Omaha World-Herald article

Omaha Tech Climate Gets High Marks

High-tech industries in Silicon Valley, New York and Chicago may seem like they’re a long way from Omaha, but their success directly benefits information technology growth in Omaha and other similar urban areas.

Omaha’s climate for high-tech industries, especially telecommunications, received praise in a new study that examines the role that technological advances play in reviving urban areas.

The study, titled “Knowledge-Value Cities in the Digital Age,” comes from the Milken Institute, a Santa Monica, Calif.-based economic think tank whose stated mission is to “explore and explain the dynamics of world economic structure, conduct and performance by conducting research in economics, business and finance.”

The cities of Omaha; Reno, Nev.; Tulsa, Okla.; Albuquerque, N.M.; Huntsville, Ala.; and Boise, Idaho, were dubbed by the study’s authors as “emerging-technology cities” whose digital economies have blossomed as investors and entrepreneurs sought low-cost alternatives to the exorbitant rents and salaries found in traditional urban technology hotbeds.

“There’s no question these areas (like Omaha) have benefited,” said Joel Kotkin, who co-authored the study with Ross DeVol. “The residue (of high rent and salaries) has made it difficult to weather economic downturns. Investors ask ‘why pay more’ when you can go to other areas and pay less.”

Kotkin and DeVol call Omaha “a stable, growing telecommunications giant” that has successfully piggy-backed on the telecommunications infrastructure provided by the development of the Strategic Air Command at Offutt Air Force Base, now called the U.S. Strategic Command.

The study also credits Omaha’s economic stability and growth, low cost of living, cooperation between business and government and confidence by high-tech companies in the city.

“The city seems to be a magnet for middle-level workers and managers essential to the infrastructure part of the high-tech industry,” the authors wrote.

The growth of the “digital age” mirrors the rise of U.S. manufacturing when factories first opened in major metropolitan areas, then spread to smaller cities when lower labor costs became a priority, Kotkin said.

“As an industry matures, it begins to move to other cities,” said Kotkin, a Milken Institute senior fellow.

Lower labor costs and the metro area’s quality work force were key reasons why Palo Alto, Calif.-based PayPal Inc. selected Omaha in 1999 for its customer service call center, said Julie Anderson, PayPal’s vice president of customer service. Establishing the call center near its San Francisco Bay-area headquarters would have been “incredibly prohibitive,” she said, because of high labor and rent costs.

“We knew we could count on getting a fairly large pool of educated workers,” said Anderson, who was in charge of establishing the west Omaha call center for the Internet-based payment service.

Anderson, who grew up in Nebraska and Iowa, also credits the area’s good work ethic for its high-tech successes. “You just don’t have that everywhere,” she said.

In addition to work ethic, the area’s “practical and common sense” business climate makes it attractive to entrepreneurs and workers, said Bob Gentzler, president of Omaha-based MSI Systems Integrators, which has operations in eight Midwest states.

“The technology industry is fast-changing. It’s a bit wild,” he said. “With all that craziness it helps we can offer a pretty solid base to build from.”

While much is made of Nebraskans leaving the state to pursue career opportunities, Gentzler maintains Omaha has advantages of its own that attract workers from both coasts to his information technology, engineering and support company.

“The cost of living and quality of education do attract people here,” he said.

Still, Omaha and other emerging-technology cities must work hard to maintain and build upon their successes, the study’s author, Kotkin, said. Today’s “knowledge workers” won’t be attracted to an area just because it’s family-oriented, he said.

To better compete, city leaders must examine Omaha’s “cultural infrastructure” to make sure it’s attractive to these highly sought-after workers while making it easier for them to travel to and from the East and West Coasts through better transportation access like direct flights.

“Historically, all cities had to do was attract families,” Kotkin said. “But knowledge workers don’t fit this profile.”

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