By Allan Maurer

WASHINGTON, DC—Although some tech firms feel the pinch of the current down economy, many continue to thrive because they help other companies compete effectively, says Christopher Hansen, president and CEO of the AEA, the nation’s largest technology trade association. “The industry is actually doing better than most and this sector will lead the way when the rest of the economy levels off,” he says.

“This industry remains vibrant and its fundamentals are good,” Hansen tells TechJournal South. “There is less manufacturing, but lots of other areas, software, R&D, and engineering continue at a good clip.”

“In data we can measure, we’re not seeing a downturn,” he says. “Anecdotally, we hear the economy is having effects on some areas. But this industry serves others. If they have problems, they cut back on a lot of things. But they cut back only so far on technology because it helps them remain competitive.”

Investors still seek tech
He admits some of the larger players are trimming staff, but notes that others continue to grow. “A lot of the bigger companies have larger ties to the economy as a whole,” he says. “But many smaller companies doing new things continue to grow at a good rate.”

He does not see investors becoming shy about investing in the industry. “The appetite we see in the investment community for technology is still very high. They’re not getting a lot of IPOs,” he notes, which affects the availability of capital.

On the other hand, he says, “I’m amazed at the pace of merger and acquisition activity. Some companies have been doing 12-14 major acquisitions a year. They’re good at it. It’s unusual.” Because of that, he says, many tech companies are seeking ways to make themselves acquisition targets.

“We have a conference for CEOs on how to help them do that,” says Hansen.

Business models are sound
The reason tech firms weather some downturns, he says, is that “It is so changeable and mobile, always adjusting to what’s going on. It’s almost inherent in the culture of the industry.

This downturn also differs from the Internet crash early in the century, he says. “People knew then there was something unique in this industry, but they did not look carefully at business models. Now the business models tend to be very sound.”

One of the AeA’s major functions is to lobby the federal and state governments for policies favorable to the industry. On its current agenda, restoring an R&D tax credit on the federal level, is paramount, says Hansen.

“It has expired again,” he says. “Both presidential candidates want to make it permanent. We all want this industry in this country. Other countries are attracting U.S. investments with better tax credits and other inducements.”

Education, e-health on policy agenda
The organization is also lobbying for more H1B Visas for foreign workers and graduating students. Hansen points out that foreign-born entrepreneurs have founded or co-founded many tech companies, large and small. “It’s a great fallacy that they are taking jobs away from Americans,” he says. “They’re creating jobs.”

The AeA also wants to see e-health initiatives mandated. Hansen says that getting the medical profession to switch to electronic medical records would reduce errors and help reduce costs. He suspects the profession may have feared that electronic records might lead to more liability, whereas they really have the opposite effect.

“They reduce errors and allow doctors to protect themselves, so I think the reticence to adopt is going away,” he says.

Improving education in science and math from the elementary to the secondary level is another major priority, Hansen says.

“We’re losing our edge in science and technology education,” he says. “The playing field is leveling and we’re falling behind. That is something we have to correct.”

Hansen notes that the Southeast is “becoming more of a technology center in this country, but there is a need for more capital deployment.”

On the good side, he adds, in the AeA’s latest Cyberstates report, Florida rose to the 4th largest technology state and there are big tech centers in NC and Georgia. “We’re seeing a lot of growth,” he says.

On the Web: www.aeanet.org

© 2008, TechJournal South. All rights reserved.