For years, North Carolina touted its status as a technology haven, using a combination of warm climate, low costs and highly trained workers to attract major operations of growing firms such as IBM, Cisco Systems, Nortel Networks and Lucent Technologies and foster the emergence of dozens of young start-ups.

But during the nation’s ongoing economic funk, thousands of pink slips have been handed out at the state’s technology crown jewels and many of its fledgling firms have simply and quietly fallen by the wayside.

The prolonged slump has forced Jim Nichols to work harder than ever before.

Nichols, who heads the technology business recruiting efforts for the North Carolina Department of Commerce, is not only battling to bring new tech jobs to the state, he’s also fighting to hold onto the ones already here. The state did snag Flextronics’ new headquarters for Franklin County and a potential 1,500 jobs. But other relocations or new plants have been hard to come by.

Local Tech Wire caught up with him recently to discuss the state of North Carolina’s tech industry.

The past year has been so awful for the state’s tech companies, are the prospects for 2002 any better?

We’re seeing a fair level of interest from prospective employers, but people still are slow to make any commitment. The sector is still feeling the effects of not only the national economy but the global slowdown as well, and some of our existing companies haven’t gotten back into a growth mode yet. We’re probably not going to make a full recovery until ’03.

How do you recruit business in a climate like this?

We’re working to keep North Carolina on the radar screen so that, when things do pick up and people are ready to expand, we’re right there. We developed a new advertising campaign for the state last fall (“North Carolina – A State of Minds”, in conjunction with the North Carolina Electronic and Information technology Association) that will help, and I would hope that it convinces people that there’s life beyond the Triangle, the Triad and Charlotte and we will start to see tech firms filtering out across the state.

Our best strategy is to prepare counties as best we can to take advantage of the opportunity to attract these jobs. The Rural Internet Access Authority is bringing improved communications to rural areas, and overall level of interest in technology is rising statewide, particularly at the high school and community college levels. Once we have the infrastructure in place and our workers trained, some of these places will start to see the benefits of the state’s investments.

With the state in such a huge budget crunch the past two years, how does that impact the tax credits and other incentives you use to attract new business here?

The state isn’t alone with its deficit -other states are facing similar problems – so we know no one has a competitive edge on us. The General Assembly is looking to capture more revenue, and I’m certainly concerned that they may not take a long-term view of where we are. Now is the time to be somewhat visionary. The temptation is to cut back, but the smarter route is to look down the road so that when we pull out of this recession, which we will, we can advance again.

This is also the first year for the Economic Development Board under Gov. (Mike) Easley and the secretary (Commerce Secretary Jim Fain), and they have been given the mandate to take a clean slate and look at everything in terms of incentives. I hope as they review various options that tech companies will be looked at as vital to the future health of the state, not just IT and software firms but biotech and life sciences as well. I think we will see more targeted incentives and better alternatives for research companies.

The slow economy has been particularly hard on tech start-ups, with funding hard to come by. What role do you see for the state’s venture capital community in helping your tech recruitment efforts?

We do talk with the venture capitalists, but perhaps not as much as we should. New companies are a solid source of growth for the state, both through spin-offs from our research universities and entrepreneurs that have come out of larger firms.
It’s definitely tougher to get (venture) money these days. We’ve got companies with very promising technologies, but they can’t get the attention of venture capitalists. We don’t want to see our best and brightest move elsewhere to obtain the funding they need to grow and succeed. I would like to see us do more with venture capital firms over time, work to develop more angel investor networks, obtain more support for these types of investments from the Treasurer’s Office. In the short run, I don’t see any initiatives at the state level, although I see a lot of interest at local levels for broadening our venture capital network.