Ted Simons: In tonight's focus on Arizona technology and innovation, a new poll shows leaders of high-tech companies are concerned about the lack of Tech talent and the quality of education in science, technology, engineering and math. Steven Zylstra is the chair of the technology councils of North America, which conducted the survey. He's also president and CEO of the Arizona technological council. Good to see you.
Steve Zylstra: Good to be here.
Ted Simons: For the optimistic side it shows that most firms do plan to hire in the next 12 months.
Steve Zylstra: Yes, I believe that about two-thirds of the over 1,700 CEOs around the U.S. indicated they are planning to hire this next year. As well as make investments and innovation and products and capital investments as well. So I think over all there's a feeling that the economy is improving and they need to start investing.
Ted Simons: Okay. Now the other side of the ledger here. It sounds like there's concern over lack of Tech talent. Talk to us about that.
Steve Zylstra: So nationally this is an issue. Couple of years ago here in Arizona we actually did a very comprehensive work force study around Tech talent and confirmed the concern that most companies have. What we realized, though, is that and the poll indicates this that Arizona is doing better than a lot of places. We determined that we don't have as much of a brain drain as a lot of other states have. A lot of stem graduates are staying here in Arizona. We find that companies find it relatively easy to attract talent. This is a great place to live and work. Even with that said, it's very difficult for them to find the talent that they need. Part of it is just there's a national shortage.
Ted Simons: Is that shortage enough to hinder growth? Start with Arizona, go to the country. Is it that serious?
Steve Zylstra: I believe it is. Over the last couple of decades, as you probably know, the Tech industry has been hiring talent from overseas under H1B Visas. The recent immigration discussion would have doubled if it was successful in getting passed the number of H1B Visas for tech talent. Either we go overseas and bring talent here under Visas or some companies will take the jobs overseas. That's a big concern.
Ted Simons: So why? Why is this happening? It seems like we have talked for years about the stem education, these things need to be increased. It sounds like a lot of schools are trying. Are we just waiting for the results here? What's going on?
Steve Zylstra: There's a few reasons. First of all, to pursue a stem educational path is very tough. It's tougher than a lot of other curriculums. Taking calculus and physics and kinds of things that you have take in stem fields is tough. So the pool is not as big as it might be for some other things. Then Mega economic trends sometimes get in the way. You recall there was a dot-com bust in the late 90s, early 2000s; as a consequence a lot of talent went to of all places Wall Street. The same analytical minds can work in the finance field as in the engineering field. Now, that industry went bust a few years ago. So hopefully the trend starts coming back the other way.
Ted Simons: you seeing a little bit of that already?
Steve Zylstra: We're beginning to hear that from deans of colleges and universities in both I.T. and engineering.
Ted Simons: The polls show concern over the quality, not just the fact that not enough kids are getting in there, but the quality once they are there. Talk to us about that.
Steve Zylstra: Particularly in the I.T. field that’s the case. Students are graduating don’t necessarily have the requisite skills to hit the ground running. An additional complaint is lack of soft skills. Team building, communication skills, some of the things that students should have learned in high school but aren't.
Ted Simons: Why aren't they? That surprises me. I would think that social would be the one thing most kids would be able to handle these days.
Steve Zylstra: All I can say is that pretty much across the board and around the country this is a complaint of companies that kids graduating from high school don't possess the requisite soft skills to be effective in the workplace and I believe that's an issue that our K through 12 education folks need to take a look at.
Ted Simons: The poll looked at a bunch of other things as well and we talked about this earlier. The increase in demand for tech. Are we seeing that over all? Are we seeing it particularly in certain sectors?
Steve Zylstra: I would say over all the tech sector is doing well. Even in the midst of the great recession, the unemployment in the tech space was about half of overall employment. So things are starting to heat up again. Companies are as I said earlier willing to make new investments in R&D, product development and other infrastructure they weren’t willing to make over the past few years. The industry is more upbeat. I would say Arizona is a little more upbeat than certain parts of the country. New England, for instance, a little more pessimistic. Maybe having a tougher time than places like the west, but over all a good attitude that things are heading in the right direction although still some concerns about the economy over all. Whether or not we're really out of this or not.
Ted Simons: Yeah. You talked about companies willing to invest. Are they finding access to capital?
Steve Zylstra: It's actually one of their greatest complaints. One of the areas where they feel that government could be doing more to help facilitate that. Particularly in the state and local areas. In fact the tech council is working on an initiative to try to create an early stage venture fund here in Arizona through legislation so bring it right ome.
Ted Simons: Let's get back -- what would you like to see? One thing you would like to see. They look at Arizona's place in the poll. What do you want them to do?
Steve Zylstra: I think Arizona's primary deficiency right now is capital. I think we have a lot of good talent. Maybe not as much as we need, but there's good talent here. I think the state through the legislature and the governor has done a lot over the last few years to improve the business climate in Arizona and we're beginning to attract a lot of companies, not the least of which is Apple. But start-up companies still have a very difficult time finding capital, and that's why the state can do something and many other states, almost all the states in the country have a state supported fund of some type.
Ted Simons: The initiative you were talking about, what would it do?
Steve Zylstra: It would use tax premium or insurance premium tax credits to capitalize a fund. Insurance companies would get a tax credit for investing in the fund administered through the Arizona Commerce Authority. Early stage tech companies.
Ted Simons: Nothing coming from the general fund.
Steve Zylstra: Not hitting the general fund for revenue it might have otherwise gotten because of the tax break.
Ted Simons: We had to put that on the other side of the ledger. Second year for this particular survey, have you seen any major changes? When you look at this after the first year, what strikes you?
Steve Zylstra: Well, people are more optimistic. I think there's a general sense that the economy is improving. Things are getting better. They are more willing as I said to make critical investments. That's the main difference that we see. And as I said earlier, the concern about finding talent is increasing. As the economy heats up, that concern also increases.
Ted Simons: So over all optimism I'm hearing in the tech sector. Arizona's place in that optimism.
Steve Zylstra: I believe Arizona's a little more optimistic than the rest of the country. I think that has a lot to do with what's happened in general around here. As your last presenter talked about, the economy is improving in Arizona. People are starting to buy homes again. All of that generally good news that’s going on makes people feel better.
Ted Simons: last question, I have asked you this different ways before, are we a player in the sense that we're now in the tech crowd or are we still trying to catch up to a crowd that's also running ahead pretty strong?
Steve Zylstra: I would say that the Apple announcement is a critical milestone for us. That we, Arizona, has arrived from a tech standpoint. We are fourth overall in aerospace and defense, fourth overall in semiconductor and electronics and two over all in data centers. Some of the other early stage sectors are starting to pick up as well.
Ted Simons: encouraging news. Good to have you here. Thank you for joining us.