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High-tech growing pains

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On June 18, computer data storage company Iomega Corp. says it will lay off 400 people from its Roy headquarters. Six days later, Corel Corp. announces that it will move WordPerfect to Canada, leaving 530 Orem employees without jobs.

Yes, it has been a rough couple of weeks in Utah's information technology industry.But both local and national industry watchers say that does not mean the dream of building a mini-Silicon Valley on the shores of the Great Salt Lake has died. Instead, they say, this is simply part of the development process in a young, ever-changing, rapidly growing industry.

"Business decisions are bound to happen in any industry sector," said Mike Lawson, president of the Economic Development Corporation of Utah. "What is probably more noteworthy about the info-tech sector is . . . we've only seen it develop lately. We notice when they expand enormously, which we're all used to, and when they don't expand, which maybe we're not as used to."

Peter Genereaux, Utah Information Technologies Association president, said the state's technology sector has seen explosive growth over the past few years, but the pace is slowing.

"We are not growing as fast as other leading areas in the country, but we definitely have continued to grow," he said Thurs-day. "Given that there are 2,200 (information technology) businesses already here in the state of Utah, I think we have a sufficient momentum and critical mass of activity that (despite) some of these high-profile upsets, we'll continue to sustain our-selves."

Achieving that so-called "critical mass" of companies is vital, especially in the technology sector.

Stan Corker, director of technology research with Emerald Re-search in San Diego, said Iomega's Roy location has hurt its chances of attracting top engineers in the past.

"A lot of the high-tech, especially storage, companies tend to be based either in northern California or in Colorado," Corker said. "Iomega has found it difficult to attract people from both of those locations. . . . Engineers normally like their quality of life in the locations that they live in and tend to be concerned about moving to Roy, where there's just a single employer in their field."

If those engineers decide to move again after a year or two with Iomega, he said, they face the added expense and complication of going back to the San Jose, Calif., or Boulder, Colo., areas. If they stay in those two areas to begin with, they can just move to the company next door when they get bored or burned out.

To fight this problem, he said, Iomega set up engineering operations in California and Colorado, leaving Roy with more corporate executives and marketing types.

But Genereaux said Utah may grow more enticing to engineers with the continued turnaround of Provo-based computer networking company Novell Inc.; the arrival of computer maker Gateway, which is building a 260,000-square-foot facility in Salt Lake; and the possibility that computer chip-maker Intel Corp. will build a huge research campus in Riverton.

"We still have a ways to go to get the critical mass of depth and breadth of companies in the state involved in information technology, and also we need more world-class, skilled entrepreneurs and business leaders to be available to enhance the start-up growth and maintain the competitive advantage of our companies here," he said. "On balance, Utah remains competitive in the quality of life, the cost of doing business."

Lawson said he is not sure Utah was ever the hot spot for technology businesses, but he thinks it continues to be one of many prime areas in the country.

For example, he said, 17 percent of EDCU's inquiries are in the info-tech area. Just three to five years ago, that figure was less than 7 percent.

"(The loss of jobs) is obviously an enormously significant impact on the individual employees," Lawson said. "But it represents an opportunity for the many medium- to small-sized companies that are out here . . . to enjoy some really quality leadership from some of those employees."

The recent layoffs also have served as a wake-up call for anyone who thought the state could relax its recruitment efforts, Lawson said.

Rick Mayfield, director of the Utah Division of Business and Economic Development, said technology companies are still its priority target for recruiting.

"We think we still have a strong base," he said. "We think we're still attractive."

Mayfield said he is confident Gateway will succeed and Intel will come, and the state continues to work with its education system in an attempt to produce more technology graduates.

"If anything, what (the layoffs) do is loosen up some employees in that sector so that we're more attractive," he said. "I don't see that anything has changed except for a couple of companies that needed to cut costs to improve their position."

Mark Rosenker, vice president of public affairs with the Virginia-based Electronic Industries Alliance, said 350,000 technical jobs are open nationwide in the $500 billion technology and electronics industry.

People who are laid off in the industry usually find other jobs quickly, he said, and the Mountain states remain hot for technology growth, along with California, northern Virginia, Maryland and South Carolina.

"People are still talking about Utah," Rosenker said. "It's a wonderful state. It's a wonderful place. It will prosper. . . .

"You're not talking about a dying industry. You're talking about an industry that's exploding, and this may well be a temporary setback."

Corker said the bottom line is that Utah needs to do a better job of selling itself if it wants to be known as a technology hub.

"I know a number of people who have moved to Roy, and they just love it. They don't want to move again," he said. "It's getting the person to move in the first place that's the problem."