In contributing $3 billion in 2007 to the state's economy, private technology companies represent only a small percentage of overall earnings in Hawaii's business sector. But a new analysis of Hawaii's position in technology industries released last week said employment in the sector should continue to grow at 2.1 percent annually, and will require 1,650 trained workers statewide every year.
The report, "Innovation and Technology in Hawaii: An Economic and Workforce Profile," was prepared for the Hawaii Science & Technology Council, a statewide industry organization.
It notes that much of the state's growth in technology industries is based on federal government spending in research and development in areas such as space research and related defense industries. But it suggests potential for expanded development in fields of renewable energy, biotechnology and agricultural biotechnology, environmental remediation, marine science and even in digital media and communications technology.
In Maui County, growth in technology industries was primarily a result of projects funded by the federal Department of Defense, in aerospace research as well as information technology "driven partly by the activities occurring at the Maui High Performance Computing Center and the Haleakala High Altitude Observatory Site," the report said.
But it also noted that Maui County is increasingly attracting alternative energy programs in use of wind, solar and biofuels.
Other key issues include:
* The report said that workers in technology industries in Hawaii generally earn less than workers in similar positions on the Mainland, with the disparity greatest in private industry, where the Hawaii worker earns on average 72 percent of a Mainland counterpart.
* Educational programs in Hawaii still leave the state short of technically trained workers in the mechanical, industrial and electrical engineering fields that will be needed, with an estimate that even if every student graduating from a Hawaii engineering program stays home, Hawaii will need to recruit 60 to 70 engineering graduates every year to meet its technical work force needs.
* There remains a need for risk capital to support private research and commercialization of products that are developed.
The last issue may be the greatest concern with the weak national economy affecting state and federal government revenues.
State Sen. Roz Baker, chairwoman of the Senate Ways and Means Committee, said she is familiar with the technology report and understood that it demonstrates the value of the state efforts to promote investment through Acts 221/215, the technology investment credit law first approved in 2001.
While a 2007 report said the tax credit supported $1 billion in investment in Hawaii, at a cost of $167 million in tax revenues, the program has been criticized for failing to create sufficient numbers of permanent jobs.
Baker had been Maui County economic development coordinator in 2001 and said the tax credits program succeeded in persuading businesses and investors to consider locating in Hawaii. But she said the current revenue picture may make it difficult for the state to continue all of its support.
"It is probably too early to tell whether we'll be able to augment the state's investment in science and technology,'' she said. "However, I do believe we need to continue our current investment in this important $3 billion industry.
"The science and technology sector provides and creates living-wage jobs, has helped to reverse the 'brain drain' and bring our kamaaina home to good jobs, reinvests in our economy and contributes to the overall health of our economy as an alternative to our service sector and tourism."
Leslie Wilkins, Maui Economic Development Board vice president and member of the advisory committee to the Hawaii Science & Technology Council, said the report shows the state still needs to achieve "critical mass" in science and technology industries that will help private industries compete on a global scale.
Agencies such as the Maui Economic Development Board have been promoting educational programs for STEM (science, technology, engineering and mathematics), starting in grade schools with a long-range goal of providing a trained and stable work force for industries that might come to Hawaii, or developing entrepreneurs who would create their own technology-based businesses.
It's been a two-part effort to encourage schools to provide the educational base while investigating ways to attract tech industries to Hawaii, Wilkins said. She said history has borne out the success of the effort.
"Certainly the trend has been improving and Hawaii is well positioned with assets that will continue to be valuable in driving growth as well as in attracting and growing new industries," she said.
"We've invested in the work force, collaborating in the (kindergarten) through 12 pipeline and also with the colleges, with the University of Hawaii system and at the community colleges, to make sure the curriculum is aligned and does prepare our Hawaii students to take these jobs."
Wilkins said the economic development boards and companies in Hawaii recognize the wage differential among private technology businesses. She noted that one factor is the federal government's contribution to the technology employment sector, which includes the federal cost-of-living adjustments for Hawaii, effectively boosting the pay scales for scientists and engineers in federal jobs.
But she said the wage differential for technology jobs in Hawaii is not unique.
"The lower wage scales are not unique to the technology sector in Hawaii. It affects all industry sectors," she said.
At the same time, she said, Hawaii companies in need for a specialist in a field "have done a lot to be competitive with the national market." Having the Maui High Performance Computing Center to provide support for private industry technologists is also a benefit, she said.
"We have not yet built a critical mass. It is still an emerging part of the state economy where you have to achieve a critical mass of employment that the competition for workers is more equal," she said.
MEDB President Jeanne Skog added that Hawaii still has a location advantage, particularly with specialists who grew up in the islands.
"There are kamaaina who are willing to give a little because it still allows them to come back to Hawaii and make a decent, a living wage," she said.
"Kamaaina, when they think about coming back, evaluate a lot of things, including the quality of life issues, being connected to family, being able to care for their parents and where they are raising their children," Wilkins said.
