STAR-BULLETIN FILE
Craig Fujikami and Jocelyn Kunimitsu worked on Adtech equipment in 1999. The high-tech Hawaii company moved its assembly operations to California two years later.
State tech
market shrinksA survey that shows a 3.2%
job decline in 2002 from a
year earlier gives more fuel
to Hawaii's Act 221
Hawaii, like most states, shed tech jobs in 2002, according to a new report released today by AeA, the American Electronics Association.
Last year, the islands had 13,353 tech jobs, a decrease of 445 jobs, or 3.2 percent, from 2001, the report said.
The study, called "Cyberstates 2003: A State-by-State Overview of the High-Technology Industry," comes from a U.S. Bureau of Labor Statistics database that uses a government classification system to define high-tech jobs. The AeA report does not include the biotechnology industry or temporary workers.
The downsizing mainly happened in Hawaii's telecommunications services sector, and is likely linked to long-term restructuring at Verizon Hawaii, the state's dominant telephone carrier.
At the start of 2001, Verizon Hawaii had approximately 2,400 employees, but the number has been whittled down to 2,000, and Verizon more recently offered a buyout to its 664 Hawaii managers.
"Part of it is the centralization in the mainland of services," said Susan Shepherd, president of the nonprofit Hawaii Tele-communications Association and senior communications consultant at ComTel. Also, Hawaii businesses froze their spending in the wake of 9/11, she said.
Nationwide, the telecommunications services sector dropped more than 100,000 jobs from 2001 to 2002, a 7.8 decrease.
Most states had a higher percentage loss of tech jobs than Hawaii, and only the District of Columbia, Montana and Wyoming added tech jobs between 2001 and 2002. Overall, the United States lost more than one-half million tech jobs.
"While high-tech employment fell by 8 percent last year, preliminary 2003 data show a significant slowdown in high-tech job losses, with a decline of 4 percent," said William T. Archey, president and chief executive of AeA. "This sector has demonstrated its ability to drive the economy, and it can do it again."
Tech workers represented less than 2.5 percent of Hawaii's employed labor force in 2002, and Hawaii ranked eighth lowest among the states for the percentage of high-tech workers out of overall private sector workers in 2002, according to the AeA study.
The report did not account for biotechnology jobs, but that would not significantly change the bigger picture. A separate state report estimates Hawaii had 913 biotech jobs as of 2001, the last figure available.
Having a relatively small tech sector was a silver lining for Hawaii in 2002, when tech jobs were slashed. The state's unemployment rate tied for seventh lowest among the states, the report showed.
Hawaii's high-tech exports more than doubled to $59 million in 2001 from $28 million from 1997, but then shrunk back to $33 million in 2002, the study said.
Still, it's easy to see why officials seek to encourage tech growth in Hawaii, such as through the controversial Act 221 tax credit law. The high-tech payroll in the state totaled $742 million in 2002, with an average wage of $53,767, 80 percent above the average private sector wage of $29,816.
ComTel recently added five or six workers as part of an expansion, and now has just under 20 employees, Shepherd said. Everyone she talks to in the telecommunications sector here is busy again, though the companies have realized they are vulnerable and that many things affect the economy, from tourism to federal construction spending.
The AeA report includes a bleak picture of venture capital in Hawaii, saying there were only $3 million in investment deals here last year, the lowest since 1998. Of all the states, only Puerto Rico, Alaska, Montana, North Dakota and Wyoming had fewer venture capital investments in 2002 than Hawaii, it said.
Jeff Au, managing director of PacifiCap Group LLC, a Honolulu company that manages venture funds, took issue with the estimate. "Our firm alone has done more than that, in 2002," he said.
Au said he thinks Hawaii's venture deals totaled closer to $25 million in 2002, though that would be down from previous years. Pihana Pacific, a data storage firm, raised $236 million here in 2000 and 2001 before it closed its Honolulu headquarters in a merger.
On the other hand, Firetide Inc., a wireless networking technology firm, recently said it is moving its management to California from Honolulu because it can't find enough venture capital here.
