Region's
Technology Firms Present Successes, Struggles (cont.)
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Western Massachusetts could be doing more to
prepare itself to be a fertile place for new types of technology.
"We need to do a better job of injecting ourselves into current
trends," Steig said. To that end, organizers are giving thought to
planning a conference or series of events focusing on medical devices,
Steig said. Several companies that make or test medical devices are
located in the region.
The computer services sector was at the center of the technology
decline.
Whalley Computer Associates, based in Southwick, sells computer
equipment to large and small businesses, and provides other
computer-related services. The company saw its revenue drop as the
economy stalled and computer purchases plunged.
"Everything that's going bad, we've been in the
midst of," Paul H. Whalley, vice president of the company, said.
The company's large customers, which include hard-hit storage-maker
EMC, based in Hopkinton, began to order far less from Whalley. However,
smaller companies around the region maintained their orders, and
Whalley managed to find new customers among those firms.
"In the good times, smaller companies don't order much more, but in bad
times, they don't go down as much," Whalley said.
As a result, revenues dropped, and the company went from 170 workers to
about 150, mostly through attrition. At the same time the company
continued to turn in profits. "We've been profitable every month during
this 24-month recession," Whalley said.
He said the company has done so by limiting costs, including reducing
overtime.
Whalley said the demise or decline of competitors has provided
opportunities for his company. Whalley has hired some employees of
faltering competitors.
Whalley is poised to expand into an area that has been perhaps hardest
hit by the technology bust: telecommunications. The company announced
last week it was forming a telecommunications subsidiary to provide
telephone, data and Internet services to customers.
Whalley had been referring customers to CTC Communications, which has
offices locally, but when that company filed for bankruptcy
reorganization last year, it decided to compete in the
telecommunications arena. Whalley has hired some former CTC executives
as consultants to its own telecommunication efforts. CTC hopes to
emerge from bankruptcy soon, and has continued to operate under Chapter
11.
The telecommunications decline came because companies often spent a
great deal of money on networks that were unprofitable at the start.
When stock markets turned south and venture capital dried up, there was
no money left to keep those companies afloat, Whalley said.
Geoff Little, a telecommunications executive who is now consulting for
industry, said declining prices for long-distance and data services
also hurt the telecom sector.
"There was an idea you would go after customers, no matter what the
cost," he said.
Little was an executive for Equal Access Networks in Springfield until
last year, when Equal Access' parent company, Global Crossing, fell
victim to financial problems. It folded Equal Access, which provides
telecommunications to remote parts of the region, into its main
operations while it seeks to emerge from bankruptcy.
"We were actually cash-flow positive, but we were the exception,"
Little said.
The year ahead promises a reorganization of non-profit groups which
promote technology. Those organizations took it on the chin during
2002.
Telitcom Development Corp., formed to promote telecommunications in
Greater Springfield, folded in September amid the worst
telecommunications market in history. Officials said the 7-year-old
group had accomplished its goal of boosting telephone company
development, but acknowledged that the climate for telecom was a
factor.
In the fall, the Western Massachusetts Venture Forum, which had been
holding meetings every other month to connect entrepreneurs with
investors, announced it would suspend its activities. Earlier this
month, the group said it would give its remaining funds to American
International College in Springfield, where the meetings had been held,
and legally disband.
Organizers held out hope that the forum could return once the economy
improved and venture capital investing gains strength again.
Also last year, the Center for Advanced Fiber Optic Applications in
Sturbridge closed its doors. State officials are investigating the
financial problems that caused the center's directors to decide to
cease operations.
Hanley, who was an executive at a fiber optic company in Sturbridge a
decade ago, said he was saddened to learn about the closing of the
center.
He said the fiber optic industry focused too narrowly on
telecommunications-related products, and suffered disproportionately
when telecommunications faltered as an industry.
"Sometimes people lose sight of the value of the core technology and
get caught up in one application," he said.
Mass Ventures, a non-profit associated with the University of
Massachusetts at Amherst, is reevaluating its mission to help start-up
companies in the region to grow and get venture capital funding.
Officials said its mission had been taken over by a variety of private
consultants, some former Mass Ventures employees, and new venture
capital funds.
The one non-profit technology group that has been thriving is the
Regional Technology Alliance, a network of industry-specific groups
meeting to discuss common concerns. The RTA, also affiliated with the
University of Massachusetts, has been funded mostly from a federal
grant that is set to run out, although an extension is possible.
The RTA and the Economic Development Council of Western Massachusetts
are in talks to bring the technology group under the umbrella of the
EDC, officials said. "We need an organization like the RTA that can act
as an honest broker (between companies) and also as an advocate of the
technology community," Steig said. Area colleges are continuing to pay
a great deal of attention to technology training.
Springfield Technical Community College offers programs in
telecommunications, bioscience and computer networks.
Holyoke Community College is preparing a proposal for a technology
center building on its campus, officials said.
Little said he believes the region's technology companies have been
hurt but remain viable. Few companies have folded, and that is a good
sign, Little said.
"It hasn't been a pretty time, but I think we're towards the end of
it," he said.
William Freebairn can be reached at wfreebairn@union-news.com
2003 The Republican Company. All rights
reserved. Used with permission of The Republican
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