7 Mass. innovation sectors see rise in employment

By John Larrabee | Boston Business Journal | January 31, 2013

Old MacDonald had a robot? These days that could be the case. Just ask John Kawola, CEO at Harvest Automation, a Billerica company that makes robots for use on farms.

“Two big trends are helping to create big opportunities for robotics companies,” he says. “Companies are continuing to look for ways to automate and reduce costs, in warehousing, in manufacturing, and now agriculture. Second, the technology that goes into robotics — computer processing power, sensors, vision systems — all those things continue to get better and better and cheaper and cheaper. Robots are becoming less expensive and more practical.”

That drive to control costs has helped Massachusetts’ innovation economy rebound from the economic downturn of the past few years. That’s according to the Index of the Massachusetts Innovation Economy, an analysis published every year by the Massachusetts Technology Collaborative, a public economic development agency.

The report — released this week — paints a mostly rosy picture of the state’s technology and science industries, but with a few caveats. Massachusetts’ innovation economy, which accounts for almost 40 percent of the state’s jobs, grew significantly last year, with employment climbing in seven key sectors and the average annual wages for all innovation industries rising to more than $56,100. The Bay State is growing faster than most of the top technology states in several areas — computer and communications hardware; software and communications services; scientific, technical, and management services; and post-secondary education employment.

Robotics and Big Data led the job growth spurt. Employment in those areas has outpaced that of the entire Massachusetts economy. Both industries are geared toward making companies leaner and more efficient, big selling points in a rough economic climate.

Bentley University professor Patricia Flynn, who chaired the committee that prepared the report, notes there’s another reason for the Big Data surge: digital media has caused an explosion of information. “With social media and iPads and cellphones, data is growing by leaps and bounds,” she says. “Retailers can use it to target consumers, and manufacturers are using it to meets the needs of customers, but you can’t manage it with the old data processing units.”

The Mass Tech Index also highlights a discouraging trend: four industry clusters — advanced materials, biopharma and medical devices, financial services and business services — fared worse in 2011 than 2010.

“In the medical device field, I suspect that research and development is still going on, but production is being outsourced to other countries,” says Alan Clayton-Matthews, a professor of economics at Northeastern University. “Biopharma is a different story. The supply of new products is never constant; it always ebbs and flows. Financial services is an area that was clobbered by the recession. There has been a trend, and it may be continuing, to move the back office to areas beyond Boston that are less expensive.”

Flynn plays down the negatives. Advanced materials, she says, has always been attached to manufacturing, which faded in New England decades ago. She adds that while financial services jobs have declined by 1.4 percent since the recession, other leading states fared worse. Connecticut has declined by more than 3 percent; Pennsylvania, by 2 percent.

The report also notes changes in the availability of capital. While the state has retained its first-in-the-nation ranking for venture capital investment per GDP, the dollar amount of venture capital investment in the state is still below pre-recession levels. Angel investors, however, have helped plug that gap in Massachusetts.

Another trend: Massachusetts is facing more competition from other states. The Bay State ranks second in industry funding of academic research and development per capita, but from 2005 to 2010, three other leading technology states grew at a faster rate.

“The report very strongly shows Massachusetts is in good shape, but we cannot become complacent,” Flynn says. “Other states and other countries are putting money into research and education. They’re starting to close the gap.

“In Massachusetts, 45 percent of the workforce has a bachelor’s degree or higher. That makes us number one in the country, and it’s a key factor in a small state with winter weather and high labor costs. We have a lot of great private colleges and universities, but that’s no reason to think we don’t have to protect private institutions. Massachusetts is below the national average for state higher education appropriations. We have to think about that.”

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