Expert Predictions: Manufacturing & Technology | How will tech and biotech companies along the 495 corridor do in 2010?
Big-name, high-tech companies will be a key to the fortunes of the I-495 area in 2010, according to Paul Matthews, executive director of the 495/Metro West Partnership.
Matthews said IT contributed nearly 18 percent of the state’s GDP in 2008, and while Cambridge has a reputation for being the technology center of the commonwealth, big names like IBM, Cisco, EMC and Intel all have operations concentrated along 495.
“I fully expect those companies will be very well positioned going into 2010,” he said.
Matthews said things are more challenging for technology startups and other small companies in the area. But he said one bright area for those companies is the possibility of international relationships. The acquisition of Marlborough drug maker Sepracor by a Japanese company this year provides a model that other companies may follow, he said.
Matthews said the real estate market along the 495 corridor has been much more stable than many urban markets, including Boston, during the recession.
“From a location and cost perspective, this region’s very competitive,” he said.
Matthews said the I-495 area is well suited to weather changes because of the high education levels of its residents. As different industries rise in importance, he said, people with college and graduate degrees will often find they can get work in new areas.
When times are lean, throwing money at long-term, long-shot investments may look less attractive than ever. And, according to Jerry Schaufeld, a Worcester Polytechnic Institute professor who specializes in entrepreneurship, that spells trouble for the high-tech companies clustered in the “arc of innovation” along I-495.
“You’re seeing some layoffs, you’re seeing less ambitious projects coming along,” Schaufeld said. “You go along 495, you see lots of ‘for lease’ signs.”
Schaufeld said venture and angel investors these days are feeling the recession’s impact on their net worth. At the same time, some of the companies they’ve invested in are returning to them for more capital instead of coming up with a successful exit strategy to pay them back.
As a result, many investors are opting for “shorter vision” outlays.
“Instead of a new diagnostic for cancer or whatever, they’re tending to go into medical products,” he said.
Schaufeld said one ray of hope for 2010 is the money from the federal stimulus package that could finally start making itself felt in the form of increased funding for early-stage companies from the National Institutes of Health and National Science Foundation.
And, in the longer term, Schaufeld said, investors will continue to include a small amount of high-risk investment in their portfolios. Schaufeld said the 495 corridor will continue to be a good place for early stage tech and biotech ventures because of its ability to attract people from all directions.
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