A New Identity for a Political Town
The Washington, D.C., region has attracted a growing economic base of technology businesses, but now it needs to show them off
Washington's business leaders think it's time to reveal to the world what they have known for quite some time -- that politics isn't the only game in town.
While the federal government will always be a major draw for new business in the Washington region, increasingly companies are moving here to be part of the burgeoning network of technology firms. And the region's 2,000 or so companies that provide information, telecommunications, medical, space and transportation technologies are beginning to make up an increasingly large percentage of the area's employment.
In fact, many experts studying local economic growth say promoting technology-based businesses is the most promising hope the area has had for creating a luring business image for itself. And there are signs even the traditional real estate and retail business base is ready to embrace the opportunity of being known as another Silicon Valley.
The Greater Washington Board of Trade could provide a strong voice -- and significant funds -- towards creating this image when it announces its strategy for the region's future economic growth, due out next year. For the first time ever, the board is sponsoring a study of the technology businesses in greater Washington, suggesting the group is ready to recognize the pivotal role technology-based firms will play in the region's future economic growth.
"Technology-based economic activity has not been recognized as important until recently. Now it is being recognized as a driving force in the economy of the region," said Roger Stough, a professor of public policy at George Mason University. He is heading up an effort to create a database of the region's technology companies for the Board of Trade.
Stough recently completed a study of the Northern Virginia high-tech community and found that while technology-based businesses only represent 3 percent of the area's firms, those companies directly impact 20 percent of Northern Virginia's jobs, 33 percent of the economy indirectly and directly, and about 40 percent of the tax base.
Past studies of technology firms in Suburban Maryland yielded similar results. Stough expects the region-wide technology study to show technology businesses are an economy driver. But many industry observers don't need another study to show them the obvious.
"The region's future growth lies with its future high technologies," said Paul Schneck, past chair of the National Information Technology Center of Maryland, which recently changed its name to the Maryland Information Technology Center. The type of technologies that the region has become known for, especially in the information-based sector, will grow quickly and become increasingly important to the nation, he said.
They are environmentally sound, in that they manufacture intellectual capital instead of products, and the technologies support workplace changes such as telecommuting, said Schneck.
Stephen Fuller, who after 25 years as an urban development professor at the George Washington University recently joined the staff at George Mason University, agrees. Even though the federal government is the current principal foundation for the region, that's not what will propel economic growth in the area, he said.
The federal government infused the Washington, D.C. economy with close to $80 billion in direct and indirect spending last year. And the Defense Department contributed almost a third of that amount. In addition to the federal government, education, medical and health services and tourism each contributed between $15 billion and $20 billion to the local economy.
But those revenue sources are not expanding, and in fact the federal government chunk is shrinking, said Fuller. The two areas that represent growth for the future and new jobs are technology-based businesses, which have been evolving since the 1980s, and international business.
Historically, anyone who tried to call the Washington, D.C. region a center for business was openly laughed at. But that is slowly changing, and today, "The business community that knows, knows that the Washington, D.C. region is a good place to do business," said Fuller. And as large companies continue to build up a significant presence in the Washington area, that will solidify the region's business image.
Concert, the new joint venture between British Telecommunications and D.C.-based MCI Corp., is a case in point. In August the firm, which plans to provide a single-source global telecommunications network, established its headquarters in Reston, Va., creating 350 jobs. "The proximity of Fairfax County to Dulles Airport makes the county an excellent location for Concert and other international firms that serve a global market," said Patricia Woolsey, chairwoman of the Fairfax County Economic Development Authority. Concert CEO and President Chris Earnshaw cited access to Dulles airport, a highly skilled and educated workforce, a nationally ranked school system, and the pro-business attitude found in Fairfax County as reasons for locating in Reston.
But Concert's decision, while it contributes directly to the Fairfax economy, can also boost the entire Northern Virginia, D.C., and Suburban Maryland image of being a center for information and network services. But first the image must be popularized.
"We need to sell ourselves as a technology area and take our hot technology firms on the road," said Mark Warner, president of Alexandria, Va.-based Columbia Capital. He says the region's corporations need to communicate and take an active role in promoting the region. "Because the technology-business base is made up of so many diverse firms, there has to be cooperation among companies to bring in even more business to the region," he said.
Warner insists the region needs a name "that says we are on the cutting edge." Although he doesn't have a better suggestion, Warner dislikes the Fortune-coined term Netplex because it seems to exclude the biotechnology, space and wireless communications firms that are growing in the region. In the coming year, the Greater Washington Board of Trade will be undertaking a major national and international marketing program and technology business is likely to be a central part of that, said Stough of GMU.
Having this regional economic body behind it may give Washington's technology business community the support it needs to start seriously promoting itself as a technology capital. "Even the stodgiest have to realize that our future lies in that direction," Warner said.