 1.8% and NJ’s leading 2.7% NH ranks only 23 rd in concentration of employment in Biotech..compared to 3 rd in high tech overall Biotech wages in NH are 42% below the average in MA and 21% below US average Only 9% of 2001 of VC$ in NH in Biotech (vs. 16% in MA) Over last 6 years (1994-2000) employment growth in Biotech in NH 2.8% per year (below US ave of 3.2% and below overall employment growth in NH of 3.8%)

9. NH’s Biotech Industries Medical equipment Manufacturing (with 54% of total Biotech employment) in NH is by far the largest sector in the New Hampshire’s Biotech industry. Pharmaceutical and medicine employed 3% of the less than 1% of total employment that Biotech in NH represents and this is one of leading sectors within Biotech elsewhere.

10. The High Tech Advantage in NH: High Value Added per Worker in Manufacturing (e.g, Computer and Medical Equipment). This is also true, but not as pronounced for high tech services

11. NH High Tech workers more educated than the average worker in NH, but well below US and well below MA high tech workforce:

12. Capital Expenditures per Worker in NH High Tech Manufacturing (& Services) is below average: What will be the effect of this on long term competitiveness?

13. Employment Trends NH compared to US average and other high technology leaders

14. Nearly 50,000 High Tech Jobs in NH: Employment trend up in mid and late 1990s after a decline 88-93, since Q1-2001 high tech employment again in decline

15. Cycles in High Tech Employment: NH longer term performance better than New England average, but below US average..and lagging significantly behind some other states including Colorado

16. During late 1990s tech “boom” NH ranked only 36th of 50 states in high tech employment growth, grew below US ave & less than competitor states…this resulted in decline in AeA rank from 1st to 3rd From Q1-98 to Q1-01 Percentage Change in High Technology Employment –NH 7.6% (ranked 36th highest among 50 states) –Compared to US ave of 18% and CO 22%, VA 19%, CA 17.6% NY 13.3%, PA 11.4%, MA 11.3%

17. Unemployment in NH (well below US ave) and tight labor market in MA limited high tech growth in NH, low unemployment continues

18. During the recent recession NH’s economy has performed better than US average and better than other high tech leaders Total Employment Decline March 01 to July 02… –NH less than 1% (-.8%) and below US average (-1.3%) –Less of a decline than CO nearly 3% MA over 2%

19. The recent recession nationally and in NH is concentrated in Manufacturing: 4/98-7/02: NH lost 8% of manuf. employment..but less steep decline than US ave (-11.3%), 34th out of 50 states

20. Layoffs concentrated in high tech manufacturing in NH.. 50% of layoffs

21. Steepest Decline in Manufacturing in Manchester and Portsmouth MSAs, decline greater than other tech centers

22. NH Software layoffs much less significant

23. Some recent high tech layoffs in NH

24. High tech employment in NH decline started Q1 2001 (lagged decline elsewhere)..since then employment decline is less steep in NH than MA & CO but above US ave

25. NH 13th of 50 states in High Tech Employment decline (on a percentage basis): 7.4% decline compared to US ave of 5.7%, but lower decline than MA, CO

26. Venture Capital Flow…peaked Q4-2000 similar recent drop (2/3rds) in NH & the US

27. NH High Technology Looking Forward Longer term trend of declining rank...losing top position in concentration of employment in High Tech Need to address key factors influencing high tech businesses and investment decisions such as worker availability and skills –quality of life (as magnet) –taxes and wages (will affect skilled worker availability and “pull in” of entrepreneurs) Need to address the foundations that apply across high tech sectors, with particular focus on manufacturing (as manufacturing accounts for 2/3rds of high tech employment in NH) –Increase investment in capital expenditures and R&D –Investment in education, training and retaining of workers and retaining workers (e.g., through minimizing layoffs) e.g., improve pipeline from HS to Post-Secondary