Technology, Wealth and RIF's

Market View

John D. Sanders, Ph.D.,

"Technology, Wealth and RIF's"

Lots of new jobs have been created in the U. S. economy during the past couple of years. Lots of old jobs have been eliminated during the same period. And, with increases in corporate profits and with new opportunities created by advances in technology, lots of new wealth has also been produced.

Certainly the newly created jobs are something to be pleased with. However the jury is certainly still out on RIF ("reduction in force") benefits from corporate downsizing and elimination of old jobs because of reengineering and operational efficiencies, many of which are functions of technology applications. I'm not going to get into those discussions, although it sure would be easy to write many long and passionate articles taking all sides. The RIF's in many companies- and possibly in your government agency- have been a short-term hurt to those people involved, but the results in productivity as indicated by financial figures have been extremely beneficial to corporate earnings and projections.

The most striking result of the new technologies and the increased corporate profits because of the growth and better management of American industry is the rise in stock prices. Best representations of the rise are the Dow Jones and NASDAQ indices, which are busting through the tops of all previously created charts. Let me point out a figure of merit that I used during my days in the investment banking business. For each point of rise or fall on the Dow Jones Average, there was the corresponding creation or elimination of approximately $1.5 billion of wealth from total values of stocks listed on the New York Stock Exchange companies. Therefore, the rise from 3,000 to 4,500 "on the Dow" has created more than $2 trillion in value. This doesn't count the NASDAQ over-the-counter companies where more of the technology entrepreneurial companies are listed; and, it doesn't count the even greater amount of money in bonds.

So what's going to happen to this enormous wealth created "in the stock market." First of all, 1995 is a banner year for initial public offerings and secondary financings for entrepreneurial companies. These companies are now well financed and can develop their technologies and market penetrations for even significantly greater results. How many "newly minted millionaires" have been created from these burgeoning enterprises? What are they going to do with their money? You bet; they're going to invest it in even newer companies that they understand and are excited about. The capital available for expanding markets and new technological development is now enormous, and continues to grow. This is real money, too. These people will also build new houses, buy new cars, travel and purchase more goods and services. The new markets will generate even more jobs, albeit requiring higher training and greater productivity on the part of those filling the jobs.

For technology transfer the opportunities are also enormous. Many technologies that are "on the shelf" may now have places in these new markets and to accelerate the new developments that would not have been there with tight capital budgets. The entrepreneurial U. S. corporation today is truly the target for the latest and best in technologies- with the corporate wealth to utilize them- the desire to find them- and the realization that they will drive the economy into the next century, and to help determine the "winners and losers" of the future.

Don't fret about the lost jobs. They're gone. Get excited about the new jobs- especially those we even can't yet perceive. And, thank our capitalistic, entrepreneurial economy for the method of risks and rewards that provide the structure to implement such opportunities.

If you have comments, please contact me at Technology Transfer Business magazine: phone: 703-848-2800, ext. 151; fax: 703-848-2353; internet: jsanders@technews.com.

prepared for the October, 1995 Issue of the Federal Laboratory Consortium NewsLink