- The Washington Times - Monday, March 20, 2000

As feds downsize in region, tech firms fill in.

How Washington defines itself is changing with every technology start-up company that moves into the area.

The region is not just about government anymore, say economists and business leaders, who note that technology was the single largest creator of jobs in the capital and surrounding counties last year.

"Technology has become … a must-have for companies, and everyone is trying to keep on the leading edge," said Alan Fogg, director of the Fairfax County Department of Economic Development. "The more that happens, the more critical those companies become."

Fairfax County added 14,729 new jobs in the 12-month period ending last November, according to the Virginia Commission of Employment more than half the total for all of Northern Virginia. Two-thirds of those jobs were in the computer and telecommunications industries.

In Washington's Maryland suburbs, Montgomery and Howard counties made the greatest gains. Montgomery's Interstate-270 biotechnology corridor flourished last year, and Howard's unemployment dipped so low that employers began offering sign-up bonuses and tuition reimbursement to workers fresh out of college.

But Northern Virginia outpaced its neighbors. During the 1990s, the region gained 2.2 new workers for each job created in suburban Maryland.

In the District, where the employment base had been stagnant since the 1980s, businesses created more than 6,000 new jobs more than making up for the 3,500 lost to downsizing by the city and federal governments, according to the D.C. Department of Employment Services.

"One of the major stories in the region is the renewed health of the District," said Charles W. McMillion, chief economist for MBG, a Washington-based business information firm.[

The workers

The Dulles high-tech corridor in Northern Virginia has brought hundreds of recent graduates and technology workers to the Washington area.

Matt Conohan is a good example. At 26, he works as an assistant programming manager for America Online. He moved to Reston in December, leaving behind a job at a media start-up in Chicago.

"I actively promote the area. It's a great place to work and it's only getting better," he said.

Mr. Conohan visited the District in the summer of 1997 for an internship. He said, "There was a good feel about the place," so he began networking.

"I stayed in touch with people from the internship and heard what was going on in the area it was definitely attractive," he said. "And then there was America Online."

America Online along with MicroStrategies, MCI WorldCom, Nextel, MetroCall and Oracle account for most of the nearly 30,000 jobs created last year in Arlington, Fairfax, Prince William and Loudoun counties and in Alexandria.

The Internet and telecommunications companies have enjoyed some success in luring technology workers from other parts of the country. That was the case with Sean Neary, who moved here from New York three weeks ago.

At 28, Mr. Neary had been an editor at George magazine for four years when Voter.com, a Capitol Hill-based political Web site, offered him a job.

"They made me an offer I couldn't refuse," he said, adding that he wasn't very happy about leaving New York.

"It (New York) was an incredible place to live and I'm already going through a bit of withdrawal," Mr. Neary said. "But being here I'm slowly overcoming those hesitations."

Growth begets growth

Some economic development officials say the technology industry is so well established in the Washington region that it has become self-perpetuating.

"Just the presence of the tech companies seems to be building on itself," said Mr. Fogg, adding that companies from chip designers to software engineering firms have relocated to be close to the technology giants, further helping the region grow.

That is what happened in Prince William County, which after Fairfax created the most jobs, with 6,817.

The county last year got a contract for an America Online facility, which will employ 500 people. Covad Communications Group, Avenir Inc., Sverdrup Technologies Inc., and Utron Inc. also moved in and created new jobs in the county.

"It was a watershed year," said Martin Briley, executive director for the Prince William County Department of Economic Development.

Loudoun County, home of America Online, got 2,203 new jobs last year. And, in June, the county received more good news when MCI WorldCom announced it would move its headquarters there, committing another 3,300 jobs to the area in the future.

Terri Holzheimer, director of the Office of Business Investment, which is part of Arlington County's Department of Economic Development, said that as the government cut jobs in the past seven years, technology companies have filled the gap.

Arlington County saw 2,992 new jobs last year. In nearby Alexandria, 2,082 jobs have been created. Very similar forces appear to be at work in both areas.

"They (lost government jobs) are being replaced by many small and not-so-small Internet-based tech companies," Mr. Holzheimer said. "These companies have helped fill the office space that the federal presence had left."

He added: "So it's clearly a great impact on the local economy."

"Two things are happening," said Cindy Richmond, deputy director for the Loudoun County Department of Economic Development. "We are seeing large corporations like WorldCom and some others that were announced last year come in, and many of those are Internet and telecom companies."

Ms. Richmond said that as new residents move in, the area has seen the opening of several new malls and shopping centers. Another beneficiary of the job growth has been the airline industry.

Atlantic Coast Airlines, which began operating out of Loudoun County 10 years ago, has just built new concourses at Washington Dulles International Airport, which is now the fastest growing airport in the country.

Atlantic Coast is the exclusive East Coast carrier for United Express, a division of United Airlines.

"We are very proud of the fact that we have become one of the largest employers in Loudoun County," said Rick DeLisi, Atlantic's spokesman. "We are committed to the growth of this area and proud to contribute to it."

The airline, which employs just under 2,600 workers, hired 10 percent of its work force last year, and plans to hire a few hundred more this year.

Mr. DeLisi said nobody expected Dulles airport to surpass Ronald Reagan Washington National Airport in number of passengers and grow to the extent it has. Dulles saw over 19.5 million passengers last year, while Reagan airport saw under 16 million.

The District

Between 1985 and 1995, the Washington area lost about 80,000 jobs and even more residents. By 1996, that started to change in the suburbs, but the District continued to lose residents. Then last year everything changed.

"The District had been in real trouble," said Mr. McMillion. "But last year, for the first time in the '90s, there were jobs and they were good jobs. And that really helped change the dynamics within the region."

About 2,000 of the estimated 2,500 jobs created last year in the District were in the technology field. Small companies with less than 50 or so employees lurk around every corner in the District.

FoodFit.com, an Internet nutrition company, opened its doors in the Dupont Circle area in May. At the time the only employees were the founder and her assistant. Today the company employs 20 persons and hopes to double its size by the end of the year.

"Having lived in D.C. for 15 years, seeing the vitality of the area and the opportunity to draw on a bright, forward-looking talent pool, it seemed the natural place to start a business," said Ellen Haas, founder of FoodFit.com.

"There really is a lot going on in D.C.," she said. "There is office space that suited our needs a small office where we have doubled up and tripled up, but that has worked very well."

Other fields that have brought jobs to the District include law firms, consulting firms, health care services, and personal services. The creation of all those jobs has brought new residents to the District, which in turn has created revenue for the city.

"There was out-migration of population and out-migration of jobs," Mr. McMillion said. "Last year all of that changed. Altogether '99 was an absolutely marvelous year for the region much stronger than the nation's as a whole."

Montgomery County

At a time of record-low unemployment and a booming economy, virtually every region of the country is growing and developing, but few so vigorously as Montgomery County's I-270 corridor.

Biotechnology and life sciences companies are creating jobs by the minute. There were 7,245 new jobs created between the end of June 1998 and the same time last year, according to the latest available statistics from the Maryland Department of Labor Licensing and Regulation (DLLR).

Companies like Human Genome Sciences, Celera Genomics, and Gene Logic added to the institutional research centers like the Institute for Genomic Research, Johns Hopkins University, and the Shady Grove campus of the University of Maryland have been the leading job creators in Montgomery County.

"That's our targeted industry," said Kristina Ellis, marketing specialist for the Department of Economic Development in the county.

Gene Logic Inc., a gene research company, has two complexes in Gaithersburg and one in Berkeley, Calif. The company had 179 employees at the turn of the year, and now has 201.

"We have been very busy," said Wendy Penry, human resources specialist at Gene Logic. "We have over 65 positions open right now, we are barely 200 now and might be as many as 275 by the end of the year."

Montgomery County with its slew of biotechnology companies is the perfect place to be for a company like Gene Logic, said Ms. Penry.

Company employees, only 30 of whom are on the West Coast, range from research associates, marketing and sales representatives, software engineers and scientific directors.

To illustrate the company's growth, Ms. Penry said the marketing and sales group started with four or five workers last year, and will be at about 25 by the end of 2000.

The region

In Howard, Anne Arun and Frederick counties technology was a driving force, also, helping to bring in 6,500, 3,553 and 3,667 new jobs, respectively.

The only Maryland county that reported its largest job growth came in a category other than technology was Prince George's.

Last year, for the first time since the early 1990s, the area saw creation of government employment. Prince George's added 5,901 new jobs, of which "a substantial number are companies servicing the IRS," said Joe James, president and chief executive officer for the county's Economic Development Corp.

The Internal Revenue Services site in the county deals with administrative functions, and the companies that have moved near it are primarily computer information and accounting firms.

Howard County set an unemployment record last year 1.4 percent compared to the state's 3.5 percent in January. About 6,500 jobs were created in the county.

"All sectors are enjoying parallel growth," said Dick Story, CEO of the Howard County Economic Development Authority. "It's been in technology but also in manufacturing and retail jobs."

In fact, growth has been so intense that employers are now scrambling to find workers. Businesses that want to serve both the Washington and Baltimore metropolitan areas come to Howard County because it's right in the middle, or in the bull's-eye of the market," as Mr. Story put it. Now those businesses are signing bonuses to attract scarce workers.

The focus in Anne Arun has been to attract high-tech companies' headquarters as opposed to facilities and operations offices.

USInternetWorking, a provider of software over the Internet, moved to Annapolis two years ago. Today it has almost 1,000 employees. Oil giant British Petroleum also moved its headquarters to the area last year.

"The economy has just been magnificent I'm not sure how it gets better," said Bill Badger, president and CEO of the Anne Arun Economic Development Corp. "The only down side is that we have seen spots of labor shortages across a variety of disciplines."

Frederick County's economic success could be seen by looking at the office space vacancy rate. At the end of 1997, it was at 46 percent, and at the end of 1999 at 8.2 percent.

"It was a lot of information technology-type industries, not necessarily headquarters but the working modules," said Brian Duncan, president of the county's Department of Economic Development.

Overall, the Washington area has changed dramatically over the past year, said Stephen S. Fuller, a professor of public policy and regional analyst at George Mason University.

"And the biggest driver, the one everyone talks about the most, is technology," Mr. Fuller said.

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