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John Byrnes: Milwaukee's cyber status reflects lack of tech savvy

Milwaukee, Wis. - The latest report card on how Milwaukee is doing against other Midwest cities in the race to develop a high tech economy has once again shown that we continue to fall further behind.

The 2008 Cyber Cities report issued by the
American Electronics Association analyzed the industry trends of the nations top 60 metropolitan areas, based mostly on 2006 US Census Bureau data, and found that in metro Milwaukee the downward employment trends in this decade continue, the area has lost 3,800 high tech jobs since it hit the high mark of 37,600 in 2001.

In 2006, only 46 out of every 1,000 private-sector workers in Milwaukee were employed in high-tech firms. These high-tech jobs are in manufacturing, communications, computer systems and software development, engineering services, and Internet services. The only good news in the numbers was a slight bounce in the number of engineering and Internet services jobs. Otherwise, the downward trend is clear.

Reasons for the decline

Why is this happening despite our stated goals of increasing high tech employment?

First, in the last five years Milwaukee has experienced a surge in basic, low-tech manufacturing employment, which has drawn some of the available talent away from our fledging high-tech industries. This is particularly true in metal fabrication and hydraulics, the technology that underpins the heavy equipment industries in the city - industries that are enjoying a surge of business from international buyers who need heavy equipment to build infrastructure in countries like Brazil, Russia, India, and China.

Second, except for healthcare, the Milwaukee region has not participated in the industries that normally use high-technology in their products and services. Industries like military and aerospace, telecommunications, and scientific instruments that have found a home in places like St Louis, Minneapolis, Chicago, Kansas City, and Columbus, Ohio, do not exist in Milwaukee. Even Detroit has more high-tech jobs than Milwaukee due to the efforts by the auto makers over the last decade to reduce design-time-to-market, and to focus product innovations built around high-performance engines and on-board electronics.

And finally, and not so well known, is the recent slowdown in the medical diagnostic industry, a major negative factor that is likely to continue as
GE Medical Systems struggles to regain its sales momentum. In the U.S., the slowdown in medical diagnostic equipment sales has been due in part to changes in governmental regulations that has reduced the number of expensive imaging devices sold each year, a development that may lead to a decision by GE to exit the medical imaging business to focus on the faster-growing clinical markets for genetics and proteomic analysis.

Clearly, the Milwaukee region can no longer depend on GE to provide nearly all of the high-tech jobs in its economy.

Not catching the wave

Information technology moves through the economy in waves that are more or less evenly space about five to six years. These waves coincide with the technology cycle created by semiconductor design rules that are used by chip makers to create better, faster, and cheaper information technology. Each turn of the product life cycle ushers in new IT products and services and opens new markets that did not previously exist.

Over the past 30 years Milwaukee business has missed everyone of the four to five waves of technological change that have moved through the US economy. Few if any local companies made any attempt to exploit new IT technology. A survey of the Milwaukee business community will show that local companies rarely use the latest information technology. Most local businesses are lead by those who adhere stubbornly to a “fast follower” strategy, preferring to adopt innovations long after they have been implemented by their competitors. One leading Milwaukee software development firm hasn't yet installed the last two generations of its software in its own business.

In other Midwest cities, business leaders who understand the relationships between faster chips and new market applications are seeking innovative applications of the next generation of computer chips, not the last. Techo-savvy business leaders in other communities are helping their regional economy by defining “grand challenge” problems for local research institutions, and by working with smaller, local companies to commercialize the next generation technologies that result from local research efforts. This does not now happen in Milwaukee.

Consequently, most Milwaukee businesses are chasing innovation, rather than leading it. The tendency to fall behind the technology curve is costing our region dearly and the numbers show it. Our business and governmental leaders fail to see the risk inherent in the fast-follower strategy - in high tech, it is never fast enough! If Milwaukee wants to participate in the high-tech economy, we must start with a commitment to move out ahead of the information technology curve. We must become leaders, not followers.

Institutional knowledge

At the
Milwaukee Institute we are addressing this problem in two ways: first, by focusing attention on the “grand challenge” problems in local industries, and second by providing collaboration tools that will encourage more interdisciplinary research that is targeted at finding solutions to such problems.

In the months ahead, the Institute will announce technology initiatives in healthcare, manufacturing, and transportation that will begin the process of re-inventing the economic basic of the Milwaukee region. We don't expect to solve every problem, but we do intend to encourage innovation and technology development in ways that have not yet been tried.