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The Honolulu Advertiser
Posted on: Sunday, October 3, 2004

Isles' tech job growth outpacing U.S.

By Sean Hao
Advertiser Staff Writer

Cathy Owen left a 21-year career with IBM and moved to Hawai'i four years ago to become president of HotU Inc., one of a small number of high-tech startup firms in Honolulu at the time.

Cathy Owen, former president of HotU Inc., took over leadership of Nanopoint Inc. after the liquidation of HotU left her temporarily jobless.

Richard Ambo • The Honolulu Advertiser

So it's understandable that she would be nervous about finding another high-level technology job after HotU liquidated earlier this year. But the 48-year-old former software programmer and marketing executive pulled it off.

Owen recently became president of startup cell imaging company Nanopoint Inc. Such executive level opportunities are becoming more plentiful in Hawai'i.

"Over the four years that I've been here, my perception is that there are many more very interesting technical opportunities," Owen said.

In the last three years, high-tech jobs have grown in Hawai'i at a faster pace than in the nation overall, driven in part by some of the nation's most generous tax credits and the state's limited participation in the tech bubble of the late 1990s.

As the nation's high-tech workforce shrank by 10.5 percent during the last three years, the number of people employed in technology jobs in Hawai'i rose nearly 7.5 percent, according to figures compiled for The Advertiser by the Bureau of Labor Statistics.

That doesn't mean Manoa Valley is ready to challenge Silicon Valley in terms of total jobs. The technology sector in Hawai'i employs about 15,000 people, just 3 percent of the workforce statewide. Nationwide about 7.59 million people work in tech jobs, or about 6 percent of all workers.

The good news for high-tech proponents is that Hawai'i added about 1,000 jobs and $125 million in wages between 2001 and 2003, a period when the market for tech jobs in most other states was either flat or in decline. That's according to a formula developed by Carnegie Mellon University and the State Science and Technology Institute, an industry consultant in Westerville, Ohio, that attempts to identify jobs created in the amorphous industry.

Troy Keipper, 27, left a job in the San Francisco Bay Area two years ago to take a job at Navatek Ltd., a naval engineering firm. The company has doubled its workforce to 45 over the past three years.

Bruce Asato • The Honolulu Advertiser

Hawai'i's tech growth "is good to see," said Dan Berglund, president for the State Science & Technology Institute. "I'd be pretty happy with that. I would expect that in most states the number of jobs in technology industries is going to be fairly stable."

Despite the relatively strong results, Hawai'i has had its own troubles with tech, including the failure of the once-promising HotU, which made software for managing career fairs. The state also has seen businesses such as networking equipment company Firetide Inc. move its headquarters to California to be closer to investors with deeper pockets.

Because technology is such a vaguely defined sector, pinning down employment can be difficult. The formula designed in part by Carnegie Mellon attempts to solve that problem by capturing people working in industries that hire high numbers of science and technology workers or that have higher than average research and development budgets.

According to that method, Hawai'i's tech employment rose from 13,860 people in 2001 to 14,897 people last year. Meanwhile, the nation overall lost nearly 887,000 technology jobs during that period amid fallout from the bursting of the technology bubble and continued troubles in the telecommunications industry.

For Hawai'i, a growing technology sector means diversifying the state's economy away from tourism, agriculture and the military. It's also a source of high-wage jobs with the average technology wage coming in at $56,955 last year.

Troy Keipper, a naval architect at Navatek Ltd., is one of the 1,000 new employees in Hawai'i's technology industry. Keipper, 27, left the San Francisco Bay Area to work for the naval engineering firm two years ago. He was attracted by the opportunity and Hawai'i's quality of life.

He said he didn't have to sacrifice his interests or career to make the move.

"It was a complete step up for my career," Keipper said. "Put this job anywhere in the county and I'd still want to work for them."

Overall, Navatek said it has doubled employment to about 45 people during the last three years.

Another way to measure high-tech growth in Hawai'i is to clock patent and research-and-development activity.

Hawai'i inventors have been assigned 27 patents so far this year, which is consistent with levels reached during the last five years.

On the research side, federally financed Small Business Innovation Research grants won by Hawai'i companies through June topped $7 million, which was the most since at least 1989. Those figures include only companies that sought state matching grants through the Hawaii High Technology Development Corp.

Troy Keipper, a naval architect, says he loves his job with Navatek Ltd. and calls his decision to relocate to Hawai'i a good career move.

Bruce Asato • The Honolulu Advertiser

Owen's new company, Nanopoint, won a $99,900 grant from the National Science Foundation to develop an instrument to analyze and compare molecular characteristics of living cells without destroying their natural environment or the cells. The tech startup has five full-time and part-time employees.

'Aiea-based Hawaii Biotech received a $250,244 grant from the Department of Health and Human Services to research a vaccine for tick-borne encephalitis.

In an effort to spur growth in the technology industry. Hawai'i offers one of the nation's most generous tax credit programs, which in 2001 and 2002 generated $161 million in state investment and research tax credits.

Gauging whether the state is getting its money's worth or overpays for those jobs is difficult because it's unclear how much of those tax credits went to traditional technology companies and how much paid for movies or other businesses that qualified.

In addition, the identities of companies and investors benefitting from the credits is clouded in secrecy.

"I'm not entirely sure why everyone wants to be so secretive," said Paul Brewbaker, chief economist for Bank of Hawaii. "Tracking it would be a lot easier if they could just tell us — my firm created this many jobs and would not have otherwise."

"If these people want us to believe they're doing something, then let us know."

Among the tech companies that acknowledge benefiting from technology tax credits are Nanopoint, Hoana Medical, Hawaii Biotech, Hoku Scientific, HotU and Firetide. Nanopoint's Owen said tax credits have had a meaningful impact on the sector both in influencing decisions to keep jobs in Hawai'i and in mitigating risks for local investors.

"There's been a big education that has had to go on in Hawai'i," she said. "The whole idea of this is to build an investor base that we need to move forward."

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.

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