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Industrial land use planning in a context of development of high tech industry : a case study of the… Korolj, Zorica 1999

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I N D U S T R I A L L A N D U S E P L A N N I N G I N A C O N T E X T OF D E V E L O P M E N T O F H I G H T E C H I N D U S T R Y : A C A S E S T U D Y O F T H E C I T Y O F R I C H M O N D by Z O R I C A KOROLJ B . S c , The University o f Belgrade, 1986 A T H E S I S S U B M I T T E D I N P A R T I A L F U L F I L L M E N T O F T H E R E Q U I R E M E N T S F O R T H E D E G R E E O F M A S T E R O F A R T S in T H E F A C U L T Y OF G R A D U A T E S T U D I E S School of Community and Regional Planning We accept this thesis as conforming to the required standard T H E U N I V E R S I T Y O F B R I T I S H C O L U M B I A Apr i l 1999 © Zorica Korolj , 1999 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. The University of British Columbia Vancouver, Canada Department Date >fyg// mq DE-6 (2/88) ABSTRACT This thesis examines city conditions that attract high tech companies in Canada and the Uni ted States, gives an insight into the high tech industry in R i chmond, analyses factors that determine the location o f high tech in the C i ty o f R i chmond, and identifies possible actions that the C i ty o f R i chmond could take to attract high technology. The problem statement focuses on factors that determine the location o f high tech industries in Nor th Amer ican cities, generally, and in the C i ty o f R ichmond, specifically. T h e thesis' methodology consists o f a literature review, survey and interview research, statistical analysis, and policies and zoning regulations review. The economic and planning literature have provided better understanding o f the definition o f high tech industry, the types o f high technology clusters, and the locational factors affecting the spatial distribution o f high tech companies. Bo th the survey and the interview questions have focused on the effective methods o f attracting high tech industries, the conditions making high tech industries successful in the surveyed cities, the development characteristics supporting high tech industries, the development tools used by the cities in practice, and the current effective planning approaches to high technology. The statistical analysis and the review o f policies and zoning regulations have provided an insight into the number and size o f the high tech companies located in the city o f R ichmond, as wel l as into R ichmond ' s policies related to high technology. This thesis finds that high tech industries are foot - loose industries that often change locations due to factors, such as better tax climate, availability o f an educated workforce, and post - secondary institutions presence. A s a result, there is no standard framework to explain the locational pattern o f high technology. However, this thesis identifies two sets o f locational factors - general and specific - that are decisive for high technology today. There is an obvious requirement for general locational factors, such as a skilled workforce, post-secondary educational institutions proximity, linkages to other industries, good public transit, good quality business parks, higher bui lding densities, and affordable housing. The specific locational factors depend on the type o f high tech sector, and they are required by certain high tech sectors, such as biotechnology. The locational factors revealed by this thesis do not represent a framework that is applicable to all communities that aim to attract high tech businesses. However, the findings o f this thesis present val id information for any community to consider before pursuing high tech policies and programs. In addition, this thesis leads to recommendations regarding the steps that communities could undertake in order to develop successful high tech policies and programs. T A B L E O F C O N T E N T S A B S T R A C T II L I S T O F T A B L E S V L I S T O F F I G U R E S V I A C K N O W L E D G M E N T S V I I 1. C H A P T E R O N E : T H E S I S I N T R O D U C T I O N A N D O V E R V I E W 1 1.1. BACKGROUND 1 1.2. PROBLEM STATEMENT 2 1.3. OBJECTIVE 3 1.4. RATIONALE 3 1.5. METHODOLOGY 4 1.6. OVERVIEW OF CHAPTERS 5 2. C H A P T E R T W O : L I T E R A T U R E R E V I E W 6 A . T H E D E F I N I T I O N O F H I G H T E C H N O L O G Y 6 2.1. T H E IMPORTANCE OF HAVING THE DEFINITION OF HIGH TECHNOLOGY 6 2.2. DIFFICULTIES IN DEFINING HIGH TECHNOLOGY 7 2.3. HIGH TECHNOLOGY DEFINITIONS F R O M THE LITERATURE 8 2.4. DEFINITION OF HIGH TECHNOLOGY IN BRITISH COLUMBIA 10 B . S P A T I A L D I S T R I B U T I O N O F H I G H T E C H I N D U S T R I E S 13 2.5. HIGH TECHNOLOGY CLUSTERS 13 2.5.1. Technopoles 14 2.5.2. Typology of Research Parks 15 2.6. LOCATIONAL FACTORS IMPORTANT FOR HIGH TECHNOLOGY CLUSTERS 16 2.6.1. Introduction 16 2.6.2. Standard Theoretical Frameworks and Locational Factors. 17 2.7. LOCATIONAL FACTORS IDENTIFIED IN THREE STUDIES 19 2.7.1. ThePremusStudy 19 2.7.2. The Newton and O'Connor Study 22 2.7.3. The Short's Study 22 2.8. SUMMARY 23 3. C H A P T E R T H R E E : S U R V E Y F I N D I N G S 25 3.1. INTRODUCTION 25 3.2. SURVEY FINDINGS 27 3.3. SUMMARY 31 4. C H A P T E R F O U R : A N O V E R V I E W O F H I G H T E C H N O L O G Y I N B R I T I S H C O L U M B I A A N D T H E C I T Y O F R I C H M O N D 33 4.1. INTRODUCTION r. 33 4.2. PAST GROWTH OF HIGH TECH INDUSTRY IN BRITISH COLUMBIA 33 4.3. HIGH TECH EMPLOYMENT TRENDS AND THE SIZE OF HIGH TECH COMPANIES IN BRITISH COLUMBIA .... 34 4.4. T H E LOCATION OF HIGH T E C H COMPANIES 36 4.5. COMPLEXITY OF THE ISSUE 38 4.6. INDUSTRIAL L A N D 40 4.7. T H E NUMBER AND SIZE OF HIGH TECH COMPANIES 41 4.8. T H E LOCATION OF HIGH TECH COMPANIES IN RICHMOND 45 4.9. SUMMARY 46 5. C H A P T E R F I V E - I N F O R M A N T I N T E R V I E W S : R E S U L T S A N D A N A L Y S I S 47 5.1. INTRODUCTION 47 5.2. LOCATIONALFACTORS 47 5.2.1. Educated Workforce and the Presence of Post Secondary Education 48 5.2.2. Linkages to Other Industries 49 5.2.3. The Proximity to the Airport 50 5.2.4. Flexibility of Workspace 51 5.3. DEVELOPMENT CHARACTERISTICS 52 5.3.1. Public Transit 52 5.3.2. Business Parks 53 5.3.3. Quality of Life Factors 55 5.3.4. Affordable Housing • 57 5.4. POSITIVE AND NEGATIVE FACTORS INFLUENCING HIGH TECH IN THE CITY OF RICHMOND 58 5.5. INTERVIEW SUMMARY 60 5.6. SIMILARITIES BETWEEN DIFFERENT STUDIES 62 6. C H A P T E R S I X : S U M M A R Y O F R E S E A R C H F I N D I N G S , S I M I L A R I T I E S B E T W E E N S T U D I E S A N D T H E S I S C O N C L U S I O N 68 6.1. PROBLEM STATEMENT REVISITED 68 6.2. SUMMARY OF RESEARCH FINDINGS 68 6.3. POLICY IMPLICATIONS FOR THE CITY OF RICHMOND 72 6.4. CONCLUSION 75 7. B I B L I O G R A P H Y 77 8. A P P E N D I X A 81 8.1. SURVEY QUESTIONS 81 8.2. INTERVIEW QUESTIONS 83 9. A P P E N D I X B 85 9.1. PERSONS INTERVIEWED 85 V LIST OF TABLES Table 1: Final List of High Tech Industries Identified by Lawrance and Mi l l e r 11 Table 2: Factors that Influence the Regional Choices of High Tech Companies 21 Table 3: Factors that Influence Locational Choice within a Region 22 Table 4: Primary Survey Findings 28 LIST O F FIGURES vi Figure 1: The Distribution of British Columbia High Technology Employment in 1993 37 Figure 2: Distribution of H igh Tech companies in Lower Mainland 39 Figure 3: The Size and Number of High Tech Companies in Vancouver 44 Figure 4: The Size and Number of High Tech Companies in Richmond 45 Figure 5: High Tech Employment by Sectors in 1997 47 A C K N O W L E D G M E N T S There are many people whom I would like to thank for their help and support. First, are the members of my committee, Dr. Penny Gurstein, and Ian Chang, a planner from the City of Richmond, who guided and encouraged me at the time when I needed it most. Second, I greatly appreciate the help of the City o f Richmond staff, the high tech executives, the landowner and the realtor who were generous to spare their precious time and to provide me with information that I needed for my research. Without the cooperation and help of these people this work would not be complete. Last, but not least, I want to thank my husband George for his endless support, encouragement and patience. 1 1. C H A P T E R O N E : THESIS I N T R O D U C T I O N A N D O V E R V I E W 1.1. Background High tech industries are experiencing intensive growth, and many communities faced with declining employment in traditional industries are striving to attract more high technology firms. Many communities are asking the following question: "What particular factors do high tech industries require to locate in specific areas?" The City of Richmond is one of the communities that aims to attract more high tech industries. One of the Official Community Plan's objectives is ".. to ensure that Richmond will become a preeminent location for advanced technology or knowledge based industries" (City of Richmond, 1998). For the past two decades, the City of Richmond has been successful in attracting different types of industrial development. Historically, the manufacturing and TCU (Transportation, Communication and Utilities) sectors have offered the greatest employment. However, in recent years the City has been experiencing change in the nature of its economy. Traditional manufacturing industries are moving out of the City to other municipalities, whereas knowledge based industries are moving in. In 1996, high tech and office based industries comprised 36% of the total number of businesses in all industrial zones and accounted for about 29% of all industrial jobs. However, there are many barriers for the future development of these industries, including factors like increased competition from other cities, housing 2 prices, and taxes. Furthermore, the City's present industrial land use policies and zoning regulations do not fully reflect the emergence and need of high tech industry. As a result, the City aims to update its Industrial Land Use Strategy to include the needs of high tech industries. Faced with the decline of traditional industrial sectors, the City of Richmond perceives the high technology aspect as one of the targets for its economy. 1.2. Problem Statement This thesis examines conditions that attract high tech companies in thirteen cities in Canada and the United States, gives an insight into the high tech industry in Richmond, analyses factors that determine the location of high tech in the City of Richmond, and identifies possible actions that the City of Richmond could take to attract high tech industries. The analysis is based on information gathered from interviews, municipal planning reports, a literature review, and a case study. The problem statement is: Which factors determine the location of high tech industries in North American cities, generally, and in the City of Richmond, specifically? 3 1.3. Objective The main objectives of my thesis are: To examine current definitions of high technology To examine the spatial patterns of high technology To determine locational factors that attract high tech in North America To define locational factors important for high tech industries specifically located in Richmond To determine positive and negative factors influencing high tech industries in the City of Richmond To recommend ways by which Richmond can attract more high tech companies and improve the conditions for the existing ones. 1.4. Rationale The need to determine locational factors that are important for high tech companies located in Richmond is significant in light of the City's objectives related to future high tech industrial development. Policies set out in the Official Community Plan of the City of Richmond stress that one of the City's goals for the future is to ".. reinforce Richmond as a preeminent location for advanced technology or knowledge based businesses". This thesis provides recommendations on the way the City of Richmond can achieve this goal. 4 1.5. Methodology To answer the above stated research questions and to achieve the research objectives, different types of information gathering techniques were used. First, economic and planning literature was reviewed regarding the definition of high tech industry, the types of high technology clusters, and locational factors affecting the spatial distribution of high tech companies. The sources of information include books, journal articles, newspaper and Internet articles. Second, a survey among twenty North American cities was undertaken. The survey questions focused on effective methods of attracting high tech industries, conditions making high tech industries successful in the surveyed cities, the development characteristics supporting high tech industries, the development tools used by the cities in practice, and current planning approaches for high tech and their proved effectiveness. The survey questions are presented in Appendix A. Third, key informant interviews with high tech companies executives, a landowner, and a real - estate professional were conducted in person and over the telephone. The purpose of the interviews was to determine factors important for high tech industries located in the City of Richmond, as well as to identify positive and negative aspects affecting these locational factors. In order to compare research results, the questions for both the interviews and the survey were similar with just minor differences in certain points. In addition, the survey gained data on factors important for specific high tech sectors, as well as information about the interviewee's company. For more details, please see Appendix A. 5 Finally, the statistics on the number and size of high tech companies as well as the policies and zoning regulations related to high tech industries in the City of Richmond were reviewed and analyzed. This methodology enabled me to look at the problem from three different perspectives. The literature review provided me with a general academic perspective on the definition of high tech industries and on significant issues related to the spatial distribution of high tech industries. The survey findings offered an insight into the general requirements of high tech industries in North America. The interview results and the evaluation of specific policies and zoning regulations related to high tech industries in the City of Richmond provided an insight into the real - world problem. r 1.6. Overview of Chapters Chapter One provides a brief overview to the topic of the thesis and outlines the way the research questions will be examined. A review of the literature addressing the definition of high technology, high technology clusters and factors that make high technology cluster in specific areas is presented in Chapter Two. The third chapter provides a review of the survey results on the locational factors important for high tech industries in the surveyed cities. Chapter Four presents an overview of the growth trends and distribution of high tech industries in British Columbia and the City of Richmond. Chapter Five presents findings and analysis of interviews with high tech executives, as well as persons involved in high tech industries from the private sector. Chapter Six concludes with an overview of research findings and discusses policy implications in relation to the City of Richmond's high technology industrial growth. 6 2. C H A P T E R T W O : L I T E R A T U R E R E V I E W A . The Definition of High Technology 2.1. The Importance of Having the Definition of High Technology High tech industries are generally recognized as being a growing factor of many economies. They have several advantages over other types of industries. First, they provide higher paying jobs. Second, they have a strong export orientation. Third, they do not significantly deplete natural resources and they are not major polluters. Finally, their growth is currently faster than the economy as a whole (Lawrance and Miller, 1995, p. 1). For these reasons, planners involved in economic development are looking with an increasing interest to high tech industries as a source of future growth. To develop effective policies and programs that assist high tech industrial growth, it is important to have a definition of high technology. The definition "would facilitate policy and program development on the part of government, and would allow industry to better see and respond to sectoral trends" (Lawrance, and Miller, 1995, p. 3). However, defining high technology is not simply a matter of consulting the literature for the currently accepted " definition. The following sections review the difficulties in defining high technology and outline different definitions of high tech industries. 7 2.2. Difficulties in Defining High Technology High tech industries perform many roles. They provide jobs, improve the productivity, protect and maintain economic competitiveness, and lead society on the path of progress. (Glasmeier, Markusen and Hall, 1983, p. 25). As a result, the term " high technology" is being perceived in a variety of contexts and meanings. Industrialists often associate high technology with new products and with labor - saving production processes. Politicians see high technology as the prerequisite of economic recovery and a component of America's competitive edge; academics see high technology as new forms of research and development (Glasmeier, Markusen and Hall). Both the public and the private sectors have commissioned many studies to develop the definition of high technology. "However, no standard definition of high technology industries exists: it varies from study to study depending on objectives" (Wong 1990, p. 17). There are several reasons why a standard definition of high technology has not been developed yet. First, many characteristics of high technology are qualitative. "It is difficult to devise scales or measurement systems to capture, for example, accelerated obsolescence, high risk or strategic importance to governments" (Wong 1990, p. 17). Second, difficulties arise from the trade-offs that must be made between a sound conceptual definition of high technology and practicalities in its measurement (Newton and O'Connor, 1985, p. 15). Third, not all of a high tech corporation's resources are devoted to activities that might be considered 'high tech'. Some parts of a firm may be involved in high tech, while others might not be (Short, 1988, p. 14). 8 Fourth, the definition of the high technology industry and its scope may also depend on the reasons for examining high tech in the first place. If a community wants to attract a highly skilled force, then it may want to define high tech as those industries that have a high proportion of skilled and educated employees (Short, 1988, p. 13). 2.3. High Technology Definitions From the Literature Despite the lack of agreement, certain criteria are frequently used to identify high tech industries. These criteria are: high tech research development expenditures (R&D), proportion of engineers and scientists to the total workforce, and product sophistication. The research and development activity approach is frequently used as an indicator of the level of technology. This method ranks high tech industries according to the ratio of R & D expenditures to net sales of final outputs. The ranking represents the effort each industry puts into new knowledge meant to improve products. Miller and Cote maintain that a major disadvantage of this approach is that it does not take into account newly created spin-offs that emerge on the basis of R & D performed elsewhere. Moreover, this criterion usually does not cover service industries, because they spend little on R & D , or because R & D are embedded in the normal course of their activities (Miller and Cote, 1987, p. 10). Wong notes that the R & D ratio is "at best an indicator of investment in future high technology, which may not yield positive returns in terms of jobs and products" (1990, p. 20). The proportion of the technology workforce to the total workforce measures the industry's capacity to employ scientific and technological practices and to generate scientifically and technologically advanced products (Hall, Breheny, McQuaid, and Hart, 1987, p. 16). It is based on the proportion of an industry's work force employed in technology occupations including engineers, scientists, mathematical specialists, engineering and science technicians, and computer specialists. Miller and Cote argue that this indicator considers mature manufacturing and service industries, which are not usually associated with leading-edge technologies. However, it excludes consulting engineering firms associated with road construction, bridges, etc. (1987, p. 10). Further, the definition based on the proportion of skilled technical labour "does not allow differentiation between high technology producers and high technology users, since many old line manufacturing companies are also increasing the proportion of engineers and scientists employed in order to be able to use new technologies, regardless of the characteristics of their final products" (Castells, 1989, p. 39). Industries are often designated as high tech if their final product is perceived to be high tech. The advantage of this approach lies in its simplicity. The disadvantage is that judgements of technological sophistication is based on a range of qualitative factors, and lead to subjective and arbitrary classification (Ministry of State for Science and Technology, 1987). A widely accepted definition is developed by Glasmeier, Markusen and Hall. Their definition is based on the "degree of sophistication and competence embodied in the technical occupations within the industry" (1985, p. 3). Glasmeier, Hall and Markusen have established the definition based on the percentage of engineers, engineering technicians, computer 10 scientists, life scientists, and mathematicians exceeding the manufacturing average for these occupational categories. They identified 29 three digit SIC industries in the U S A with higher than the national average of engineers, engineering technicians, computer, scientists and mathematicians. The advantage of this method is that it is comparable across industries and avoids the measurement problems of weighing a composite index of different approaches (Hall, Breheny, McQuaid, and Hart, 1987, p. 16). 2.4. Definition of High Technology in British Columbia There has been an attempt to develop a standard definition of high tech industry in British Columbia. However, "many jurisdictions and researchers are struggling with this problem. Some define high technology in terms of commodity inputs, others look at outputs, still others consider the skills of employees or expenditures on research and development" (Lawrance and Miller, 1995, p. 3). As a result, different definitions of high technology are used for different purposes. Some researchers use a definition based on SIC codes. The SIC model, developed by Lawrance and Miller, is an aggregation of eleven manufacturing categories and three service categories. Table 1 presents the SIC codes that have been used in defining high technology sectors. Lawrance and Miller note that "by selecting a SIC based definition, BC Stats are able to take advantage of data available from Statistics Canada and provide time series of data values for analysis" (1995, p. 1). 11 Table 1: Final List of High Tech Industries Identified by Lawrance and Miller SIC Industry 3211 Aircraft and Aircraft Industry 3351 Telecommunications Eauipment Industry 3352 Electronic Part and Components 3359 Other Communication and Electronic Eauioment 3361 Electronic Computing and Peripheral Eauioment 3362 Electonic Office. Store and Business Machines 3369 Other Office. Stores and Business machines 3372 Electrical Switchgear and Protective Eauioment 3379 Other Electrical Industrial Eauipment Industries 3741 Pharmaceutical and Medicine Industries 3911 Indicating. Recording and Controlling Instruments 3912 Other Instruments and Related Products 772 Computer and Related Services 7752 Offices of Engineers 7759 Other Scientific and Technical Services 868 Health and Other Medical Laboratories 3192 Construction. Mining Machinery and Materials Handling 3194 Turbine and Mechanical Power Transmission Eauioment 3199 Other Machinery and Eauipment Industries N E C 3271 Shipbuilding and Repairing Industry 3381 Communication and Energv Sire and Cable Industry 3711 Industrial Inorganic Chemical Industries N E C 3994 Musical Instruments and Sound Recording 3999 Other Manufactured Product Industries From: "Defining High Technology Sector in British Columbia" by Lawrance and Miller , 1995, B . C . Stats. The significant limitation of the SIC classification is the exclusion of the 'new economy' including the high technology and knowledge -based sectors (Lawrance and Miller, 1995, p. 4). Further, the SIC model excludes ... "commercialization o f technology from the provinces' three major universities and the British Columbia Institute o f Technology" (Ernst and Young, 1997, p. 42). Finally, the SIC based definitions rely on secondary data sources. 12 However, "the high technology industries consist of companies that are on the 'leading edge' in terms of their processes, products and services, and who invest extensively in research and development. As such, the industry is always in a state of flux; its product mix, production processes and the companies comprising it change constantly. Only the most timely data will accurately capture this industry, and they too will become outdated quickly" (Lawrance and Miller, 1995, p. 2). The SIC method is not generally used to define the high technology sector in British Columbia. Some municipalities create their own definitions that are equivalent to their objectives in high technology. For example, the City of Vancouver maintains that ".. high technology product design which means the design, but not necessarily manufacture, of commercial products in the fields of computer software, electronics, telecommunications, precision engineering, robotics, biochemistry, health care, and related industries" (DeMarco and Nowlan, 1998). This definition is created to attract particular sectors of high tech industry to the City, and it satisfies the City's needs and objectives related to high technology. A standard definition of high tech industry would help federal, provincial and local governments to facilitate the needs of the industry and would allow the industry to identify trends in particular sectors. The lack of a standard definition makes obtaining reliable statistics and quantifying the size and economic potential of high tech industries problematic. At present, most statistical analyses of high tech industries are based on the SIC model. As previously mentioned, the SIC model has many disadvantages, so that it does not provide a real picture of the trends in high tech sectors. 13 B. Spatial Distribution of High Tech Industries 2.5. High Technology Clusters For planners involved in economic development and industrial land use of high tech, it is necessary to know where high tech industries tend to locate and what factors influence their spatial distribution. This section provides an overview of current thinking on spatial pattern of high tech industries and locational factors that influence their spatial distribution. It is often believed that high tech industries are concentrated in big high technology clusters, such as Silicon Valley or Route 128 in the United States. However, Miller and Cote maintain that high technology industries are spread across North America. "Silicon Valley in the United States, comprises 10 percent of high technology employment in the United States. In reality, high technology firms, employment and sectors are widely spread out in a large number of metropolitan agglomerations" (1987, p. 9). Places where new high technology concentrates are often referred to as research parks or technopoles. The research parks evolved from the concept of industrial parks which were intensively created in North America after World War II (Preer, 1992, p. 42). Examples of other terms in literature relating to technology parks include the French word 'technopole', business centres, and centres for advanced technology. Throughout the '80s and '90s, technopoles or research parks have become a popular economic development strategy. There are various reasons why a region or city may undertake the lengthy and costly process of developing research parks. First, some regions 14 want to create new jobs in new industries to replace jobs in declining industries. Second, some regions or cities might build research parks to attract industries focused on computers, software, and biotechnology. These industries are often considered industries which increase economic prosperity. Finally, some cities want to use the research park strategy to help in the creation of synergy between firms and industries (Preer, 1992, p. 42). The literature review shows that the location in business or research parks enables high tech companies to establish linkages to other industries and companies and to develop agglomeration economies, major factors for high technology. Miller and Cote maintain that the success of entrepreneurs located in high technology clusters improves the conditions for those who follow (1987, p.5). They emphasize that in business parks "... agglomeration effects take hold: incubators multiply, success stories abound and the commercial environment is enriched by sponsoring organizations on the look - out for the specialized technologies of the new firms. (1987, p.5). According to Preer, agglomeration economies in the technopolis are ".. the result of the 'vertical disintegration' of high technology industries, identified by Scott. For a variety of reasons, high technology businesses tend to rely on external suppliers, instead of resources within the firm. Niches for small and medium - size firms proliferate in this environment. Spin- off enterprises are encouraged. This is a powerful agglomeration advantage that was not present in the previous industrial era (1992, p.63). 15 Further, Miller and Cote compare high technology clusters and agglomeration economies that occur in them to a forest. "The trees, plants and bushes represent business of all sizes and shapes... Similarly, the economy of the region is often characterized by the traditional or high technology sectors of its large firms. However, a detailed analysis would reveal that a considerable part of a forest's biomass consists of plants, bushes, sprouts, and small trees. Big trees are mature. From a growth perspective, they add little from year to year to the biomass. ... Growth occurs principally through a limited number of young sprouts. By analogy, young trees represent the fast-track firms, the dynamic, small business and new firms. Not all small plants contribute to growth because some die"(1992, p.7). Agglomeration economies have not been identified as a very important factor for high technology by many authors. Agglomeration economies were moderately important factors for the location of high tech industry in the eighties (Saxenian 1985a, Malecki 1984, Markusen and Bloch 1985; Steed and Genova 1983; Hall 1985). In addition, Premus (1982), Feldman (1985), Newton and O'Connor (1985), and Short (1988) have found that various factors associated with agglomeration economies, such as proximity to customers and major suppliers, were relatively unimportant for high tech industries, (qtd. by Short, p. 53). 2.5.1. Technopoles The technopoles are often perceived as complexes of buildings that accommodate science and technology based businesses. They are often located close to universities being endowed with gyms, ball game grounds, pools and other recreational, cultural and quality of life amenities. However, research parks cover wider concepts than physical buildings for high - tech activities. Research parks also have relationships with universities and industries. 16 The Association of University Related Research Parks gives a detailed definition of research parks. It defines the term "research park" as a property based venture that has: 1. existing or prospective land and buildings intended primarily for private and public research as well as development facilities, high -technology and science based companies, and support services; 2. a contractual and /or formal ownership or operational relationship with one or more universities or other institutions of higher education and science research; 3. a role in promoting research and development by the university in partnership with industry assisting in the growth of new ventures, and promoting economic development; 4. a role in adding the transfer of technology and business skills between the university and industry tenants. (Drecher, 1997, p.3) To attract tenants, many technology parks give significant financial incentives to prospective tenants. These incentives range from the provision of basic infrastructure to tax and rental exemptions, low interest loans, research grants, business assistance, and an exemption from tariffs on imported components. The precise number of research parks is difficult to assess because figures grew so rapidly during the 1980s and 1990s. For example, in 1989, the journal Site Selection counted 426 science parks in the world, with 230 in the United States, 49 in Britain, 43 in France, 23 in Canada, and 14 in Australia (Preer, 1992, p. 14). Some of the best known technology 17 parks are,France's Sophia - Antipolis, the largest park in Europe, Research Triangle and Silicon Valley in the United States, Cambridge Science Park in Great Britain, and Tsukuba Science City in Japan. 2.5.2. Typology of Research Parks Cast ells and Hall (1993) maintain that there are three types of research parks in the world. The first type of research park consists of industrial complexes of high technology firms that are built on the basis of innovative milieu. These complexes, linking R&D and manufacturing, are the true command centres of the new industrial space. The most prominent examples are Silicon Valley and Boston's Route 128. The next type of research parks is called scenic cities. They are scientific complexes that do not have links with manufacturing. Technology parks are a third type of research parks. They tend to induce new industrial growth by attracting high technology manufacturing firms. Innovative functions are part of the economic development strategy (p.27, 1993). 2.6. Locational Factors Important for High Technology Clusters 2.6.1. Introduction As previously discussed, high tech industries are spread around the world in clusters. In recent years, a growing body of research has focused on the location of high - technology industries, the factors conditioning their spatial pattern, and the consequences of this pattern 18 for regional development (Castells, 1989, p. 34). Short maintains that for planners, it is important to know which factors influence the location of high tech industries for several reasons. First, locational factors are useful in location decision - making. A new venture looking for a place to establish would benefit from the knowledge of locational factors. Second, locational factors can help analysts forecast places where industry might be located. Third, locational factors can be useful in determining the types of industries that might be located in the area, based on the area's locational characteristics (1988, p. 38). Fourth, the knowledge of locational factors is the basis for policy making. 2.6.2. Standard Theoretical Frameworks and Locational Factors Many theories and studies try to answer the question: What makes high technology firms agglomerate in specific areas? Standard theoretical frameworks, such as the neoclassical, the political economy and the profit - cycle theories are not able to cover all factors that are important for the location of high tech industries. The Neoclassical theory emphasizes the importance of transportation costs, access to markets, and access to raw materials. Within it, labour is viewed as homogenous. Other, factors that are important for high technology are: skilled labour force, high - quality educational and research institutions, access to venture capital, physical and cultural amenities, and other quality of life attributes. However they cannot be incorporated into the Neoclassical framework (qtd. in Short). The political economy theory maintains that modern capitalist corporations seek to reorganize the spatial division of their activities so as to reach maximum profits. Massey, Castells, Sayer and Morgan argue that high technology companies may play a particular role in such structures. However, high tech industries are new and they are still developing their global strategies (Hall, Breheny, McQuaid, and Hurt, 1987, p. 83). The profit cycles theory asserts that products, firms and industries make profits go through cycles from youth through maturity, to old age. As they do so, they demonstrate changes in growth rate, profitability, degree of concentration and location (Hall, Breheny, McQuaid, Hurt, 1987, p. 83). Critics maintain that the product life - cycle theory fails to recognize the differences among firms and industries. "Many high technology industries differ in fundamental ways from older industries and do not follow the same development patterns. Product cycles are much more compressed in high technology industries. Standardization stages, in particular, are extremely short. Therefore, it may not be profitable for firms to shift production to the periphery late in the product cycle" (Preer 1992, 53). Since standard theoretical frameworks do not fully explain factors that influence spatial distribution of high tech industries, two methods have been used in the last several decades to uncover the locational factors. One method is the conducting of a survey among industries' representatives experienced in making locational decisions. However, conducting a survey can be expensive and time consuming (Short 1988, p. 38). A second method focuses on relating existing data on the location of an industry to data on the location of various locations. The strength of the correlation between the location of industry and the various determining factors can be tracked down through regression analysis. A problem with this method is that only a correlation and not a relationship can be determined by it. However, 20 these factors could be playing little or no role in the location decision making process of components within the industry (Short 1988, p. 39). Between 1982 and 1988, three important studies were conducted to identify the locational factors associated with high tech industries. Because of their relevance to this thesis, the findings of these studies are presented in the next section. 2.7. Locat ional Factors Identified in Three Studies 2.7.1. ThePremusStudy In 1982, Robert Premus conducted a survey of approximately 400 high technology companies for the Joint Economic Committee of Congress of the United States. The surveyed high technology companies consisted of selected members of the American Electronics Association and about 400 companies located in the highway 128 area of Boston. The high tech companies were asked about factors that influence their locational decisions. Further, they were asked to distinguish between those factors that influence their choice of a specific region and factors that influence their decisions on where exactly to locate, within a region. Table 2 shows the results of the survey. 21 Table 2: Factors that influence the Regional Choices of High Tech Companies in the United States | Rank Factor t 3-4 5 -7. 8-9. I 10-i 11. labour skills/availability labour costs tax climate within region academic institutions cost of living transportation access to markets regional regulatory practices energy costs/availability cultural amenities climate access to raw materials '0 79.3 72.2 67.2 58.7 58.5 58.4 58.1 49.0 41.4 36.8 35.8 27.6 12. Source: Premus, Robert. Location of High Technology Firms and Regional Economic Development. Washington D.C Joint Economic Committee, U.S Congress, 1982, p.23. Labour skills and their availability are the most important considerations. The second factor is the labour costs, whereas the third one is tax climate within the region. The fourth concern,- academic institutions -, is related to the first concern over labour skills and availability because the presence of good academic institutions can help ensure a supply of skilled labour (Short, 1988, p. 44). 22 Factors, such as cultural amenities and climate, were rated relatively low in importance. This goes against the popular notion that a good climate and cultural amenities are a necessary component of an area in order to attract and retain top employees (qtd. by Short, p. 45). The survey results regarding factors influencing a high tech companies locational choice within a region are shown in Table 3. Table 3: Factors that Influence Locational Choice within a Region 1 Rank Factor % f | 1 Availability of workers 96.1 f | 2 State and/local government tax structure 85.5 | | 3 Community attitudes toward business 81.9 f | 4 Cost of property and construction 78.8 | | 5 Good transportation for 76.1 | | people | | 6 Ample area for expansion 75.4 | | 7 Proximity to good schools 70.8 | | 8 Proximity to recreational and cultural 61.1 | | opportunities | | 9 Good transportation for materials and 56.9 | | products \ | 10 Proximity to customers 56.8 \ | 11 Availability of energy 45.6 f | supply | | 12 Proximity to raw material and component 35.7 | I supply | | 13 Water supply 35.3 ( I 14 Adequate waste treatment facilities 26.4 | I Source: Premus, Robert. Location of Ffigh Technology Firms and Regional Economic Development. Washington D.C Joint Economic Committee, U S Congress, 1982, p.25. 23 The answers received reinforce the importance of skilled, technical and professional workers to high technology industries. Other factors noted as very important are the tax structure, community attitudes toward business, the cost of property and construction as well as good transportation. 2.7.2. The Newton and 0 'Connor Study In 1985, Newton and O'Connor conducted a study using the correlation and regression analysis to determine how 12 locational factors correlated with the location of high technology establishments across 55 Local Government areas in Melbourne, Australia. The study finds that the strongest correlation exist between the academic institutions and other sources of research and development of high technology industries. The study's findings indicate that the model for total high tech establishments also suggests the importance of high residential amenities, and a well established, high quality infrastructure for office and factory based activity, in many ways embracing the standard prescription for high tech industry (1985, p. 23). In their conclusion, the authors write that".. .it is also possible that high tech activity is not perhaps as locationally volatile as was first thought, and is anchored to some currently established and for the time being efficient institutions that were built in the central part of the metropolitan area say 50 or so years ago" (qtd, Short, p.49). 24 2.7.3. The Short's Study In 1988, Short undertook a study using the regression analysis to examine locational factors for high tech industries in Canada. His study reveals the importance of the following factors: 1) a skilled labour force with a high proportion of natural sciences, engineering and mathematics employees 2) a high degree of economic vitality as indicated by income, telephones per capita and dwelling prices 3) a high level of residential amenity and demand as indicated by housing prices 4) an airport with a high annual traffic volume, and 5) a large university presence. One significant finding of Short's study is that no factors can be said to be truly important for the location of high technology. "It may be that high technology industries, when viewed as a whole, are rather footloose and can locate in a broad range of places with varying characteristics" (Short 1988, p. 115). Short also indicates that different types of high tech probably have different locational requirements. He also maintains that a survey reinforced with interviews and concentrating on one high tech subsector would likely provide more concrete and more useful results than the generalized results presented above (Short 1988, L p. 119). 25 2.8. Summary In examining the factors associated with the spatial distribution of high tech companies, the authors of the three studies described in this chapter have used two methods: the survey and the correlation as well as regression analysis. The survey was undertaken among the high tech personnel experienced in location decision making. As a result, the survey results are perhaps more accurate than the results of the correlation and regression analysis. Since conducting a survey is expensive and time consuming, the correlation and regression analysis, an inexpensive and simple method, has been used more frequently in practice. The major problem with this method is that only correlation relationships can be determined. In practice, some factors can be indeed correlated with high technology, but they can play little or even no role in the location decision making. Further, the comparison regarding the three study findings shows significant differences related to the factors that are important for the location of high technology. The differences are connected to distinct political and economic environment in Canada, the United States and Australia, as well as to different methods that were used to determine the locational factors. Although the three studies identified different sets of locational factors influencing the spatial distribution of high tech industries, all studies show the importance of a skilled labour force and university presence in the location of high tech industries. Consequently, these two elements were key factors for high technology in the eighties. In a 1998 interview done for this thesis, Dr. Owen of Helix Biotech maintained that . "high tech industries are short - term industries. They are flexible and they change their locations quite often. The relocation is caused by different factors, such as better tax policy, lower rent cost, labour force availability, better working and living conditions, etc." In order to determine the factors influencing the location of high tech companies today, I have conducted a survey among twenty North American cities. The survey results are presented in the next chapter. 27 3. C H A P T E R T H R E E : S U R V E Y FINDINGS 3.1. Introduction The purpose of the survey was to define locational factors that are important for high tech industries in North American cities. The survey results also identify effective tools for attracting high technology, development characteristics that support high tech industries and locational factors that the surveyed cities provide to high tech industries. The term "high technology" is being used as a general term without focusing on any industry. The survey questions were sent to the following destinations: In Canada: City of Ottawa, City of Saskatoon, City of Toronto, City of Vancouver, City of Winnipeg, City of Kanata, City of New Westminster, City of Burnaby, City of Calgary, City of Edmonton, City of Fredericton, City of Manktin, and City of Prince Albert. In the United States: City of Long Beach, City of Sunnyvale, City of Seattle, City of Houston, City of Madison, Minnesota - high technology Council, and City of Cambridge. The survey focused its questions on specific vital aspects of high tech industries development, such as locational factors, development characteristics and tools, as well as methods of high tech program evaluation. Thirteen questionnaires (61%) were completed and returned. In addition to questionnaire responses, planning documents such as policy plans, design guidelines, zoning bylaws and business promotional documents are enclosed as components of the survey responses. The primary survey findings are presented in Table 4. Questions 4b and 5b got low responses so that the data are not significant. 28 Table 4: Primary Survey Findings Table 4: Primary Survey Findings 1. W h a t h a v e y o u d o n e to attratr a d v a n c e d technology industry? A C T I O N lllllllllllll T o t a l P r o m o t i o n 8 13 Es tab l i sh ing Industrial P a r k s 6 13 T a x Incent ives 2 13 2. W h a t were the condit ion that m a d e a d v a n c e d techno logy industry s u c c e s s f u l in your r ^ m ^ u ^ r ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ E d u c a t e d L a b o r F o r c e P rox imi ty of Un ivers i ty / C o l l e g e L i n k a g e s to O t h e r industr ies 10 13 10 13 9 13 2. W h a t were the condi t ion that tnade a d v a n c e d techno logy industry s u c c e s s f u l in your c o m m u n i t y ? Industrial P a r k s Mult ip le - S t o r e s Bu i ld ings H igher Bu i ld ing Dens i ty P u b l i c T rans i t V ic in i ty of support s e r v i c e s ( e . g . banks , r e s t a u r a n t s ) V ic in i ty of amen i t i es ( e . g . parks , r e c r e a t i o n ) A f fo rdab le H o u s i n g 6 3 6 7 4 10 6 13 13 13 13 13 13 13 4 a . W h a t d e v e l o p m e n t too ls d o you h a v e fc r a d v a n c e d techno logy industry? Z o n i n g B y l a w S u b d i v i s i o n Regu la t i ons D e v e l o p m e n t Permi t D e s i g n G u i d e l i n e s 8 2 3 1 13 13 13 13 4b. D id y o u c u s t o m i z e d e v e l o p m e n t regulat ions for this type of Industry? A C T 1 Y e s N o N / A 4 3 6 13 13 13 5a H a v e you e v a l u a t e d the e f fec t i veness of any a d v a n c e d techno logy industry p lann ing a p p r o a c h e s or p rog rams for / o u r c o m m u n i t y ? Y e s N o N / A 2 8 3 13 13 13 5b. W h a t methods d id you use to eva lua te t h e s e a p p r o a c h e s or p o g r a m s ? mi 111 l i i i s l l i s i i Y e s 1 13 N o 2 13 N / A 10 13 *) number of responses 29 3.2. Survey Findings Most Important Locational Factors for High Tech Industries The most important conditions that have made high tech industry successful in the surveyed cities include: an educated labour force, the proximity of a university or college, and linkages to other industries. Other important factors include: bilingual work force low labour costs and overall costs of living high quality of life economic development authority focused on hi - tech resources for great living: health care, parks and recreation, arts, education, low crime rate, city cleanness, office space affordability existing infrastructure for research a well educated market strong and diverse economy, and availability of a venture capital environment within which entrepreneur ship is encouraged. How to Attract High Tech Companies? The majority of the surveyed cities have undertaken business promotion and development of industrial parks to attract high tech industry. Among the surveyed cities, 61% implemented business promotion, 46% established industrial parks, and only 15% implemented tax incentives to attract high technology. 30 The main purpose of business promotion is to promote cities and research parks as innovative and entrepreneurial places for high tech industry. As a part of business promotion, several surveyed cities prepare promotional brochures. The surveyed cities lure high tech companies by promoting factors that are important for high tech, such as: location of the city partnerships with universities intellectual resources business and science environment university resources government support number and concentration of high tech companies workforce education cultural and other amenities The survey finds that cities often target specific sectors of high tech industry. For example, the Ottawa Life Science Technology Park focuses on life sciences, and it targets science enterprises, health and pharmaceutical firms through business promotion. In addition to promoting business opportunities, the business promotional brochures promote cities' amenities such as quality of life, recreational and cultural facilities, historical places, and libraries. 31 The development of business parks is a second tool meant to attract high tech industries. Generally, the purpose of the research parks is to spur economic development by supply of serviced land for high tech industrial demands. Research parks do generate jobs, income growth, and involvement in high-growth industries for some regions. To attract tenants, 15% of the surveyed cities have given financial incentives to prospective tenants. In general, financial incentives range from the provision of basic infrastructure to tax and rental exemptions, low interest loans, research grants, business assistance, employment grants, as well as an exemption from tariffs on imported components. In addition to the above mentioned tools, the cities also implemented the following incentives to attract the high tech industries: . updating the industrial zoning district schedules; promoting telecommunication advantages of the cities; creating knowledge parks in the construction phase, as a joint venture between the province, the city, the economic development agency, and the university; creating land incentives program, contracting the Chamber of Commerce to do business promotion; implementing programs that involve external marketing, . media stories about the municipality. 32 Development Characteristics The most widespread development characteristics that support high tech industries in the surveyed cities include the vicinity of amenities (e.g. parks, recreation), public transit, industrial parks, higher building densities and affordable housing. However, all these development characteristics do not represent general rules for all cities that have high tech industries. The officials from the City of Cambridge, Massachusetts, maintain that the following factors can be also important for some sectors of high tech industries: a supply of older buildings that can be converted to other uses (some industries need very high ceilings that older buildings have) the willingness of land lords to carve the buildings into small spaces (less than 2000 sq.ft. can encourage start ups) the fiber - optic system . being regarded as a desirable community (cultural amenities, safe streets, good public schools) Development Tools Among the development tools that include zoning bylaws, subdivision regulations, development permits, and design guidelines, zoning bylaw and development regulations are most often used in practice. The survey results show that 61% of the cities have used specific zoning bylaws, 23% of the cities have used development permits, 15% of the cities have used 33 subdivision regulations, and only 8% of the cities have used design guidelines for high tech industries. Effectiveness of Planning Approaches Survey results show that 31% of the surveyed cites have customized their development regulations for high tech industry, and only 15 % of the cities have evaluated the effectiveness of any high tech industry planning approaches or programs for their communities. Questionnaire responses also indicate that it is important to understand the specific needs of each high tech sector. However, this question got low responses. As a result, this data are not significant. 3.3. Summary The locational factors identified as necessary for high tech industries in the surveyed cities are skilled workforce, proximity to post secondary education, and linkages to other industries. In addition to these general requirements, the high technology in the surveyed cities requires an efficient public transit system, recreational facilities, good quality industrial parks, higher building densities, and affordable housing. 34 The survey results also show that there is no one formula that is successful and generally applicable for all high tech sectors. To attract high tech companies, it is necessary to understand the needs of targeted high tech sectors, and target the specific sectors with well developed strategies. To target different high tech sectors, most surveyed cities have used business promotion. The purpose of business promotion is to promote cities and research parks as innovative and entrepreneurial places for high tech industries. As a part of business promotion, some cities prepare promotional brochures to emphasize the strengths of the cities for high tech businesses. The locational factors and other survey findings will be used as the guidelines for my analysis of Richmond's high tech industries, focusing specifically on locational factors that determine the spatial distribution of high tech in Richmond. The next section presents an insight into high tech industries in British Columbia and the City of Richmond. 35 4. C H A P T E R F O U R : A N O V E R V I E W O F H I G H T E C H N O L O G Y IN B R I T I S H C O L U M B I A A N D T H E C I T Y O F R I C H M O N D 4.1. Introduction Chapter Four presents and analyses the data on high tech industries in British Columbia and in the City of Richmond. Section A presents the data on past growth, employment trends in BC, and high tech companies' location. Section B reviews the data on the number and size of Richmond's high tech industries, discusses the City's goal related to high tech and presents the complexity of issues related to the future growth of high tech industries in Richmond. 0 4.2. Past Growth of High Tech Industry in British Columbia British Columbia has experienced rapid expansion of high tech industry in the last few years. From 1988 till 1994, the high tech industry grew at an average annual rate of 12 per cent, compared to 7 per cent for the economy as a whole. It generated revenue of about $4 billion in 1994 and about 2 per cent of Gross Domestic Product. Further, B C high tech growth rates averaged 22 per cent annual growth between 1995 and 1997, generating an estimated 7.6 billion in revenue (Ernst & Young, 1997, p. 3). The expansion is largely attributed to technology service companies. The four technology service sectors - Computer and Related Services, Scientific & Technical Services, Medical and Other Health laboratories, 36 as well as Engineering Services - accounted for 80 per cent of $5 billion high - tech industry in BC in 1995 (Ernst & Young, 1997, p. 10). 4.3. High Tech Employment Trends and the Size of High Tech Companies in British Columbia In 1996, 41,850 people were employed by high tech businesses in BC. This figure represents a 22 per cent year over increase in high tech jobs from 1994 to 1995. During the same period, the overall provincial workforce grew by 4 per cent. In 1997, the high tech industry employed about 61,000 British Columbians. These numbers include employees from the computer hardware, software and networks, biotechnology, pharmaceuticals, medical devices, aerospace, submarine technology and environmental technology fields (William, 1998). The available data show that the largest portion of employees in B C work in the information technology sector. Figure 1 shows the distribution of high technology employment in BC. 37 Figure 1: The Distribution of British Columbia High Technology Employment in 1993 BC High Technology Employment 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 81% : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :.-f;: Si;! I 9% 7 % HI r—i 2% 1% Information Technology Aerospace Biotech Subsea Pharmaceutical high technology sectors From: City of Richmond. Richmond. Island City by Nature. 1996 Although British Columbia's high tech sector has grown rapidly in the last years, it is still very fragile as too few of the companies emerge from the start - up phase, and the ones that do tend to falter or be sold before they reach maturity (Science Council of British Columbia, 1995). Moreover, B C high technology sector is composed mostly of small and medium - sized companies. Over 60 per cent of the B C high - tech companies have less than five employees. Only 3 per cent of the high tech companies in B C employ over 50 employees (Ernst & Young, 1997, p. 10). 38 4.4. The Location of High Tech Companies The high tech companies located in British Columbia are mostly concentrated in Greater Vancouver and Victoria. Greater Vancouver is home to almost 90 per cent of the companies with more than 15 employees. Figure 2 shows the distribution of high tech companies in Greater Vancouver. The available data show that Vancouver, Burnaby and Richmond have the largest concentration of high tech industries in the region. With about 120 high tech companies, Vancouver is the largest high technology centre in the region. Burnaby is the second largest, accommodating about 80 companies. The third one is Richmond, with about 60 companies. Figure 2: Distr ibut ion of high tech companies in L o w e r M a i n l a n d 39 120 100 80 | 6 0 I f E 40 20 82 3 ! » iff r asps High Tech Companies - by City -44- 10 17 4 J Z 3 L ^ ^ ^ N<? <^> A « /is 6 VS* ^ . 0 ° - O * Municipalities 117 29 V From: Advanced Technology in the Pacific Northwest Quanix Directory Guide, 1998 Section B presents data on the industrial land, employment, number and size of Richmond's high tech companies. 4.5. Complexity of the Issue "The City of Richmond is one of a few communities in the G V R D with a positive jobs to labour force ratio. Due to a strong and diverse economy, employment growth has outpaced labour force increases in Richmond for the past fifteen years" (City of Richmond, 1996 p. 6). Richmond offers many advantages that attract businesses and industries: an international airport, West Coast quality of life, great Asian connections, proximity to the U.S., a West Coast market and good quality industrial and research parks. As a result, the City has been very successful in attracting different kinds of industries in the last few decades. Historically, the manufacturing, transportation, communication and utilities sectors have offered the greatest employment in Richmond. Traditional industries have the strongest base and they account for 47 per cent of all industrial businesses. High technology and other office based industries also form a significant portion of the industrial employment base. In 1996, office based businesses comprised 36 per cent of the total number of businesses in all industrial zones (City of Richmond, 1996 p. 6). At present, Richmond is experiencing change in the nature of its industries. Many Richmond companies requiring traditional light industrial space have been moving to Delta, Surrey and Langley (Urban Systems, 1994, p. 40). The relocation of the traditional manufacturing and distribution industries is continuing for two reasons. First, the central location and cost of housing have made the Fraser Valley more attractive for businesses. 41 Second, as these companies get organized for the next decade, they are becoming extremely cost conscious and view such moves as an opportunity to utilize current equity to not only acquire new premises, but also upgrade or expand equipment, or as an opportunity to decrease operation costs by cheaper rent (Urban Systems, 1996, p. 40). While traditional industries are moving out, high tech and office users are moving iri. "Richmond is especially impacted by this trend due to the concentration of high tech companies in the City "(City of Richmond, 1996, p.6). The City expects to see even more high tech growth in the future. By the year 2021, "while all sectors will grow, the Hi - Tech sector and tourism will see the most growth" (City of Richmond, 1997, p.2). According to the OCP's employment projections, by the year 2021, Richmond will have more than 10,000 high tech jobs (City of Richmond, (1997, p 2). One of the City's goals for the future is to "reinforce Richmond as a preeminent location for advanced technology or knowledge based businesses" (City of Richmond, 1997, p. 23). However, the City's goal is not fully complemented with policies from the Official Community Plan and Area Plans. None of the existing industrial policies fully addresses the high tech industries and their needs. Moreover, the City does not have a definition of high tech industries. Instead, some high tech industries are considered as office based businesses. The OCP outlines that "the City should expand the number of industrial sites in which independent offices are permitted, in order to accommodate office - based businesses (e.g. software development, research, brokers, contractors (1997, p.23). However, the needs of high tech companies differ from the requirements of office based businesses. As a result, the City aims at reviewing and updating its industrial policies to satisfy the high tech industries' needs. The next section presents insights with respect to the size, location and employment of Richmond's high technology sector. 4.6. Industrial L a n d The City of Richmond's industrial survey undertaken in March 1996 shows that Richmond's industrial base covers 3967 acres of zoned industrial land, or about 15% of the 26,500 acres in the Greater Vancouver area (including Abbottsford, Maple Ridge and Pitt Meadows). Out of that, 325 acres (21%) is serviced (City of Richmond, 1996 p. 9). There are four main industrial areas in Richmond: 1. North Richmond, which includes the Crestwood industrial area, the airport industrial lands and the Bridgeport/Brighouse/Vanhorne industrial area; 2. East Richmond, which includes the Fraser Port lands; 3. South Richmond, which includes the Riverside Industrial Park; and 4. The Steveston area. North Richmond is a home to traditional manufacturing and distribution firms, high tech companies, building material and household furnishing outlets. The Crestwood Business Area is very successful in attracting large high tech companies, such as MacDonald Dettwiler, Metricom Inc., and Canadian Standard Association. The Tree Island Steel plant and the 43 Fraserwood Corporate Centre are located in East Richmond. The Riverside Industrial Park, a home to new manufacturing, distribution and high technology firms, is located in South Richmond. Steveston has businesses servicing the fishing industry as well as commercial service businesses that serve the local population. There are 1547 acres of vacant industrial land, including 90 acres on Sea Island. This represents 39% of the total inventory of industrially zoned lands. Most of the vacant sites are in the II and 12 zones. 4.7. The Number and Size of High Tech Companies In 1996, Richmond and Kanata were referred to by a Kanata City Councilor as two of Canada's most significant high technology centres (Economic Development Department, 1996). At present, the City has about 60 high tech companies employing approximately 5600 people (Advanced Technology in the Pacific Northwest Quanix Directory Guide, 1998). This number includes companies in aerospace, biotechnology, telecommunications, software, electronics, as well as companies that manufacture components and support products for these sectors. In contrast to other cities from the region, Richmond has a large proportion of medium and large size companies. 23.7% of Richmond's high tech companies employ more than 100 people. In comparison, in Vancouver only 7.6 per cent of companies employ more than 100 people, whereas Burnaby has 18.7 per cent. 44 Further, 13.6 per cent of Richmond's high tech companies are medium size employing between 50 and 100 employees. 42.4 per cent of companies have between 10 and 50 people. 20.3 per cent of companies are of a small size employing between 1 and 10 employees. In comparison, in Vancouver, 11.02 per cent of companies have between 50 and 100 employees, 43.2 per cent medium size companies employ between 10 and 50 people, and 38.14 per cent are small companies with less than 10 people. Figures 3 and 4 show the size and the number of high tech companies located in Richmond and Vancouver. Figure 3: The Size and Number of High Tech Companies in Vancouver High Tech Companies in Vancouver 1-10 10-50 50-100 number of employees >100 From: Advanced Technology in the Pacific Northwest Quanix Directory Guide, 1998 45 Figure 4: The Size and Number of High Tech Companies in Richmond The Size and Number of High Tech Companies in Richmond 1to10 10t050 50 to 100 over 100 Number of Employees From: Advanced Technology in the Pacific Northwest Quanix Directory Guide, 1998 This data indicate that Richmond has a larger proportion of big and medium size high tech companies than the province in general. As indicated above, the B C high technology sector is composed mostly of small and medium - size companies. Over 60 per cent of the B C high - tech companies have less than five employees and only 3 per cent of high tech companies in BC employ over 50 employees (Ernst & Young, 1997, p. 10). The information technology companies make up the largest sector within the high tech industries in Richmond. In 1997, there were 3036 employees in the information technology sector, 1510 in aerospace, 705 in engineering and high tech manufacturing, and 50 in biotechnology. Figure 5 shows the high tech employment by sectors, for 1997. 46 Since the SIC codes are not available on the municipal level, for the purpose of this thesis, the data from Advanced Technology in the Pacific Northwest Quanix Directory Guide, 1998 are used. It is necessary to emphasize the shortcomings of the presented data. As discussed in Chapter 2, British Columbia does not have a provincially accepted definition of high technology. As a result, different criteria are used to define high tech industries and compile the data. In addition, the high tech industries has grown rapidly so that data becomes outdated in a short period of time. For example, ALI Technologies Inc. from Richmond had 100 employees at the beginning of 1998. In September 1998, the company had 120 employees, and it planned to employ 20 more people by the end of 1998. In comparison, only five years ago, the company had fourteen employees. (M. Boreham, personal communication, September 14, 1998). 47 Figure 5: High Tech Employment by Sectors in 1997 w OJ > l o a E a> a* E 3 4000 3500 3000 2500 2000 1500 1000 500 0 Richmond: High Tech Employment 1510 3306 50 aerospace inform.technol. biotech high tech sectors "705"" engineers/manuf From: Advanced Technology in the Pacific Northwest Quanix Directory Guide, 1998 4.8. The Location of High Tech Companies in Richmond The large proportion of Richmond jobs (over 80%) are located in the "golden triangle" consisting of the airport, the City Centre, and the industrial - commercial lands stretching eastward, from the City Centre to the Knight Centre. Most high tech companies are concentrated within industrial/commercial lands which provide "the bulk of Richmond industrial and business park space, making Richmond the second largest provider of commercial/industrial floorspace in Greater Vancouver" (City of Richmond, 1997). 48 4.9. Summary The City of Richmond is the third largest high technology centre in British Columbia. In 1997, the City had about 5600 high technology employees, with about 58 per cent employed in the information technology sector. In contrast to other municipalities from the region, Richmond has a large proportion of mature high tech companies, such as MacDonald Detwiller Ltd., Epic Data International Inc., MDSI Mobile Data Solutions Inc, etc. Richmond's high tech industries are constantly growing. By the year 2021, the City projects that the number of high tech employees will be about 10,000. The City's industrial policies do not fully reflect the City's goal to become a preeminent location for knowledge based industries. To attract more high tech companies and satisfy the needs of the existing ones, the City has to create policies and regulations that will fully meet the requirements of high tech industries. The next chapter presents the findings of personal interviews that I conducted to determine locational requirements of high tech companies located in Richmond. 49 5. C H A P T E R F I V E - I N F O R M A N T INTERVHCWSrRESULTS A N D A N A L Y S I S 5.1. Introduction The purpose o f this chapter is to present the findings o f interviews conducted as research to identify key factors for the location o f high tech industries in the City o f Richmond. The interviews also identify positive and negative factors affecting high tech sectors in the City. There were three categories o f interviewed people: 1) executives o f high tech companies located in R ichmond, 2) a landowner, and 3) a professional from the real - estate field. In total, nine people were interviewed. (See Appendix B for persons interviewed). A l l interviews were conducted in person, with the exception o f those with respondents number seven and nine which were conducted over the telephone. The same questions were asked o f each person in each category. T o compare the survey and interview results, similar questions were used. (See Appendix A ) . 5.2. Locational Factors The interview findings illustrate that the following locational factors influence the spatial distribution o f high tech companies in the C i ty o f Richmond: • The presence o f an educated workforce and post secondary education; • Linkages to other industries; 50 • Proximity to the airport; • Ability to accommodate a continual growth of high tech companies. 5.2.1. Educated Workforce and the Presence of Post Secondary Education When questioned about the most important factors for high tech industries, the executives of high tech companies emphasized a skilled workforce and good post secondary education. At present, a skilled workforce is the most critical factor in the whole province. Very much like respondent No. 7, an executive from an information technology sector, respondent No. 1, also an executive from an information technology company, explains ".. because of the cost of living, high taxes, current provincial practices with regard to business, and state of the economy as a whole, high tech companies in general have difficulties to attract educated labour force from other parts of Canada and the United States. At the same time, universities and colleges in British Columbia do not produce enough graduates for booming high tech industries. As a result, it is very important for high tech industries to be located in a region that has good post secondary educational institutions." Further, respondent No 1. maintains that".. the vicinity of post -secondary education helps high tech companies to recruit new graduates and market themselves among school personnel. The companies located in the vicinity of educational institutions recruit the graduates easier than other companies. However, the lack of a university and a technical school is not a problem for Richmond because the City is located in relative vicinity to U B C and BCIT." 51 Respondents No. 3 and No.6, executives from biotechnology companies, maintain that a university or a college presence is not essential for all high tech sectors at a city level. They believe that close proximity to educational institutions is only mandatory for high tech companies involved in research and development. Both respondents maintain that taking into account the vicinity to the airport, the flexible zoning regulations, the reasonable rents in business parks, and a relative vicinity to the educational institutions and the hospitals from the region, their companies decided to locate in the City of Richmond although it does not have a university. 5.2.2. Linkages to Other Industries The interview results show that high tech companies cannot live in geographic isolation. High tech companies often concentrate in clusters, which enable them to establish linkages to other high tech companies and other industries. Respondent No. 5, an executive from a high tech company involved in both research and manufacturing, maintains that linkages to other companies and industries help the new, small, high tech companies to survive, and the big ones to further develop their businesses. He explains "... since high technology companies have access to the Internet and other telecommunication systems, it is often believed that they can be separated from other companies and market. However, this is not true because the richer the commercial environment is, the easier it is for high tech companies to survive. For example, companies involved in both manufacturing and research require the vicinity of suppliers, a market, an university, as well as other companies for promotion and business development." 52 Respondent No. 1, an executive from a well -established high tech company, also underlines that the linkages to other companies and businesses are key factors for both small and large high tech companies. He explains "... small, new high tech companies prefer to locate in the vicinity of mature ones because they are encouraged by the success of other entrepreneurs. Since their first year is often hard, they use the vicinity of big companies to secure market for their products, promote themselves, as well as to convince investors to join them in new ventures. On the other hand mature high tech companies located in clusters work together more closely and market themselves as magnets for capital, research talent and high -skill jobs." 5.2.3. The Proximity to the Airport All respondents stressed the importance of the Vancouver International Airport for Richmond's high tech industries. Respondent No. 1, an executive from a well - known information technology company located in Crestwood Parkway, explains ".. the vicinity of the airport is essential for all high tech sectors in Richmond because the airport is necessary for the shipping and receiving of products and the transportation of high tech personnel. When a company makes a decision about a new location, the vicinity of the airport is more important factor than the price of development land." Respondent No. 3, a president of a biotechnology company, points out that the vicinity of the airport is a key factor explaining why his company has stayed in Richmond for 18 years despite some drawbacks, such as inadequate public transit, traffic congestion, high housing 53 prices, and unavailability of adequate space for biotechnology. Respondent number 9, a realtor, believes that the City of Richmond has many advantages for high tech businesses, among which the presence of the airport makes Richmond even more attractive for high technology than other municipalities in the region. 5.2.4. Flexibility of Workspace The respondents stressed the immense importance of workspace flexibility to the high tech industry location in the City of Richmond. Respondent No. 2, an executive assistant from the information technology sector, like respondent No. 4, a director of suburban leasing, explain..." most high tech industries experience intensive growth, and they constantly require extra space to accommodate that growth." Respondent No. 3, an executive from the biotechnology sector believes that".. the flexibility of properties is so important for high tech that it can be one of the tools to attract new high tech companies to the City. Richmond can attract new high tech companies by having these flexible buildings where new companies can add new space if they need." Further, respondent No. 4, a landowner in Crestwood Parkway, maintains that".. the flexibility of space is the biggest requirement today. High tech companies are growing so quickly and they need extra space in a short period of time; they do not want to move from one place to another often. For example, space requirements of a high tech company often increase by 13, 000 sq. ft in one year. In comparison, office users need an extra 5,000 ft. in five years." Respondent No. 4 emphasizes that".. the biggest reason why high tech companies are coming to the Crestwood Parkway is flexibility of space." 54 5.3. Development Characteristics In addition to the discussed general locational requirements, such as the skilled labour force, post secondary education, the vicinity of the airport, linkages to other industries, and flexible workspace, the respondents emphasize that high tech companies prefer to locate in areas that have: • Efficient public transit; • Business parks with industrial buildings that accommodate highly technological infrastructure; • Quality of life factors, such as restaurants, business hotels, banks, convention centres, and recreational facilities; • Affordable housing. 5.5.7. Public Transit The interview results show that high tech employees would rather not have a long commute and would prefer Richmond to become a less car-oriented city providing a good public transit system and an alternative transportation infrastructure, such as biking and cycling paths. Concurrently, an inefficient public transit system in the City is seen as a key negative factor affecting high tech employees. Respondent No 4, a landowner in Crestwood Parkway, points out that most of the 2500 business park's employees use private cars as a transportation mode because of inadequate public transit system. The lack of a public transit system affects the high tech businesses in several ways. First, the dominance of single occupancy vehicles during the rush hours increases the traffic congestion on the main roads 55 and bridges, thus making the business areas less accessible. Second, the presence of a large number of cars on a daily basis causes air and noise pollution and increases the need for parking areas in business parks and their vicinity. Respondent No. 4, a landowner in Crestwood Parkway, maintains that "the lack of parking space is so critical that the landowners of Crestwood Parkway have built smaller buildings in favour of larger parking lots. Respondent No. 3, an executive from a biotechnology company, believes that".. because of the inadequate public transit and poor freeway accessibility, Richmond is less attractive for new employees than Burnaby or Vancouver is. Employees who do not reside in Richmond would rather choose to work in Burnaby, that is more accessible and has a more central location." Respondent No. 2, an executive from the high tech company located on Shellbridge Way, mentions that several employees rejected employment with the company because of issues related to public transit. 5.3.2. Business Parks The presence of business parks, including flexible workspace and highly technological infrastructure, is an important factor influencing locational decisions of high tech companies. Respondent No. 1, an executive of a high tech company located in Crestwood Parkway, maintains that high tech companies prefer business park locations because "... they like a campus style environment with high quality, low density buildings equipped with highly efficient telecommunications systems. Further, the location in business parks enables high tech firms to establish links to other high tech companies and other businesses." 56 Respondent No. 3, an executive from a biotechnology company, believes that Richmond needs an industrial park specifically designed for various high tech sectors. A high tech park would attract more high tech companies to the city and would better serve the needs of the existing high tech sectors. At present, Richmond does not have a high technology park so that high tech companies are located in business parks together with other businesses and industries. The style, form and function of the buildings sometimes do not satisfy the requirements of high tech industries that have different needs from those of office-based businesses or traditional industries. For example, small biotech companies that are not involved in research and development require offices with laboratories, as well as strong electrical power, conditions that none of the buildings in the existing business parks possess. Respondent No. 3, a president of a biotechnology company, believes that building a high tech park meant to accommodate ancillary high tech uses is one of the possible solutions for the City of Richmond to attract new high tech firms. However, respondent No. 4, a landowner in Crestwood Parkway, maintains that market forces influence style, form and uses of industrial buildings. As a result, developers prefer to build business parks with buildings fit to accommodate a variety of businesses and industries. Otherwise, the concern among developers is that these high tech parks would not be suitable for other types of industries or businesses if the market change. Just like respondent No. 9 (a realtor), and respondent No. 4 (a landowner in Crestwood Parkway), respondent No. 1, (an executive from an information technology company), maintains that Crestwood Parkway is the most successful business park in 57 Richmond. They maintain that the success of this park lies in the high quality buildings, pleasant campus style environment, proximity to the airport and City Centre, presence of large, mature high tech companies, such as MacDonald Detwiller, Raytheon Systems Canada Ltd, Canadian Standard Association, and reasonable rents. In addition to many well -established high tech companies, the Crestwood Parkway also hosts other businesses, such as London Life Insurance Company and Sprint Canada Inc. 5.3.3. Quality of Life Factors Quality of life factors include support services, such as banks, hotels, restaurants, convention centres, as well as cultural and recreational facilities. Emphasizing the importance of the quality of life factors, the respondents believe that the city and the developers should pay more attention to these issues. Among the quality of life factors, the respondents illustrated the immense significance of recreational facilities for high tech employees. Respondents number 1, 2, 3, 5, 6, and 8, all high tech executives, point out that most high tech employees are young and they need recreation facilities in the vicinity of work places. However, they emphasize that most business parks in Richmond do not have adequate recreational facilities. Respondent No 3, an executive from a biotechnology company, underlines that".. the employees of the business park located on the River Road have access only to a nearby dyke and a weight room. The presence of bike and walking trails, and of tennis and basketball courts would better satisfy employees' needs." 58 Respondent No 2, an executive assistant from a software development company, maintains that the lack of any recreational facilities in the vicinity of the business park located on Shellbridge Way is a big issues for high tech employees who work odd and long hours and want to use the facilities regularly. However, not all high tech executives agreed on the importance of recreational facilities for high tech employees. Respondent No. 1, an executive from the company located in Crestwood Parkway, believes that the presence of recreational facilities within business parks and in their vicinities are important in a general sense, but recreational faculties do not stand for a critical locational factor for high tech businesses. However, the presence of recreational facilities and quality of life factors not only increase a city's attractiveness for high technology, but also create better working conditions for high tech employees." The respondents believe that in addition to recreation facilities both high tech employees and clients require spin - off services, such as hotels, restaurants, banking services, and convention centres. 59 5.3.4. Affordable Housing All the interviewed high tech executives stressed the importance of housing prices for high tech employees. Housing costs are mentioned as an important issue in the City of Richmond. The high cost of housing in the city kmits the ability of the Richmond's high tech companies to attract and retain personnel needed by high technology firms. Respondent No. 3, a president of a biotechnology company, maintains that ".. high housing prices make Richmond less attractive for new employees coming from other provinces and municipalities. More affordable housing is available in southern municipalities, such as Langley and Surrey. Since these municipalities are remote from Richmond, high tech employees who do not like long commute and prefer public transportation, would rather choose to work in Burnaby or Vancouver that are more accessible to the southern municipalities and have a better public transportation system." 60 5.4. Positive and Negative Factors Influencing High Tech in the City of Richmond Although the City of Richmond possesses a number of key factors contributing to high technology growth, the respondents cited quite a few challenges facing the successful evolution of Richmond into a pre- eminent high technology centre. When asked about the positive and negative key factors affecting the high tech industries in the City of Richmond, the respondents cited the following. Geographic strengths: the proximity to post secondary education (i.e. U B C , SFU, BCIT); the vicinity of the airport, the vicinity of the USA; the vicinity of clinics and hospitals - important for biotechnology. Social and quality of life strengths: availability of support services: hotels, restaurants; climate - less rain than in other parts of the region; good housing supply; Business strengths: the good telecommunications and fiber optic systems in business parks; . the attractive rent and lease rates; the good quality industrial parks; . the good municipal regulations; 61 the vicinity of suppliers - important for information technology and high tech that manufacture products; the availability of good hotels; the flexibility of business park industrial district zoning (I 3 zoning); the presence of a'critical mass' of high tech companies; Social and quality of life weaknesses: the inefficient public transit, . the shortage of parking spaces in business parks; the lack of recreational facilities within and in the vicinity of business parks. Business weaknesses the lack of an economic development plan for the City of Richmond; . the lack of a promotional brochure for the City; the lack of a clear vision and strategy for high tech sectors; zoning ( Vancouver and Burnaby are active in pushing high technology, they change zoning to allow multiple storey buildings); . the lack of industrial parks designed for high tech; zoning does not allow the offices with laboratories; shortage of employees with relevant skills; • high taxes; housing prices; 62 old buildings do not have a good power supply and it limits a future expansion o f high tech; I 3 zoning (in terms o f biotechnology sector). 5.5. Interview Summary The interviews with the high tech executives, the landowner and the realtor revealed the set o f locational factors that are essential for R ichmond's high tech companies. The respondents maintain that the key factors for R ichmond's high tech industries are the presence o f skilled workforce and post secondary educational institutions in the region, the linkages to other industries, the vicinity o f the airport, and the availability o f flexible workspace that can accommodate intensive growth o f high tech companies. Furthermore, the high tech companies prefer a location in business parks that have good telecommunication and fiber optic systems, recreational facilities, an efficient public transit system, and enough parking space for future expansion. The interview results illustrate that quality o f life factors play important roles for both the clients and the high tech employees o f R ichmond's high tech companies. The quality o f life amenities are not only a desirable commodity but also an incentive to keeping good employees. Furthermore, the presence o f quality o f life amenities, such as recreational facilities, banks, restaurants and hotels, increases the city's attractiveness for new high tech companies. 63 The preceding interview results also show that, generally, high tech employees do not tolerate a long commute. As a result, an inefficient public transportation system and car dependence are found to be major concerns in the city of Richmond. Al l respondents believe that the transportation issues decrease Richmond's competitiveness in relation to Vancouver and Burnaby, two large high technology centres in the Lower Mainland. In addition, the interview results illustrate that high tech businesses require more affordable housing prices, as well as spin - off services such as restaurants, hotels, and convention centres. Aside from requiring discussed general locational factors, some high tech companies also have specific locational requirements that depend on the type of high tech sector. Biotechnology, for example, needs laboratories with strong electrical power, whereas software companies require the vicinity of suppliers and potential clients. This thesis finds that biotechnology, in general, has by far different locational requirements from other high tech sectors located in Richmond. As a result, to define the specific needs of the biotechnology sector, it is necessary to undertake a study focusing on that sector. The interview findings show that there are some differences between the responses of the high tech executives on one hand, and the responses of the landowner and the realtor on the other. Except for public transit and parking space concerns the realtor and the landowner, have not specified other issues that affect high tech industries in the city, considering that, in general, the City of Richmond does satisfy numerous requirements of the industry. In contrast, the high tech executives raised several issues, such as the lack of an economic development strategy for high tech industries, the 13 zoning in terms of biotechnology, and the 64 tax climate providing the recommendations discussed above. Further, while most high tech executives believe that the presence of quality of life factors are essential for high technology, the landowner and the realtor consider that these facilities are important in the general sense but they do not represent key factors in attracting high tech companies. The interview results reveal that the City of Richmond possesses a combination of assets that are important for high tech industries, such as the vicinity of the airport, the good quality business parks with flexible workspace, the mature high tech companies clustered in business parks, the proximity to educational institutions located in Vancouver and Burnaby, good hotels and restaurants as well as good municipal regulations. The outcomes of the interviews point out many weaknesses Richmond presents for high tech. The issues include: public transit, a vision for high tech, development and promotional strategy, I 3 zoning in terms of biotechnology, high taxes, housing prices, parking space in business parks, and recreational facilities within and in the vicinity of business parks. The recommendations on the ways the City can address some of the raised issues are presented in the next chapter. 5.6. Similarities Between Different Studies The co - existence of a skilled workforce and post secondary education has been identified as an important factor in the location of high technology by many authors (Glasmeier Hall and Markusen 1985, Premus 1982; Newton and O'Connor 1985; and Short 1989). Premus writes that universities provide benefits to high technology companies through their basic research activities and through the intellectual and cultural climate that they 65 provide. Further, universities provide skilled labour in the form of faculty consultations, research assistance, and graduate students" (1982, p.32). Preer maintains that university students provide a labour pool for companies in the park. Even when the ties between the university and the science park are weak, the presence of the university - especially if it is an institution with a reputation for excellence - will draw companies because of the associated prestige (1992, p. 14). The interview and the survey findings also illustrate that the presence of skilled workforce and post secondary education are key factors for the high technology industries. As a result, high tech firms tend to concentrate in municipalities that either have a university or a college or are located in its vicinity. Likewise, Preer points out that technopolises are unlikely to arise in areas where the labour force is predominantly blue collar (1992, p 61). The literature findings, as well as the survey and the interview findings, show that high tech companies prefer to cluster in business or research parks. In the literature, research parks are often portrayed as places for high tech activities that establish relationships between universities, research and industry providing gyms, ball game grounds, pools and other recreational, cultural and quality of life amenities. Preer maintains that university connections are important to the success of business parks because of the flow of personnel and ideas between the two institutions (1992, p. 14). r 66 However, the interview findings show that while companies involved in research and development tend to settle in research parks located in the vicinity of universities, other high tech companies settle in business parks that meet other requirements of the companies, such as affordable rents, vicinity of airports and suppliers, and availability of flexible workspace. Both the literature and interview findings show that high tech industries have certain infrastructure requirements including airports, public transportation, roads and telecommunication networks. The importance of airports for high tech was discussed by Glasmeier, Hall and Markusen (1983), Short (1988), and Preer (1992). The proximity to the airport is seen as a key factor for high tech in Richmond. Al l interviewees stressed the importance of the Vancouver International Airport for Richmond's high tech industries. The airport is essential for all high tech sectors in Richmond because it is necessary for the shipping and receiving of products, as well as for the transportation of high tech personnel. However, the survey findings have not found a positive relationship between the vicinity of airports and the location of high tech companies in the surveyed cities. This thesis, as well as some other studies undertaken recently on the locational requirements of high tech industries, shows that good transportation is essential for high tech industries and that high tech employees do not tolerate long commute. The study undertaken by the City of Vancouver reveals that the competition for good employees has resulted in serious consideration being given to transportation infrastructure in many North American cities. Transit becomes so important to the industry that some high tech industrial parks have paid for their own transit links until the public system was extended as to reach them. The 67 most important transit connections are geared toward the residential areas where employees live (1998, p. 11). The studies undertaken in the eighties did not reveal such a strong relationship between high technology and public transportation. Apparently, the increased public transit orientation is a result of the strong environmental awareness of high tech employees as well as of the high costs related to car maintenance. The interview findings differ from all other studies discussed in this thesis in that they discover the immense importance of workspace flexibility for high tech. The flexibility of workspace includes the opportunities for companies to accommodate constant growth and to add extra workspace, as well as to reroute fibre optic cables and the plumbing system in case requirements for extra space arise. As previously discussed, the flexibility of space is one of the most important locational factors for high tech industries in the Lower Mainland today. The interview findings also reveal that high tech companies are paying increased attention to quality of life amenities and public transportation issues. Generally speaking, the comparison drawn between the studies undertaken in the eighties and the ones conducted for this thesis shows that high tech industries require more growth and quality of life factors today than they needed in the past. Further, the comparison between the survey and the interview results on one hand, and the findings of the three studies on the other hand, shows that high tech industries were more cost-conscious in the past. In addition to a skilled labour force and a university presence, high tech industries were concerned about labour costs, federal and local government structure (Premus, 1982), a high degree of economic vitality as indicated by income, telephones per capita and dwelling prices, and a high level of residential amenity and demand as indicated by housing prices (Short 1988). There are many similarities between the interview and the survey findings concerning the development factors important for high technology. Both studies show that high tech companies require good public transit, good quality business parks, higher building densities, affordable housing, and presence of quality of life amenities, such as recreation and parks. 69 6. C H A P T E R SIX: S U M M A R Y O F R E S E A R C H FINDINGS, S IMILARITIES B E T W E E N STUDIES A N D THESIS C O N C L U S I O N 6.1. Problem Statement Revisited This chapter concentrates on the findings of the preceding research and on the policy implications of the outcome. At this point, it is useful to review the thesis problem statement and the research objectives. The problem statement focuses on factors that determine the location of high tech industries in North American cities and, specifically, in the City of Richmond. The locational requirements of high tech industries have been identified in the literature review, the survey and the personal interviews. The findings were used to provide the City of Richmond with recommendations on means to create successful high tech communities in the City. The summary of the thesis findings and the conclusion are presented below. 6.2. Summary of Research Findings In order to develop effective planning policies and programs that will assist high technology, it is important to have a definition of high technology and to understand current locational requirements of high tech industries. As a standard definition of high technology still does not exist, different approaches, such as high tech research development expenditure, proportion of engineers and scientists to the total workforce, product sophistication, and the SIC classification, have been used in practice to define high technology. 70 In addition, some municipalities create their own definitions that are equivalent to the municipalities' objectives concerning high technology. Through customizing a high tech definition, communities have opportunities to attract specific sectors of high tech industries and create zoning and policies that would meet the requirements of the targeted sectors. Although cities can benefit from creating their own definitions of high technology, having a standard definition would be helpful in several ways. Thus, all levels of government would be able to identify the trends and economic potentials in particular high tech sectors, as well as to facilitate the high tech industries needs. The knowledge of locational factors helps planners toward preparing high tech policies and making decisions on the future location of high technology. High tech companies are spread in metropolitan agglomerations and they often concentrate in research parks or technopoles. In contrast to traditional industries, high tech companies often change their locations due to various factors such as, better tax climate, lower rent costs, workforce availability, and better working and living conditions. As a result, there is no theoretical framework that completely explains factors that influence the spatial distribution of high technology. The survey and the interviews conducted for this thesis provide an insight into the factors that determine the spatial distribution of high tech industries in North American cities, in the nineties. The studies show that both general and specific locational factors are important for high technology settlement. General locational factors are required by many high tech sectors, and they include a skilled workforce, post-secondary educational 71 institutions, linkages to other industries, efficient public transit, good quality business parks, higher building densities, and affordable housing. Specific locational factors are required only by some high tech sectors, such as biotechnology. Each city or region aiming at attracting high technology has to be aware of both general and specific requirements of the targeted high tech sectors. Further, this thesis shows that high technology requirements also depend on the local economic conditions. Thus, because of intensive growth, most high tech companies located in Richmond constantly require more work and parking space. Some factors, such as quality of life factors, are not required but preferred by high tech companies. Generally speaking, high tech companies prefer to locate in communities that have indoor and outdoor recreational facilities and spin -off services that include.hotels, restaurants, convention centres, banking services, etc. To fully understand high technology needs, it is necessary to undertake an independent study on the area concerned. The case study undertaken for the City of Richmond shows advantages of taking such an approach. This study leads to the clarification of both general and specific locational factors, the evaluation of the city's policies related to high technology and the assessment of the city's strengths and weaknesses in terms of satisfying the needs of high tech industries. The locational factors revealed in this thesis do not represent a framework that is applicable to all communities that aim to attract high tech businesses. However, the findings of this thesis present valid information for all communities to consider before they pursue high 72 tech policies and programs. In addition, this thesis recommends actions regarding the steps that communities could undertake in order to develop high tech policies and programs. First, communities that aim to attract high technology, and to develop policies for high technology, should consider the general locational requirements discussed in this thesis. Second, it is important to identify the growth trends of different high tech sectors that exist in a city or a region. The data on the growth trends will help communities to identify which high tech sectors tend to settle and grow in the subject area. As discussed above, agglomeration economies are very important factors for attracting high technology. Third, communities have to focus on particular high tech sectors and determine the specific locational requirements of those targets^ Fourth, communities have to assess their strengths and weaknesses in relation to the general and specific locational requirements of targeted high tech sectors. Fifth, communities should create policies, zoning regulations and economic development programs that reflect both general and specific locational requirements of targeted high tech sectors. Finally, communities at city levels have to create an economic development strategy as well as promotional brochures, that will outline cities' strengths related to accommodating high technology. 73 6.3. Pol icy Implications for the C i t y of R ichmond The results from the interviews point to several areas for improvement in the City of Richmond. In order to achieve its goal and become a preeminent location for high technology, the City of Richmond should improve its policies, whose directions for nature policy formulations are presented below. One of the most significant issues affecting the employees of Richmond's high tech companies is the inefficient public transit system. This research shows that Richmond's high tech employees do not tolerate long commutes, and they require a better transit system that connects business parks to residential areas. To improve the current public transit system, one of the solutions would be for the City to work on alternative transportation modes, such as small busses, private "shared - ride" taxi services, bicycles, and different transit options in lower density areas. Other ways to encourage more efficient public transit are to increase transit - oriented city planning and have better coordination between transit and high tech companies. The development of a good transit system and alternative modes of transportation would lessen the demand for parking space in the business parks, too. The city should also continue the densification process to create complete communities where people would live and work. 74 The statistical data related to high technology show that most of Richmond's high tech companies belong to the information technology sector. The city has a significant number of mature information technology companies, a major factor for attracting more high tech businesses. As a result, the city should reinforce its profile of a high tech centre in the Lower Mainland. As a part of its action plan, the City should consider developing an economic development strategy defining areas for future actions. Future actions might include the preparation of high tech promotional documents, such as a brochure or a poster, and the creation of a high technology commission. The promotional brochure would emphasize the City's strengths concerning the information technology sector, such as proximity to post secondary educational institutions (particularly U B C and BCIT), the vicinity to the airport and the U S A boarder, the presence of a significant number of high tech companies, the west-coast life style, the good quality business parks such as Crestwood Parkway, the availability of land and space, and the efficient and effective approval processes. Further, the city might consider working together with the Greater Vancouver Regional District on developing a regional economic strategy for the Lower Mainland. The role of a high technology cornrnission would be to maintain the liaison with the high tech business community in Richmond and to implement a marketing campaign to attract high tech businesses to Richmond. To create conditions for biotechnology companies, the city should change its 13 zoning and allow development of offices with laboratories. Furthermore, the city might consider developing high tech incubator buildings that would have strong electrical power, laboratories, flexible work space, fiber optic wiring, shuttle bus services, recreation facilities and other common services. The presence of such high tech business incubators would attract 75 small biotechnology companies that can become large companies within a short period of time. High taxes and housing prices are other issues raised by the interviewees. Because of high taxes, some high tech companies moved away from the city. Municipalities do not have control over corporate and personal tax rates; however, municipalities can provide better property tax rates for companies. One potential way to deal with the problem of high taxes and housing prices is for the City of Richmond to develop property tax rates that are competitive with other municipalities. To attract and accommodate more high tech companies, the City of Richmond needs more business parks such as Crestwood Parkway. The location of business parks should satisfy the high tech requirements discussed in this thesis. The business parks should be accessible from main highways and located in relative vicinity to the airport. They should have good public transit, recreational facilities, and flexible office space. New parks should be remote from traditional industries and be located in the vicinity of affordable housing and spin - off services, such as restaurants, convention centres, health club, bariking services. Further, since most high tech employees prefer to have both indoor and outdoor recreation facilities in the vicinity of their workplaces, one of the options for the city is to develop bike trail systems that would connect business parks with other parts of the city. Finally, in order to create adequate high tech policies, the city should adopt a definition of high technology that would reflect the City's objectives related to the industry. 76 The high tech definitions discussed in this thesis do not encompass all new small businesses that emerge as a result of technological advancement. As a result, the city should consider in its definition new high tech businesses, such as computer animation and web page design, because a lot of the opportunities for new firms are occurring in new service activities arising from technological advancement. In the future, the city should regularly update the list of new high tech businesses emerging from technological growth. As Miller and Cote write ". . . every period in history has its own particular set of high technology industries... Today, biotechnology, computers and software applications are considered high technology. Tomorrow's high technology sectors will certainly be different "(1992, p. 10). 6.4. Conclusion The development of new high tech policies addressing the locational requirements discussed in this thesis would be a positive step for the City of Richmond, consistent with its goal of becoming a preeminent location for high tech industries. By addressing the above issues and implementing the policy recommendations the City of Richmond will facilitate the development of a successful high technology centre achieving economic development in this sector. The presence of more high tech businesses would be beneficial not only in economic context but also in environmental and community contexts. High tech industries are clean, as they do not produce noise, smoke and other pollutants. They are more environmentally concerned than other industries, and many high tech companies have strong environmental ethics. For example, Bentall Corporation located in Crestwood Parkway, Richmond, is over 50% more energy efficient than standard buildings. Further, high tech employees are more environmentally aware and they tend to promote cycling, public transportation, recycling and other environmental preservation programs. The implementation of these programs not only helps environmental protection but also the education of the surrounding neighborhoods. Power - smart buildings and recycling programs reduce local impacts on climate change, promote community energy planning, and provide a positive example to the whole community. In conclusion, the findings of this thesis are not only relevant for the City of Richmond, but also for other communities that aim at attracting high tech industries. The thesis presents the process of defining the requirements of high tech and of assessing the strengths, as well as the weaknesses, of the City of Richmond as a high tech centre. Furthermore, this thesis presents the experience of thirteen North American cities, an experience that can be useful to any city or region contemplating to attract high tech industries. 78 7. BIBLIOGRAPHY 1. Boei, William. "High - Tech Replaces Forestry as B.C's Top Employer." Vancouver Sun. 16. April 1998 2. British Columbia. High Technology Industries in British Columbia: The Agenda for Growth. Vancouver: Science Council of British Columbia, 1995. 3. British Columbia. Ministry of Employment and Investment. The British Columbia High Technology Sector. Victoria: Ministry of Employment and Investment, 1995. 4. British Columbia. The Ministry of Employment and Investment. 1995/96 Annual Report. Victoria: The Ministry of Employment and Investment, 1996. 5. Castells, Manuel and Peter Hall. Tecnopoles of the World: The Making of 21st Century Industrial Complexes. London and New York: Routledge, 1993. 6. Castells, Manuel. The Informational City: Information Technology. Economic Restructuring, and the Urban - Regional Process. Oxford. Basil Blackwell, 1989. 7. City of Calgary. Planning and Building Department. Saddle Ridge Area Structure Plan. Industrial Policy Review. Calgary, A B : City of Calgary, 1997. 8. City of Calgary. Planning and Building Department. Southeast Industrial Area Structure Plan and Supporting Information. Calgary, B.C. City of Calgary, 1997. 9. City of Cambridge. Cambridge Economic Development Policy. City of Cambridge: Community Development Department, 1996. 10. City of Ottawa. Department of Planning and Development Landscape and Building Design Guidelines Ottawa Business Parks - West. Ottawa: City of Ottawa, 1988. 79 11. City of Richmond. Hamilton Area Plan. An Official Community Plan. Bylaw 5400 Schedule 2.14. Richmond: City of Richmond, 1995. 12. City of Richmond. OCP Hot Facts. Vol 4. No 10. Richmond: Urban Development Division, 1997. 13. City of Richmond. OCP Hot Facts: Richmond Jobs and Businesses. Vol. 4 No 13. Richmond: Urban Development Division, 1997. 14. City of Richmond. Richmond Industrial Land Inventory. Richmond: Ian Chang and David Brownlee, 1996. 15. City of Richmond. Richmond Island City, by Nature. Richmond: Economic Development Office, 1996. 16. City of Saskatoon. Planning and Building Department. Proposed Development Plan. Saskatoon: City of Saskatoon, 1997. 17. City of Seattle. Office of Management and Planning. City of Seattle's Comprehensive Plan. Toward a Sustainable Seattle. A Plan For Managing Growth. Seattle: City of Seattle, 1994. 18. City of Vancouver. Planning Department. High - Tech Industry in the Urban Context. A Discussion Paper. Vancouver. City of Vancouver, 1998. 19. Coriolis Consulting Corp. Steveston Industrial Study. Richmond, BC, 1996. 20. Fraser River Harbour Commission. Fraser Richmond Unified Development Plan. Richmond, BC: Urban Systems, 1995. 21. Giaoutzi Maria and Peter Nijkamp. Informatics and Regional Development. Hong Kong: Brookfiled, 1988. 80 22. Glasmeier, Ann; Peter Hall and Ann Markusen. A Defining High Technology Industries. Working Paper No. 407. Institute of Urban and Regional Development, University of California. Berkley, 1983 23. Hall, Peter, et al. Western Sunrise: The Genesis and Growth of Britain's Major High Tech Corridor. London. Allen & Unwin, 1987. 24. Hilpert, Ulrich. Regional Innovation and Decentralization: High Tech Industry and Government Policy. London and New York. Routledge, 1991. 25. http://www.une.edu/depts/dcrpweb/courses/261/drecher/litrew.htm; Research Parks in the United States; Denise Drescher 26. Internet; Business Incubators: Success Criteria; http://www.business.week.com 27. Malecki, Edward. "High Technology and Local Economic Development." Journal of the American Planning Association. Vol. 50, No 3, 1984: pp. 262 - 269. 28. Massey, Doreen, Paul Quintas and David Wield. High Tech Fantasies: Science Parks in Society. Science and Space. London and New York: Routledge, 1992. 29. McCurry, Theresa. "High - Tech Defines Changing Times." Vancouver Sun. 24 February, 1998 30. Miller, Roger and Marcel Cote. Growing the Next Silicon Valley: A Guide for Successful Regional Planning. Massachusetts and Toronto: Lexington Books, 1987. 31. Miller, Steve and Jill Lawrance. "Defining High Technology Sector in British Columbia", 1995, B.C. Stats. 32. Newton, Peter and Lynn O'Connor,. The Location of High Technology Industry: An Australian Perspective. CSIRO and Monash University, Melbourne, Paper prepared for 81 CD3 W72 - World University Workshop: 'Innovation, Technological Change and Spatial Impacts', 1985. 33. Planning and Development Research Centre. Technopole Planning in Britain. Ireland and France: The Planned Regional Acceleration of Innovation. Working Paper 6. University College London, 1993. 34. Preer, Robert. The Emergence of Technopolis. New York, 1992. 35. Premus, Robert. Location of High Technology Firms and Regional Economic Development. Washington D C Joint Economic Committee, U S Congress, 1982. 36. Scott, Allen. Technopolis: High Technology Industry and Regional Development in Southern Cahfornia. University of California Press. Berkeley and Los Angeles, 1993. 37. Short, Nelson. "High Technology Locational Factors: An Analysis of Major Cites in Canada." Master Thesis. U B C School of Community and Regional Planning, 1988. 38. The Corporation of the District of Burnaby. Discovery Parks Community Plans: Research and Development Facilities Willingdon (BCIT) Site. Simon Fraser University Site. Planning and Building Inspection Department, 1988. 39. The Technology Industries Association Report on High Technology Industries in British Columbia. Technology Industries in B.C. A 1997 Report Card. Toronto Dominion Bank and Ernst and Young, 1997. 82 8. A P P E N D I X A 8.1 Survey Questions (High Technology Industry Survey - City of Richmond) 1. (a) What, i f anything, have you done to attract high technology industry? Promotion Establishment of industrial parks Tax incentives Other 1. (b) If you have specific planning policies to attract and enhance high technology industry, please describe and/or enclose a copy. 2. What were the conditions that made high technology industry successful iri your community? Educated labour force Proximity of university/college Linkage to other industries Other (please describe) 3. What are the critical development characteristics, which support high technology in your community? Industrial parks Multiple — storey buildings Higher building density Public transit Close to support services (e.g. banks, restaurants) Amenities (e.g. parks, recreation) Affordable housing Other 4. (a) What development tools do you have for high technology industry? Zoning bylaw Subdivision regulations Development permits Design guidelines Other 4. (b) Did you customize development regulations for this type of industry? If yes, please explain why. Please enclose a copy of all development tools that you use for this type of industry. If no, please explain why. 84 8.2 Interview Questions 1. Please indicate the high tech segment in which your company operates. Information technology - computer hardware, software, information technology service, electronics, wired and wireless communications. Biotechnology Pharmaceuticals Subsea Environmental Technology Medical Devices Other 2. Generally, what are the conditions that make high tech industries successful in one community? a) Educated labour force b) Proximity of university/college c) Linkages to other industries 3. What are the critical development characteristics, which support high tech industry in the City of Richmond? a) industrial parks b) multiple - store buildings c) higher building density d) public transit e) vicinity of support services (e.g. banks, restaurants) f) vicinity of amenities (e.g. parks, recreation) g) affordable housing 4. What are the development characteristics, which would attract new high tech companies to the City of Richmond? a) industrial parks b) multiple - store buildings c) higher building density d) public transit e) vicinity of support services (e.g. banks, restaurants) f) vicinity of amenities (e.g. parks, recreation) g) affordable housing 5. What are the key driving factors contributing to high technology growth in the City of Richmond? 85 6. What are the negative factors affecting high tech companies in the City of Richmond? 7. Which factors are important for the location of your type of high tech company? 8. In your opinion, how the City of Richmond can attract new high tech companies? 9. How long have you been working in the industry? How long have you been working for the company? 10. How long is your company in the business? 11. How long is your company in Richmond? 12. Could you describe the facilities that you have in Richmond? 13. Do you intend to expand in Richmond? 14. Do you intend to move out from Richmond? 86 9. Appendix B 9.1 Persons Interviewed 1. Eric Mogensen, Corporate Communications Manager, MacDonald Dettwiler, Richmond. 2. MonicaBoreham, Executive Assistant, A L . L Technologies Inc., Richmond. 3. Terrance G. Owen, President, Helix Biotech, Richmond. 4. Jeffrey L. Rank, Director of Suburban Leasing, Bental Group, Vancouver. 5. David Thomas, Director of Development Sector, Northwest Mettech, Richmond. 6. Laurie McMichael, Executive Assistant, Xillix Technologies, Richmond. 7. Kathleen Murison, Director of Human Resources, Raytheon Systems Canada Ltd., Richmond. 8. Layton C. Newman, Co-ordinator of Facilities and Material Handling, Canadian Standards Association, Richmond. 9. Bruce Richardson, CB Commercial Realty Group, Vancouver. 

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