Glendening's high-tech legacy is likely to endure for years

October 06, 2002|By JAY HANCOCK

LAST APRIL a state trade group declared Manugistics Inc. to be the "Firm of the Year" and a "pacesetter" in Maryland's technology industry. Unfortunately, the award was well-deserved.

Rockville-based Manugistics, which creates software linking industrial producers with vendors, lost $48 million last quarter, is laying off as many as 166 people and boasts a stock that sells for approximately 4 percent of its price two years ago. Behold the pacesetter.

Other firms are doing what they can to keep up.

Corvis Corp., a Columbia producer of glass-fiber telecom hardware, has shed scores of employees this year and just got kicked off the main Nasdaq exchange because a share of its stock couldn't buy a bag of Wal-Mart candy corn the week after Halloween.

EntreMed Inc., a Rockville company that was supposed to have cured cancer by now, has laid off 60 employees in the past two months, keeps losing top bosses and is almost out of cash.

Guilford Pharmaceuticals Inc. and Celera Genomics Group are both bleeding money and downsizing, as are many smaller Maryland biotech firms whose stock doesn't trade publicly.

And Ciena Corp., a Linthicum fiber-optic company that seems to be bucking for next year's "Firm of the Year" laurels, lost $160 million in its most recent quarter and has shucked some 1,600 workers over the past 12 months.

According to Maryland's Department of Business and Economic Development, this state is a "New Economy" leader, far ahead of the country in high-tech jobs and know-how. They say that as if it's a good thing.

Actually, it is. Despite the tech blowup and the ensuing short-term damage, high-tech jobs remain a potent and desirable driver of the regional economy.

Maryland made great progress building its technology base over the past decade. A large number of tech jobs, which pay 75 percent better than jobs generally, will remain after the gloom lifts, and the state should be in good shape to thrive in the next expansion.

But meanwhile, the pain.

"The situation is grim" in Maryland, says Anirban Basu, director of applied economics for Towson University's RESI research institute. "We are still very much in a tech down-cycle. There is still not an end in sight."

Some industries, such as telecommunications, "are dealing with overcapacity, and they may be dealing with these overcapacity issues for years," he adds. "Even in biotechnology you're seeing that companies are having tremendous difficulty sustaining financing for ongoing activities."

Two years ago you couldn't get Gov. Parris N. Glendening and Lt. Gov. Kathleen Kennedy Townsend to shut up about Maryland's high-tech segment. Now, as Townsend vies for the governorship, she plays it down.

The program for this month's Greater Baltimore Technology Council's "Technite," printed in dull, money-saving hues, shows a rabbit and a top hat and urges tech disciples to be "believers."

But what the industry needs is not magic or faith but renewed capital spending by customers, a faster regulatory track for drug approval and at least some redeployment of investment toward more promising ventures.

About 6.6 percent of Maryland's 2.45 million jobs were in high-technology occupations last year, according to the Progressive Policy Institute.

Although the number has probably declined, because high-tech has suffered more than the economy as a whole, this is a pretty impressive result - beating out federal employment as a slice of Maryland's economic pie and roughly equaling the percentage of construction jobs.

Massachusetts is tops in U.S. high-tech jobs, at 10.4 percent of its work force. Maryland's leaders have been doing a good job following Massachusetts' lead in trying to strengthen the high-tech factor. That doesn't mean promoting biotechnology parks or "Silicon Harbor" projects.

It means education. Glendening's most significant economic legacy may turn out to be his enhancement of Maryland's university system.

Some would say he went overboard, but a rich vein of smart, highly trained workers is the foundation for a vibrant economy.

It's uncertain what Maryland's high-tech sector will look like a decade from now, but it won't be the same. The fiber-optics business, which once looked so promising as a high-tech "cluster" for the state, faces a grave crisis.

On the other hand, computer-oriented, non-telecom companies should see a quicker revival. The payoffs from deciphering the human genome are only starting.

And as's Scott Hoyt points out, Maryland's biotech sector "now becomes an element of our defense industry," which ought to be amply funded.

It may not be clear what products tech companies will be selling in 2012, but it's obvious where they'll have to go to find workers.

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