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High-tech trailblazing

Wang. Digital Equipment. Raytheon. New England has plenty of showcase, high-technology companies all right. And economist Ben Chinitz feels confident the region's high-tech businesses will continue to grow. But much of his optimism over this state-of-the-art industry is based on something that happened here more than 150 years ago.

In those days, the big names were Almy and Brown, the Boston Manufacturing Company, and Amoskeag Manufacturing. They were the high-tech companies of the textile business, famous throughout the country for their innovations. And, their dogged attempts to speed up textile manufacturing developed a whole new industry for New Englanders - machine tools.

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''We are particularly good at new technology,'' says Mr. Chinitz, an economist who specializes in regions. In his living room in Newton, Mass., hunting through a booklet of data, Chinitz makes a point: New England's strength was never really textiles or machine tools, or even electronics. The key to success here is innovation.

''History is our biggest asset,'' he says, and this history of innovation will keep New England at the forefront of technology.

Economists and business leaders give the region's six states top marks in the development of the high-tech industry, saying the growth will continue. They believe the area has a lot of advantages: excellent engineering schools, an abundance of local venture capital, and an established base of high-tech companies to build on. They do foresee some problems - such as competition from Asia and a shortage of scientists and engineers - but nothing peculiar to New England.

In her office overlooking Boston Harbor, Lynn Browne says New England owes a lot to its high-tech centers. An economist with the Federal Reserve Bank of Boston, she explains, ''High-tech has changed us from a position where we were much slower than the nation in (rates of) manufacturing growth, to where we are much faster.'' According to her broad definition of high-tech (which includes defense, chemicals, office equipment, electronic equipment, aircraft, various transport equipment, and instruments), about 10 percent of the people employed in New England's private sector hold high-tech jobs. She puts the national average at about 6 percent.

And, she adds, ''high-tech is one of the most important factors that helped us weather the recession.'' While the nation suffered 9.7 percent unemployment for 1982, New England registered 7.8 percent. In September it was 6.5 percent, while the nation stood at 9.3 percent.

''My bottom-line assessment is optimistic,'' Chinitz agrees. He sees New England's high-tech growth continuing, ''mostly because the demand for these products is strong. Even if we remained static - if we didn't do anything to encourage high-tech - we'd have strong growth because our eggs are in the right basket.''

Chinitz, who also is dean of the College of Management Science at the University of Lowell, says New England breeds new ideas. Right now these ideas are taking shape in things like thinking computers and livestock cloning. As long as new concepts keep churning, the region will be able to keep these sectors. A company with rapidly changing product technology will have to stay in New England to keep up to date, he says.

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Looking back in history again, Chinitz says, ''If you can imagine the personal computer settling down the way radio did,'' then the region may begin to lose a few companies. Thousands of radio companies grew up near New York when the innovations were hot. Once radio became standardized, ''that's when companies look for a place where they can get distribution all over the country and at the lowest cost.'' In radio, the industry went through a shakeout and moved to the Midwest, where distribution was easier and costs lower.

In the meantime, the Northeast continues to go beyond the computer industry and develop other high-technology sectors. The University of Massachusetts - already well-known for its research in the makeup of various materials such as plastics and metals - is setting up a new polymer research center next year to examine and improve these plastics. Other disciplines getting more attention from colleges include biotechnology, biomedical engineering, miniaturization, software, and gravity-free science.

The region's high-tech leaders all have a different explanation for why New England hangs on to its companies - and keeps sprouting new ones.

Some say it's the vast amount of venture capital available to invest in new firms. Along with New York, Chicago, and San Francisco, Boston is a major center for venture capitalists - investors looking for start-up firms with huge potential returns. Business leaders here say no geographic region can hope to spawn strong technological growth unless it has plentiful sources of local funds.

Others praise the academic community here - calling it the best breeding ground in the country for talented engineers.

John Rennie, president of Pacer Systems Inc. and head of the Smaller Business Association of New England, says the interchange between the local universities and businesses is ''one of the elements that makes this place go!'' Pacer makes aviation-related equipment and does test and design work for contractors.

Pacer's headquarters in Burlington, Mass., is nestled in a tiny pine grove along one of those numbered avenues crowded with other high-tech firms. The avenue is a stone's throw from Route 128, Boston's ''technology highway.'' Although Mr. Rennie has offices around the country to be close his markets, he says he'd like the impossible - for all of them to be located here. The degree to which academics and business leaders work together ''is higher here than any place in the country,'' he says.

Good technical universities abound here, but the one that draws the most acclaim is the Massachusetts Institute of Technology. ''I wouldn't want to claim we have the corner,'' says Vincent Fulmer, secretary of the MIT Corporation. At the same time, ''we happen to be an engineering powerhouse,'' he says.

With quiet pride, Mr. Fulmer lists a slew of ways that MIT interacts with business and government: The university has more than 3,000 research contracts and grants; its professors are active consultants to industry; it runs cooperative education courses with local companies; it sponsors seminars just for small businesses; many of the Fortune 500 pay an annual fee to gain access to MIT research; the university makes a point of licensing its patents.

''If [this university] wants to stay in the lead - if [we] play the cutting edge - it's essential that [we] stay well-connected with business,'' he says. But the connection benefits business, too: About 400 companies have risen from MIT lab research since World War II. (Fulmer plays this down, though, saying MIT spinoffs are a drop in the bucket of new companies formed.)

Not only do New England companies turn to the universities for basic research , but they also depend on them for manpower. ''New England, by virtue of its academic base, is a very good market for talent,'' says John Pasquariello, vice-president, manufacturing, for the Raytheon Company, the largest industrial employer in Massachusetts.

Graduates tend to fan out to companies in the area - or start businesses of their own. ''Small firms get started wherever the guy happens to live. That's why the universities are so important,'' says economist Browne.

Small firms also hatch from big firms when people in large companies think they can build a better mousetrap, or when employees can't convince the companies to act on their ideas. A generation of spinoffs from the major high-tech firms are now growing up in the area. Technology in the region ''is now building on itself,'' comments Mrs. Browne.

As these new companies are born - or as existing companies expand - the trick is to keep them here.

A number of states have launched mighty marketing campaigns to reel in high-tech firms. Mr. Pasquariello of Raytheon says ''active solicitors'' visit him regularly, trying to interest the company in expanding to their neck of the woods.

But when they come knocking at Raytheon, they don't find a taker.

''They all sound alike,'' Pasquariello generalizes. ''They all have a 'very productive native work force.' They all claim to have low state taxes and state-paid training. They trumpet their quality of life. It would take a very unusual set of circumstances to get us to move. We want to add on to our existing facilities here.''

The real advantage of staying put, he says, is that ''we are already here. . . . The continuity of product line and engineering know-how about the product line exists here in plants in New England.'' Expanding the electronics division out of the area would be inefficient, he explains. ''You would have to move a substantial number of your general people, or face starting with new people and not building on your own know-how.''

Still, business leaders have complaints. John Rennie of Pacer Systems thinks the school system is deteriorating because of Proposition 2 1/2, which drastically reduced property taxes across the state. And many engineers prefer warmer climes, he says. These things are important when a company recruits engineers.

By far the biggest worry is the talent pool of engineers. ''There is not much free-floating talent,'' Rennie says. Companies have to work extra hard to keep employees from jumping ship to another nearby company that may offer a higher salary or a more exciting opportunity. ''If anything would limit my ability to grow here it would be the availability of technical people,'' he says.

This is a national problem, but it's being tackled on the local level. The Massachusetts High Technology Council - a lean, no-nonsense group of local chief executive officers - has convinced its member companies to earmark 2 percent of their annual research and development budgets to local universities. Last year, the amount totaled $54 million. And the council has been a force behind tax reductions. ''We buried the slogan, Taxachusetts,'' says Howard Foley, president of the council. ''Very few people pack up and move out [to find a place with lower taxes],'' Foley adds, but it's a factor when it comes time for company expansion.

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