Technology Industry Growth in South-Central Pennsylvania
By Gregg Schwotzer

The south-central Pennsylvania region boasts a multitude of locational advantages, relative economic stability, an excellent quality of life, fine institutions of higher learning, expanding social and entertainment opportunities for younger people, and many quality communities in which to raise a family. These combine to represent fertile ground in which the seeds of technology companies have already been planted. And while these seeds have absolutely begun to show promise, south-central Pennsylvania certainly posses many elements that lead one to believe there is outstanding opportunity for dramatically more growth in the both the number and size of technology companies in the area.

In spite of these many advantages, a recent report indicated existing technology related companies interested in relocating or expanding to any new market tend to seek out sites and office parks that feature the latest technology. In the case of the Region, many existing business and industrial parks were planned 20 to 30 years ago. Some of the newer parks situated in prime locations are built-out, with minimal land available for new development. While unemployment in the Region has historically been below the national and state rates, the area has experienced some major closings. But sometimes what seems to be a serious setback actually turns out to be opportunity knocking, especially as it relates to technology startups. A recent newspaper article reported that the “layoff of about 2,000 AMP employees when Tyco International acquired the company a few years ago, is helping to drive the spurt of high-tech startups.” The article featured a number of former AMP employees who decided to start their own small companies rather than look for just another job. According to one of the Region’s Small Business Development Centers they “joined a growing wave of high-tech firms for which the area is becoming known. When you have those firms clustered together, they can support each other”. The term “cluster” is a key component of growth in technology sectors. According to Michael Porter, a cluster is defined as “a geographically proximate group of interconnected companies and associated institutions in a particular field linked by commonalities and complementarities.”

In the case of the Region and based on information we gathered for a recent engagement, businesses in the area that have experienced patterns of good growth include wholesale trade-durable goods, personal services and engineering and management services. In summarizing the Region’s overall trends, one source opined clusters exist in management services, health care and a general cluster centered on “business to business selling.” It seems to me the term “clusters” and “technology parks” are somewhat synonymous. For example, the former AMP headquarters campus is now being developed by Crossgates Inc. as the Region’s first technology campus. In partnership with computer Aid, Inc., Crossgates purchased the former AMP headquarters campus in Swatara Township, Dauphin County. The TecPort Business Center will focus on the development of 102 acres in a campus setting to create a true technology park, blending modern office, research and development space with more traditional amenities and support services such as lodging, restaurants, day-care facilities, and exercise trails. As a measure of the success of this endeavor, over 1,200 people now work at TecPort, and our development projections indicate that over 5,000 people will be employed here by 2007.

Supported with the appropriate infrastructure of true technology parks, it seems to me that central Pennsylvania is perfectly situated to benefit from the tremendous advancement in technology growth that has been occurring to its east and west. Central Pennsylvania is clearly developing a major health care cluster, which is a perfect synergy to the health care, biomedical and pharmaceutical clusters flourishing in the Philadelphia and Pittsburgh regions. Central Pennsylvania is also blessed with a multitude of outstanding institutions of higher learning, many of which are significantly expanding research and development funding. In addition to existing institutions, an exciting educational prospect is in the formative stages. The Harrisburg Polytechnic Development Corporation is currently evaluating sites in urban Harrisburg to establish a new, nationally recognized research university to be called the Harrisburg Polytechnic Institute (HPI). HPI will be a non-traditional university that offers undergraduate and graduate science-based degree programs. It will include a preparatory high school for math and science students (Poly Prep), a business incubator, a workforce development center, and a conference/exhibition center. HPI expects these components will combine to serve as a regional crossroads for education, applied research and economic development.

A major conduit for fueling technology companies here in Central Pennsylvania is the Life Sciences Greenhouse of Central Pennsylvania, which just recently signed a two-year lease for over 13,000 square feet of space with an option for an additional 8,000 square feet at TecPort Business Center in Harrisburg. The Life Sciences Greenhouse (Greenhouse), the Technology Council of Central Pennsylvania and several biotechnology firms will soon occupy this space. The Greenhouse was able to execute this lease because the Commonwealth of Pennsylvania executed a contract awarding the local Greenhouse $32.8 million it was promised in April 2002 from the Tobacco Industry Settlement. These funds will be used, in part, for the biotech incubator planned at TecPort. Within five years, the Greenhouse hopes to attract and build 40 biotech companies in Central Pennsylvania.

This biotech incubator will be an excellent adjunct to an existing incubator in the Region, the Murat Business Center, which serves the counties of Cumberland, Perry and Dauphin. While Murata is owned and operated by the Capital Region Economic Development Corporation, it is a good example of public and private cooperation. Eleven agencies and organizations support both the program and the renovation of the facility, including the Commonwealth of Pennsylvania, Cumberland County and the Borough of Carlisle. Several private sector firms also support the program with financial assistance and other resources. According to recent conversation with the Executive Director of Murata, this business center is undergoing significant expansion.

The success of a business incubator in any region is best measured by how well it continually turns-over its tenants. When a tenant leaves a business incubator, it means it has the wherewithal to advance its location to a viable technology park, thereby creating space in the incubator for the next startup company. It is within this context that Central Pennsylvania has perhaps its greatest void. True technology parks demonstrate the underlying health of a region’s technology industries. In addition to TecPort, the area needs more office and technology park space in the development pipeline.

Gregg Schwotzer is the President of Crossgates, Inc., and can be reached at 724.941.9240 or via e-mail at gschwotzer@crossgatesinc.com.

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