DATE: Sunday, November 2, 1997              TAG: 9710310820

SECTION: COMMENTARY              PAGE: J6   EDITION: FINAL 

TYPE: Opinion

SOURCE: BY THOMAS G. DONLAN 

                                            LENGTH:   82 lines

LESSON FOR VIRGINIA: TECHNOLOGY IS YOUR MOST IMPORTANT INDUSTRY

The most important industry in Virginia is not tobacco, but electronic technology. The most important industry in Texas is not energy but electronic technology. The most important industry in Oregon is not lumber and forest products but electronic technology. And electronic technology is the leading manufacturing industry in California, Minnesota, Illinois, New Jersey, Massachusetts and Pennsylvania.

In the state of Washington, the biggest employer is still agriculture, but electronic technology has already overtaken aerospace. In North Carolina, textiles and clothing still hold the employment lead, but electronic technology has already passed furniture to take second place.

High tech is much more than a Seattle miracle, or one reserved for Silicon Valley, the highways ringing Boston or the Research Triangle of North Carolina. High tech has become a national driving force - and the largest industry in America.

Electronics manufacturing had total 1996 sales of $428.4 billion, including exports of $150.2 billion; high-tech services added another $170.5 billion to the nation's gross domestic product. The high-tech industries employed more than four million American workers directly, including nearly two million manufacturing workers. (Because of the limits of government statistical reports, these figures exclude start-up companies and employment of part-time and temporary workers.)

William T. Archey, the president of the American Electronics Association, is trying to bring this message to state officials: Computers and communications are what counts nowadays.

High tech means high growth: Even in Michigan, where high-tech industries are still well behind traditional manufacturing in total employment, the growth in high-tech employment accounted for more than a third of the total number of jobs added in the state between 1990 and 1996.

High tech also means high-paid: Workers in the high-tech areas of computers, electronic parts, software, computer services and communications earn nearly twice the national-average private-sector wage.

Not every state has yet figured out the importance of high tech to its chance of prosperity. For example, tobacco still carries far more weight in the Capitol at Richmond than its economic importance would require. That's why Archey is piling up frequent-flyer miles to give a slide show called ``Cyberstates'' to political groups and business groups around the country. He wants them to think more about the high-tech industries' issues.

Part of Archey's mission is to educate; the other part is to use the clout that ought to come with the economic importance of the high-tech industries. The AEA wants state governments to finance better public education systems, from kindergarten to graduate school. It also wants state officials to pay attention to other issues, such as trade and immigration, that they often dismiss as irrelevant to all but Californians.

Will Virginia prosper if it does not keep improving its ability to attract new workers and to educate the next generation? Even if raising the cigarette tax were the most obvious way to support public education? There are more than 19,000 open jobs in high-tech fields. Jobs in the tobacco fields are not so plentiful or so lucrative.

Three large semiconductor plants are opening in the next five years between Richmond and Washington. They will generate thousands more jobs both directly and at suppliers. Although the state seems delighted, it's treating these developments as an economic windfall, not as something that its past investments in higher education helped to cultivate.

Most other states, Archey reports, are not much different. Governors who would fight for a Japanese auto plant by cutting taxes have no idea how to work with homegrown high-tech industries.

Fortunately, sometimes they try. Delegations of strangers often come to Seattle seeking the secret of high-tech industrial success. William Gates Jr. is a widely sought motivational speaker for visiting business leaders from other parts of the country, perhaps because he is the father of that Microsoft Bill Gates. The father, a Seattle lawyer, founded the Technology Alliance, which works to keep the local high-tech economy humming.

He tells visitors that the new economy has at least three indispensable parts. They are major research universities such as the University of Washington, large and public-spirited industries, such as Boeing, that hire highly educated work forces, and state governments that are friendly without being suffocating in their support of business development.

It's a good message, and one that business leaders should pick up and repeat as often as possible. MEMO: Thomas G. Dolan is editorial page editor of Barron's. Reprinted by

permission of Barrons's, (c) Dow Jones & Co. Oct. 20, 1997.

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