BIRMINGHAM, Alabama -- High-tech industry is the holy grail in efforts to create more long-lasting, high-paying jobs in the Birmingham area, but fashioning a vibrant technology base in a city whose symbol is Vulcan, the god of the forge, is a challenge.
The Birmingham Business Alliance's Steven Ceulemans, vice president of innovation and technology, says the push to promote existing high-tech companies and recruit more comes at a pivotal time because these firms can be a catalyst for growth as metro Birmingham emerges from the hammering it received during the economic downturn.
"We need to nurture and support inventors and entrepreneurs with great technology innovation opportunities to ensure the future growth of our technology sector," said Ceulemans, hired by the BBA last fall to lead the economic development agency's focus on technology.
As part of an effort to map out a regional strategy for building business innovation and a technology ecosystem, the BBA generated a list of technology companies in fields ranging from biotechnology to information and communication technology and analytical services (IT and medical).
The list, available here on the BBA website, currently includes 773 companies operating in the seven-county Birmingham metro area.
With the growing role of technology in producing goods and services as the U.S. economy becomes more knowledge-based, the Birmingham area is wise to focus on developing high-tech and biotech industries, said John Norris, managing director at Oakworth Capital Bank in Birmingham.
[Is the time right for Birmingham to leave manufacturing behind and go high-tech?]
Metro Birmingham's ability to grow its tech sector will be limited by its ability to attract top entrepreneurs, and improving the quality of education is the key to success, he said.
"It is much easier to produce these people than to steal them from elsewhere," Norris said. "Our higher educational system in the state would do the local economy a huge favor by increasingly focusing on math, science, and computer technology. Being able to quote the preamble to The Canterbury Tales has never earned me a dime. However, being computer literate and savvy puts food on the table at my house every day."
The push for high-tech jobs has long been a goal but it was formalized in Blueprint Birmingham, the BBA's comprehensive strategy to advance the region's economy, which set an aim of creating a thriving technology industry base and supporting existing tech firms.
"By focusing on tech jobs, we are building on an existing innovation capacity that is extraordinarily high because of our research engines like UAB and Southern Research Institute, providing a unique opportunity to cultivate this research into technology innovation and ultimately tech jobs," Ceulemans said. "These jobs are particularly attractive since they are often the seed out of which an entire industry cluster can flourish and grow regionally."
Susan Matlock, chief executive of Innovation Depot, said the BBA's focus on tech jobs provides a structure that allows many organizations to work together to maximize the Birmingham region's potential.
"It is critical that Blueprint Birmingham focuses specifically on the creation, retention and growth of technology employment opportunities," Matlock said. "It is no secret that the present and the future here and globally are related to technology, innovation, and having a work force that is prepared to fill those jobs and having opportunities to attract and retain the best and brightest of our region."
Ceulemans cited successful Birmingham technology companies such as the medical analytics firm MedMined, which have paved the way for dozens of successful and growing healthcare IT companies in the region. The science and technology programs at UAB have received national and international acclaim, with the Carnegie Foundation naming UAB among the top public and private universities in the country for both "very high research activity" and "community engagement."
UAB ranks 31st in the nation for federal research funding and 20th in the nation for National Institutes of Health (NIH) funding. UAB medical center not only ranks as one of the largest academic medical centers in the nation, but consistently ranks in U.S. News and World Report as one of the top national providers in at least four specialties. In rankings released Thursday, nine specialties at UAB were ranked nationally.
With seven FDA-approved drugs and seven other compounds in pre-clinical development or clinical trials, the track record of Southern Research Institute in early drug discovery surpasses that of any other nonprofit research institution in the U.S. and continues to grow successfully.
Defining tech
The BBA is smart to focus on growing metro Birmingham's technology sector, but it is vital to get a better description of what is considered a "tech job," said University of Alabama economist Ahmad Ijaz.
"Almost every industry and business these day employs workers whose function is very closely related to some sort of technology-related job, which is one reason why it's always very difficult to tell about the employment situation in technology-related industries," Ijaz said. "For instance, a person employed in an automotive plant working on their computer systems or robotics is not classified as a tech worker, although their job function is essentially that of a tech worker. People working with a public university's computer centers are not classified as tech workers, but are counted as state and local education employees."
Ceulemans said he considers a tech job to be focused on new technology, or closely aligned with the innovation process of turning new ideas and inventions into products and services that can make a difference in the marketplace.
"It can be anything from an engineer developing novel composite materials to a biotech entrepreneur raising capital to develop better ways to test drug effectiveness, to a computer programmer working on a better way to track students after graduation," Ceulemans said. "It can be a research scientist working on better ways to deliver drugs over longer periods of time, or even a technician refurbishing medical devices and helping hospitals run more efficiently."
Ceulemans said such tech jobs already exist in Birmingham at companies such as Innovative Composite Solutions, DiscoveryBioMed, InDegree, Evonik Birmingham and Integrated Medical Systems. He said Innovation Depot, created five years ago when UAB merged its on-campus incubator with an existing incubator, is a major player in developing thriving high-tech companies in Birmingham.
"Several major technology employers in our area were founded at Innovation Depot but have since graduated into larger offices outside of the incubator facility," Ceulemans said. "The IT consulting firm CTS is a prime example of this, and is a true testament to the Innovation Depot's value as an economic catalyst to our region."
Matlock said technology companies comprise 90 percent of its 86 tenants. Of its businesses, 46 are in the field of information technology/software development, 12 are engineering technology firms, and 10 each are in the biotechnology/life science and high-growth-opportunity business service sectors.
"As an economic development partner of UAB, Innovation Depot is the prime location for companies to develop technology commercialized as a result of UAB research," Matlock said.
For example, she cited VIPAAR, which uses technology developed by surgeons and engineers at UAB to help companies increase the efficiency and accuracy of problem-solving, and Soluble Therapeutics, which enhances the drug discovery process.
Success breeds success
While Birmingham has made great strides in developing its high-tech industries, the region has a long way to go before it can be mentioned in the same breath as Raleigh, Boston, or San Jose, Norris said.
"Success breeds success, so the best way to grow our tech sector is to continue to have success stories," Norris said. "The best way of doing that is to have a highly competent workforce. The best way to have a highly competent workforce is to train the heck out of your young people. The best way of doing that is making education the top priority in your area, period."
To take Birmingham's tech sector to the next level, Ceulemans said the metro area must continue building its brand as a talent- and innovation-rich region, "to ensure that local, regional, and international awareness of Birmingham as a technology hub continues to grow." Targeted economic development efforts and incentives to help keep pace with rivals are also crucial, he said.
Matlock of Innovation Depot said the Birmingham region must also focus on giving UAB, the BBA, Birmingham Venture Club, Tech Birmingham, Birmingham Angel Network, Central Alabama Angel Network, and other supporters of technology the resources they need to grow.
"UAB is critical not only for the commercialization opportunities, but to provide the undergraduate and graduate education essential to a knowledge-driven economy," Matlock said. "The Innovation Depot is recognized as a best-practice business incubation center because of the quality of the programs, ongoing training in business formation and early growth, providing linkage to resources throughout the region. There are many others that are working together to make Birmingham a star in technology economic development."
Join the conversation by clicking to comment or email Williams at rwilliams@bhamnews.com.
Morningstar Readers Rate Their Market Sentiment on a Scale of 1 to 10 - Yahoo Finance
Concerns over slowing global growth, as well as a lack of resolution to the eurozone crisis, have roiled stocks in recent weeks, though this past week also included some of the best single-day returns so far in 2012.
Given the schizophrenia, I thought it was a good time to conduct a temperature check of Morningstar.com readers. Are they optimistic or pessimistic about what the future holds for stocks? Posting in the HandsOn forum of Morningstar.com's Discuss boards, I asked them to rate their sentiment on a scale of 1 to 10, with 1 being bearish and 10 being exceptionally positive.
Not surprisingly, the discussion showcased a broad range of opinions, featuring ultrabulls and ultrabears and everything in between. (Those rating the market a "4" were curiously absent.) Other readers helpfully pointed out that one's outlook depends on time horizon and life stage. Many posters noted that they're less positive on the near term but sanguine about stocks' long-haul potential. To read the complete thread or share your own market sentiment, click here (http://socialize.morningstar.com/NewSocialize/forums/p/305611/3253424.aspx#3253424).
'I'm Burnt Out on Stocks and Mutual Funds'
In the pessimist's corner is joeblow, whose sentiment is so negative that it fell off my scale. "America has an economy built on debt. Did you remember what happened to Japan's stock market? It was almost 40,000 in 1990. I'd rate my outlook 0.5."
Inthered is similarly downbeat: "One is too optimistic."
For wartybliggins, and many other posters, what's going on in Washington, D.C., (or rather, what's not going on in Washington, D.C.), is central to his downbeat forecast. "I'm burying my stock with the hope I can dig it up in five years and get some money out of it when I sell it. It doesn't matter who is president. We have a gutless Congress of dullards who won't listen to anyone with a decent plan to manage ourselves out of this mess, and that fact makes me a 1 of 10 on stocks."
Pablotheman's comments reflect the fatigue a lot of investors are feeling, having endured two major bear markets in the space of a decade. "The market is pretty much where it was 20 years ago, and I'm not gonna live forever so I'm burnt out on stocks and mutual funds. I'm not gonna sell but just hang onto what I've got and hope to break even someday. I guess my attitude would be 1 on a scale of 1 to 10."
M48wro isn't quite as bearish but does believe that the housing market crisis still hasn't worked itself out. "The financial effects of the housing bubbles (U.S. and Europe) will still affect markets for five to 10 years--the pain is being spread out over time. The Euro crisis will also have lasting effects. India and China are slowing down, and the bright spots are too small to have enough effect. So I'd give a 3."
Although some posters think valuations are reasonable, Academic thinks equity prices are still too high to merit enthusiasm, tagging his current sentiment a "3." He wrote, "The current Shiller P/E of 20 is high. Historically, forward 10-year, real, annualized return from this level has ranged from roughly negative 3% to positive 7%. The midpoint of this range is 2%. The seemingly reasonable current market P/E is misleading because corporate profit margins are more than 50% above historical norms. Mean reversion is inevitable. The U.S. and Europe unable to solve problems; policymakers are increasingly data-resistant and irrational. The fiscal cliff and euro crisis loom large."
Yet Academic notes that his pessimism is tempered somewhat. "Overvaluation is not extreme, and bonds don't look that great either. There are much lower Shiller P/Es in Europe, in the range from roughly 7 to 14, suggesting overseas stocks offer reasonable value. We've faced problems before that are at least as bad as those we face now, and over time the stock market has still delivered strong (albeit lumpy) returns."
'I Love All This Pessimism'
At the other end of the spectrum were posters who note that periods of downbeat sentiment can create opportunity.
Gaplassen, with a fairly long time horizon, relishes the opportunity to buy stocks on the cheap. "10 for me. I have more than 20 years before retirement. The timing of the bear market works out great to me."
MervNv's investing time horizon isn't as long, but he too is stoked about the opportunity to buy stocks on sale. "I am 76 and fully invested in stocks. I love all this pessimism because I know that soon everyone will want to be in stocks, but most will get in after a big rise. I don't know when the market will take off, but it surely will. Give it a strong 9."
Other folks' worries also spell opportunity for TOOOINTENSE, who rates his outlook, "an easy 9. The current environment is scaring the pants off most, but if you look beyond the 'news,' companies are looking fine. I wouldn't invest a penny in any government issue, U.S. or international. None of them has a lick of sense as to what to do."
Other posters noted that they're not necessarily enthused about the whole of the market, but they believe certain segments have long-term appeal.
For JonathanQ, that means global growth companies with strong brand names. "I'm 50, so my investment lifetime encompassed the Reagan Revolution through the Internet bubble, a 20-year period of historical outperformance that led people to believe there was a 'new normal.' I agree with many posters that there are fundamental systemic issues in the developed economies too numerous to recount here. I'm a growth investor (yes, I know, what am I doing here), so my research led me to the study the markets of the 1960s and '70s when the 'Nifty Fifty' was king. The companies with long term outperformance were strong global consumer brands. With a burgeoning middle class in developing economies, and high birth rates in frontier economies, I am still bullish on that market segment. If [a company] gets a somewhat differentiated, low-obsolescence-risk good or service into the hands of those people, I overweight it. One thing about that investment thesis is that if it doesn't come to pass, we've got bigger problems than just global equity selection. So, [I give a] 10 on global equities, 0 on the long bond, 7 on commodities, and 7 on U.S. real estate."
Hershey, like many Morningstar.com users, is bullish on dividend payers. "I am 66 and still working. I self-direct my 401(k) and am fully vested in dividend-paying companies with long track records for increasing earnings and dividends. My intent is to live off the dividends and my Social Security in retirement whenever I choose it over working. I guess you may call me an optimist because I have a long-term view, and retirement is not the end of the investing line for me. With my companies paying me for doing nothing but owning shares of them, and giving me pay raises every year to boot, I don't worry a lot about headlines and short-term market gyrations. I intend to hold my stocks until bonds or some other investments are a better choice."
TheAethereal is also high on the opportunity to scoop up additional dividend payers on the cheap. "I've invested almost entirely in stocks that pay good dividends and have been raising those dividends for decades in many cases. I'm not worried about the market at all. If prices fall, that just gives me a chance to buy at a better price. While I have no idea what prices will do, regarding my expected return, I'd say I'm an 8 out of 10."
Rathgar doesn't rate his sentiment as high (a "7") but also likes the idea of buying dividend payers when negative market sentiment pushes all stocks down. "When the news is bad prices are low and when the news is really bad prices are really low. The current macro news is really bad so it is a good time period to be accumulating high quality dividend paying companies/funds/exchange-traded funds."
BradLBHS puts himself between an 8 and a 9 on his scale: As a seasoned investor, he's learned to go with the flow. "The market goes up and goes down. We've had a great run the last couple of years and as the market always does, it gives some back every few years. I'm 71 and have about a 60%-40% split (equities versus bonds) and don't intend to change it."
Flexible3, while a not quite as optimistic at "7," is similarly philosophical. "It's true--the market is where it was years ago; but people with discipline and a medium-long investment horizon have done reasonably well. I regard dips in the market fueled by short-term stresses as buying opportunities."
Rossinator, also a "7," believes that investors with an appropriately long time horizon will be rewarded. "The next three to five years may be rocky as long as Europe continues to be in a mess. But people always say that if you invest in stocks you need a five year time horizon, at the least, anyways. And my view is that if Europe really does implode, then a massive intervention will commence."
'I Have No Expectations'
Despite the presence of bullish and bearish sentiment, middle-of-the-road market sentiment ratings were more typical, with posters able to point to reasons for optimism as well as concern. The strength of individual businesses and the power of innovation were frequently cited as positives, while many posters cited partisan gridlock in Washington as a huge impediment.
Palmreader eloquently summed up the balance between pros and cons. "I find investing increasingly tedious and frustrating (if this were the '90s, however, I'd probably use words like 'thrilling' and 'rewarding'). I have no expectations: Politicians the world over are mired in their narrow little worlds, obviously catering to their most extreme adherents and unable to achieve anything. (We've certainly had polarizing leaders in the past--think Richard Nixon--but compromise was not the dirty word it seems to be now.) Brinksmanship is the order of the day. The macro view is ominous. And yet people and businesses are resilient. There will be innovations and better ways to do things, some of which will be lucrative. Will Apple(AAPL) reinvent the TV? Will some pharmaceutical company discover an important cure? At the end of the day I guess I'm a 5."
For Jokingme, the stalemate in Washington is offset by slightly more reasonable valuations; this poster is also a "5." "There's too much uncertainty to be bullish. The recent correction makes me not bearish in the near term (I was a couple of months ago). [I have] no confidence in either U.S. political party. I'm still convinced that 550 people selected at random to replace the president, vice president, congress, and the cabinet would be a better government than the one elected/appointed."
Grandmarais, also a "5," believes that political turmoil is counterbalanced, at least in part, by growth potential in individual businesses. "I'm not sure if stocks will ever return to their former glory. But 1% government bonds are worse. The political environment is a disaster. But that reflects our collective input. Capitalism still looks good."
The glass is also half-empty--and half-full--for Dongha, who sees malaise in the developed world and opportunity in developing markets. "Europe is in serious trouble. Unless, they follow the reforms that Germany has and continues to put into place, they will go bankrupt. Recent graduates may find that their degrees are not in demand areas and will need to look in other ones. Some African and Eastern European nations may fill part of the void. When and for how long? I don't have a clue. My attitude toward stocks rates a 5."
For BBinwyo, staying even-keeled is a matter of course. "I'm a 5. Always a 5. I just try to be neutral, let my asset-allocation model dictate buying and selling, and not be a bull or a bear. It allows me to sleep better and not beat up on myself for guessing wrong. It only took about 20 years to learn that lesson."
Several other posters noted that while they're feeling middle-of-the-road, their overall sentiment tilts slightly toward optimism. Many rated their outlook either a "6" or "7," thanks in part to valuations that look more reasonable than they did a few months back.
AndrewXnn opined, "Because of last month's sell-off in equities and junk bonds, I'm a 6. If the market sells off some more, then the enthusiasm will rise a bit, and I'll consider buying a limited amount."
Other posters acknowledged that they see plenty of storm clouds but still feel somewhat optimistic. Zigzag quipped, "I would say a 6 just to be on the optimistic side of stagnant." Ditto for fastfritz, who wrote, " I am basically about a 6 and hoping."
JHAsheville rites, "Count me in as a 6, maybe a 7 as an eternal, but realistic optimist. I always view times like this as just an opportunity to buy and tweak as needed."
'It Depends on the Time Frame, Doesn't It?'
Other posters pointed out that knowing the time horizon is key to making a market assessment, so they couched their sentiments accordingly. Many posters noted that they're downbeat for the next few (or more) years, but more positive on stocks long term.
Of my original question, racqueteer wrote, "Well, it depends on the time frame, doesn't it? Over the summer, I'd say sideways to down. So make me a 3 to 4. For end of the year, I'm more like a 5 to 6. If I've got two to three years, then I'm edging up toward 7. I don't think we're going to fall through the floor near term, but I don't think we're going to shoot up and set new highs for the year by end of year either. I think it's a traders' market for the foreseeable future."
Holiday, too, sees near-term storm clouds with some brighter skies in the distance. "Short term, I am 3 to 4. I see uncommon political risk due to radical partisanship. I expect this to worsen through the summer. Longer term, I am 7 to 8, meaning I that feel it will be moderately worth my efforts to participate. If I were any less bullish long-term then I would not be in the markets at all. It does take a certain level of rational confidence. Nothing beyond my certificate of deposit ladder feels risk-free anymore and finding compensation at these prices is difficult."
In a similar vein, playbook sees long-term opportunity and short-term turmoil. "In the short term (18 months) I expect volatility to continue with 10%-15% moves in either direction as the U.S. and Europe struggle with monetary and fiscal policies, elections, health care, taxes, and so on. For the longer term, I'm optimistic, and look forward to more stability. I anticipate another extended bull market similar to the 90s as we work our way out from under some of our problems. A lot of our difficulties are related to the aftermath of 2008-09, but other problems have been a long time in the making and will take some time to fix. The good thing is that these problems are not so subtle anymore. They've become big enough for everyone to see and demand fixes. Many companies have had to get their affairs in order to survive during 2008-09. They're healthier for it. Governments are having to do the same and that's a good thing and, I believe, will be positive for equity markets."
You can also put RetiredinFL in the short-term pessimist/long-term optimist camp. "I'm in my early 70s, and safety of capital is important. The 10 years I have been retired have been treacherous from a financial standpoint. In my adult life, I don't remember a time where negativity is as rampant as today." But, RetiredinFL adds, "I remain confident that when the powers in business and government decide that they need to work together to solve the country's problems, the markets will soar."
Manewna is somewhat more sanguine near term, and downright bullish long term. "Short term, I would be a 6 or 7; I am currently buying equities on the dip. Longer term, I am a 9 or 10; that is why I am currently buying as the market pulls back. Last summer offered the same opportunities, and one does not regret that today."
In keeping with the comments about time horizon, Norbertc believes that younger investors have reason to be upbeat, but those with shorter time horizons and more bond- and cash-heavy portfolios aren't as lucky. "For a professional with a good income or a retiree with a strong financial position, I'd say 8. There's good value surfacing in global equities and in U.S. real estate. If equity markets drop 25% from here, no problem; that would make it a 9. For a retiree worried about making ends meet, I'd say 2. Cash yields nothing; bonds are overpriced and offer low yields; dividend-paying stocks look pricey. Equities could easily see continued downside volatility for many years, causing this individual to lose sleep."
Woordal's assessment doesn't vary by time horizon; rather, this poster sees opportunities in value stocks while viewing growth names as relatively unattractive. "I think there are two answers: growth and value outlook. I think growth stocks' best days are behind them--an outlook of 2/10 might be too generous. For you value and deep-value investors out there, I see an outlook of about 8/10: A patient investor who knows when the market is overselling can get great bargains. Anyone who purchased Ford(F) stock back in 2008-09 for $1.50 knows that opportunity is knocking."
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Financial services firms get stiff fines - Independent Online
The Financial Services Board (FSB) Enforcement Committee, the board’s administrative justice arm, has fined two financial services companies R100 000 each for not adhering to the law.
* The first, Regent Life Assurance Company, was fined R100 000 for contravening the policyholder protection rules of the Long-Term Insurance Act, in that Regent:
- Entered into an agreement in connection with its insurance products with Gertel Algemene Handelaars CC trading as Multi Brokers, while Multi Brokers was not authorised to render financial services;
- Did not provide a policyholder with written information; and
- Conducted business with Multi Brokers without having entered into a written agreement.
The second, Ness Consulting Services, was fined R100 000 for contravening the Financial Advisory and Intermediary Services (FAIS) Act for conducting financial services business with another company, Prospercare Benefit Solutions, which was not licensed to render financial services in respect of funeral benefit policies.
And Prospercare Benefit Solutions was fined R80 000 for contravening:
- The FAIS Act by giving advice and rendering intermediary services on long-term insurance policies without being licensed to do so in terms of the Act; and
- The Long-Term Insurance Act by inducing consumers to buy or continue long-term insurance policies by offering a competition draw that made them eligible to win various types of prizes.
Other recent fines handed down by the Enforcement Committee include:
* Prosperity Group was fined R50 000 for negligently allowing at least one staff member to sell fraudulent life assurance policies to earn commissions. Prosperity clients had their bank accounts debited for the premiums.
The Enforcement Committee found the negligence was a contravention the FAIS Act’s general code of conduct for authorised financial services providers (FSPs) in that Prosperity failed to render financial services with due skill, care and diligence and in the interests of clients and the integrity of the financial services industry when it failed to put in place proper internal controls to prevent or detect the submission of fraudulent applications for insurance cover by its employees.
Prosperity accepted responsibility for the contravention, reported the case to the police, assisted the police in apprehending one of the suspects, reversed the commissions and reimbursed the clients whose accounts were debited as a result of the fraudulent cover.
* FSP Clement Karabo Phakane was fined R25 000 and FSPs Roderick Charles McFarquhar and Gidimag CC were each fined R10 000 for contravening the FAIS Act by marketing and/or advertising the services of foreign-based Safecap Investments trading as Markets.com, which was not an authorised FSP nor a representative of an authorised FSP.
The FSB Enforcement Committee may impose administrative penalties, compensation orders and cost orders on respondents that are found to have contravened any law administered by the FSB.
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