The very fact that this little slice of North Carolina is named the "Triangle" comes back at its heart to the arrival of Research Triangle Park, an entity that celebrated its fiftieth anniversary in 2009.
It was a point for pride and celebration over RTP, the catalyst that helped to transform a sleepy, tobacco-centric region into one of the most recognizable brands in science and technology worldwide, and which helped turn Durham, Raleigh and Chapel Hill into a center for the modern knowledge-based economy. As the Research Triangle Foundation noted in a mid-decade submission to the International Association of Science Parks' 2006 conference:
[B]efore the Park was established, fewer than 15 percent of the businesses in the three counties surrounding the Park—Orange, Wake, and Durham—were in what was defined as “New-line” industries. This included businesses involved in chemicals, electronics, communications, business services, educational services, and engineering and management services. As more companies came to the Park and created other benefits, the share of new-line industries increased. By 1966, nearly 30 percent of businesses in the three counties were in new-line industries, by 1995, nearly 47 percent were new-line and by 2005, the percentage had reached 51 percent.
As this year's remembrance of RTP's founding have demonstrated, it wasn't always clear that the Park would be a success. Far from it: the Park's future wasn't secured in any meaningful way until 1965's announcement that International Business Machines would open up a 400-acre campus in the heart of the Park, in what would grow to become Big Blue's largest US operations.
The 2006 IASP conference paper didn't break out firms by name, but noted that RTP had one employer with over 10,000 employees, and a second with 5,000-9,000 employees.
It's not hard to piece together that the first of those employers was IBM -- and that at one point, Nortel would have joined GlaxoSmithKline in that second category.
Ten years later, the Park has struggled back close to its pre-dot-com bust record employment levels, and newer entrants like NetApp and Cisco have established major operations here. And Glaxo recently named its RTP site as the official US headquarters for the London-based pharma giant.
But for two of the Park's biggest employer, the decline in RTP's 1990s lions -- and the inevitable questions over how to make the Park relevant to a newer, leaner, start-up-oriented generation (something already reflected in the large number of tiny companies there) -- stands as the tenth-biggest Durham news story of the past decade.
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For both IBM and onetime communications giant Nortel, high-tech research and development was one part of their RTP operations, but high-tech manufacturing was the other.
The firms made everything from NetVista PCs to telecommunications components in the Park. And while those tech-collar jobs (as one commenter here noted) provide one employment bridge from the days of cigarette manufacturing into the twenty-first century, they would not survive an increasingly global economy where skilled jobs in the 2000s followed unskilled jobs in the 1970s-1990s in the march to lower-cost countries in Asia and Latin America.
For IBM, which is reticent to release exact employment numbers, the best way to follow the change is by watching the headlines from the decade:
"While the company won't specify how many Global Services jobs locally were cut, IBM spokesman John Lucy said it was 'very, very minimal.' The job cuts in the PC division and Global Services group amount to less than 1 percent of the company's total work force of 15,000 in the Triangle, Lucy said. And, 'By year's end we'll have more people in the company than we had when we began the year,' he said." (Herald-Sun, July 12, 2001)
"IBM still is hiring, Sexton said, and ended 2001 with more employees than when the year began. IBM employs about 14,000 workers in its Research Triangle Park facility." (Herald-Sun, Jan. 10, 2002)
"But compared with the size of IBM's Triangle work force, Wednesday's actions were fairly minor, Helmig said. There probably won't be massive layoffs in RTP, he said. 'A layoff of 140 out of 14,000 -- come on," he said. 'This is barely over noise level.'" (Herald-Sun, May 30, 2002, describing 140 more cuts, which themselves came a February transfer of 900 PC manufacturing positions to a contract manufacturer.)
"Once the transaction is complete, Lenovo will have 19,000 workers, including about 10,000 from IBM…. 'Nobody tomorrow is going to lose a job or anything like that,' said Lucy. 'Over time we expect, because these are complementary organizations, the need for [work force] rebalancing to be minimal.' […] IBM says it eventually plans to transfer the 2,000 affected local workers off its RTP campus [of 13,300 RTP employees]." (N&O, Dec. 8, 2004, after IBM sold off its PC business to Chinese firm Lenovo, which would absorb 2,000 RTP employees.)
"And as the site's focus has changed, sales and layoffs have taken IBM from a peak of more than 14,000 employees in 2001 to 11,000 today -- its employment level in 1994…. Rusine Mitchell-Sinclair, IBM's senior state executive in North Carolina, is optimistic about the company's future here. 'I do not believe that we have a negative view of how we will continue to move and grow in North Carolina,' she said. 'There is no reason why we can't be successful here with all the infrastructure we have.'" (Herald-Sun, Sep. 19, 2005)
"A group seeking to organize workers at the technology giant said Tuesday that about 1,200 employees were laid off at IBM's systems technology group in Research Triangle Park and other sites in the United States and Canada.... IBM employed about 11,000 workers in RTP, its largest U.S. site, before the cuts started." (N&O, Jan. 28, 2009)
"Big Blue employs some 400,000 people worldwide, including 10,000 in the Triangle area, and has noted that overall employee headcount has increased. 'IBM has acknowledged notifying employees in N.A. of job reductions,' Doug Shelton, director of IBM Corporate Media Relations, told Local Tech Wire." (WRAL, Aug. 24, 2009)
Of those job cutbacks, almost 3,000 represented transfers from Big Blue to Sanmina-SCI and Lenovo. But contract manufacturer Sanmina-SCI is reported to have shed most of its 900 acquisitions to off-shore sites before it, too, exited the PC manufacturing business a couple of years ago. Meanwhile, Lenovo eventually moved its headquarters to the Triangle, but saw one-sixth of its local jobs cut to boot.
In a sign of the modern economy, many of the terminated IBM workers have been offered positions as ex-pats in India or Eastern Europe -- though with the salary denominated in the local currency of their new site, plenty to have a livable life there, but pennies on the dollar compared to US salaries.
The tale of Nortel has been even starker in the rise and fall of the onetime Northern Telecom, whose manufacturing, R&D and US headquarters operation in RTP was a major site for the Canada-based firm.
Before the dot-com bust, Nortel employed 7,500 at RTP, making it the second-largest employer behind Big Blue itself.
By the start of 2002, that number had fallen to just 4,000 employees, the N&O reported at the time. And by the year's end, that was down to just over 3,000.
The initial hit came from manufacturing, with Nortel having already outsourced some of its production, and then hit with the need for more cuts as telcos globally faced the end of the late 1990s boom in phone services.
And while the job levels stayed at that point for most of the rest of the decade, and with corporate execs promising that "RTP is at the core of this company," the firm continued to feel pain, reeling from an accounting scandal and from new competition, be it from converged communications leader (and fellow RTP resident) Cisco on the IP side, or new Chinese competitors on the legacy side.
By 2008, the markets were expressing doubt at the firm's viability. And by the Great Recession of 2009, the firm was in bankruptcy, down to just 2,200 workers in the Park, one of its largest sites worldwide.
The workforce has dwindled further as Nortel has sold itself off, bit by bit, to various suitors. Avaya picked up most of a 300-person group, with a hundred-plus more moving to Ericsson's carrier network division (separate from the Sony Ericsson mobile phone team in RTP, which shut down this year), and Ciena.
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The picture isn't entirely clear as to what will eventually become of Nortel's Triangle-based employees, or how bright the future is for Lenovo, IBM, and the other spin-offs and spin-outs from two of RTP's all-time largest high-tech employers.
But just as the tech-focused recession of 2001-02 sent shockwaves through RTP, so too did the global downturn of the late 2000s provide a second rough patch, twin bookends of economic pain for the Park.
In the end, RTP closed the decade with about the same number of employees as it had to start the decade, depending on how you factor in contract employees and the like.
The growth of NetApp and Cisco, the relocation of IEM, the rumored arrival of Research in Motion (already hiring up Sony Ericsson vets) and the recently-announced major expansion of biotech firm Syngenta (itself a 25-year vet to the Park) shows that when you have big-line departures, you can still have net job growth, or at least maintenance.
In fact, the story of Syngenta's December acquisition of a 130,000 sq. ft. facility on Davis Drive is, one might say, telling about the resiliency of the RTP business model, and of the evolution of the Park's mission.
The facility -- highly visible on Davis Drive just south of the RTF's new headquarters -- was first built decades ago as a manufacturing facility for denim textiles, according to the TBJ's coverage. In the late 1980s, IBM converted the facility to office space. And now, after several years of vacancy, Syngenta's bought the building to fuel future expansion, along with 50 acres for future development.
So, then, what makes this any different or newsworthy? What does it matter if one firm downsizes at RTP if another takes its place?
As we discussed here this summer, much of the challenge that the Park faces comes down to the fact that the newer firms coming in are often smaller companies looking to establish R&D centers or offices, but perhaps not the 5,000-10,000 regional sites so common in the days of IBM and Nortel.
And while the Park does offer flex-space and incubator options for those smaller firms, the Park as a whole is still designed and zoned for the concept of the big, secluded one-company campus, something we talked about in that July story:
I was having lunch with some folks who've been involved tangentially with the start-up a while back of another southeastern US science research park.
It's a much smaller space -- less than a tenth of RTP's size. And it looks more like a more-traditional development, too, complete with office buildings available for lease, wholly or in part.
The RTP model, they said? It's yesterday's idea, with companies looking for more density, more urbanity, and more flexibility....
One person I've spoken with recently who's connected to the local science community noted that while scientists aren't always looking for social opportunities, the world of academia provides channels for collegial connections, something that's harder to do in companies isolated in more independent office buildings and complexes....
Similarly, the prospects for living close to one's work has gotten more attractive than it did in the suburban-oriented days of the 50s and 60s when the Park was dreamed up.
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But is such a design and orientation appropriate in a world where RTP is increasingly dominated by a larger number of smaller companies?
Certainly, the presence of a large employee base in RTP -- with big employers or not -- certainly would seem to help drive economic opportunities for entrepreneurial ventures and start-ups in the region. The 2006 IASP submission certainly says as much:
A third factor of the Park’s success is the critical mass of companies and knowledge workers it has been able to build. The critical mass affords the Park and the region a sought-after labor pool that is both broad and deep. This enables the region to draw more high-quality employers and companies that not only provide jobs but also increase the sophistication and expertise of the region’s workforce through their research, use of technology, investment in employees and high standards. It also provides an environment in which company researchers, knowledge workers, and university professors can interact around ideas, creativity and entrepreneurship, thereby creating more knowledge, more innovation, and economic growth.
While acknowledging a strong base of employees is a necessary ingredient facilitate this, however, the RTF's Vision 2020 Strategy set forth by the Foundation found that the Park, relative to competitors like metro Boston and California's Bay Area, didn't do as strong a job at creating those "collegial connections" I referred to back in July. From the IASP paper again:
The Park falls behind some of the top ranked regions in terms of its intellectual interaction and providing networks to spark spin-offs and to connect individuals both formally and informally. The Project also suggests that the region needs to strengthen its entrepreneurial capacity, as this group appears to be a critical ingredient to transforming knowledge investments into economic growth.
The report's mini-SWOT list at its appendix lists lots of areas in which the Triangle region bests its competitors, from the very high education levels in Park companies and the region, to lower cost of life and short commutes, to relatively strong K-12, to having "infrastructure and zoning" for medium and large companies.
But it also includes a number of shortcomings compared to peers:
- "Top competitor regions do a better job of addressing the needs of smaller-startup companies, especially in terms of tax and fiscal environments"
- "Other regions have more space for small/gazelle companies and are able to setup new business locates more rapidly"
- "Top competitor regions offer more opportunities—both formally and informally—for interaction, much of which has arisen out of market forces"
- "Top competitor regions do a better job of providing networking and awareness mechanisms to spark spin-offs"
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In short, the problem sums up to a Park that's well-suited institutionally, organizationally, historically to attracting the IBMs and Nortels of the world.
They can bring ten thousand jobs -- or take them with them at the drop of the hat.
If the future is to lie in smaller firms and organizations, the Park will need to find a way to continue to adapt to the new-line model.
We'll close with two compare-and-contrast moments with RTF head Rick Weddle, the chief cheerleader for the grand RTP experiment.
In 2005, Weddle -- who arrived to take the reins of the Research Triangle Foundation in 2004 -- set forth for Triangle Business Journal a vision of growth and density:
"The first order is to get it back on track," says Weddle. He signaled during an interview with editors and reporters of Triangle Business Journal that the RTP of the future will have a different look from the current look in which buildings are spread far apart with thick stands of trees and little besides office buildings in the way of development.
After meeting with more than 150 "influentials and board members" after he took the job last year, Weddle says he concluded that " ... there is a fairly broad perception that the park needs to be spiffed up and brought forward."
He foresees a park with increased density - more buildings with less land surrounding them, perhaps "buildings that go up instead of out." The park's current capacity, based on existing restrictions, would accommodate some 91,000 workers. Those restrictions can be changed, he says.
Moving along, five years later, to BusinessWeek's article this fall on RTP's future:
But in a few years, some of this acreage should feel more like a densely packed suburban center. As research parks sprout up inside big cities around the globe, the grandfather of today's research and development complexes is under pressure to make itself livelier. So it's adding facilities tailored to startups as well as shops and housing at the park's edges. The goal, says Rick L. Weddle, CEO of the Research Triangle Foundation of North Carolina, which manages the park, is to make the place "consistently more attractive to the brightest minds in the world."
[But citing land use covenants and the necessary participation by large corporate land owners before land use changes are made,] Weddle, who has been in the job for five years, has focused on development around the periphery and is planning a few dense "nodes and niches" within it. Those include a 25-acre retail and housing site near a forthcoming transit hub and potentially a 100-acre site that currently hosts office space, a couple of bank branches, and a vacant shopping center. "Let's not kill the goose that laid the golden egg," Weddle says, referring to the park's model of historically catering to large companies.
Even with its new amenities, Research Triangle Park, as a whole, will never have the walkability of newer urban centers designed to encourage collaboration by funneling researchers and scientists in related industries into shared spaces in offices and outside. Encompassing 20 times as much land as the average 365-acre U.S. science park, the park is just too big.
RTP's future success, I suspect, will come down to just what kind of vision gets created for the site's future.
Will it be able to "build up" in the way Weddle told the TBJ, to add the density to reach 100,000 or more employees on site? Or will it declare itself "just too big" to ever have a greater urbanity?
And, if it can't: can it solve those issues of connectedness and networking that don't matter if you're a bench scientist at a thousand-person Big Pharma firm, but matter a whole bunch if you're trying to start up a new firm?
The future of RTP depends on the answer. Because the days of the Nortel and IBM big-site employers setting up shop may be limited indeed.