Volume 5, No.1
Spring 1999

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Illinois Has Developed Into the World's High-Tech Hub

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Illinois Has Developed into the World's High-Tech Hub
By: Thomas V. Thornton

Scientific research and technology developments are an important part of Illinois’ identity. From the reaper, to nuclear power to the Internet’s World Wide Web, Illinois has relied on the development and application of new ideas to help spur economic growth.

With its ample supply of research faculty and institutions, university science and engineering graduates, capital for research and development, and technologically sophisticated workers, Illinois has the resources needed to supply the needs of technology-intensive industries. Today, Illinois-based technology companies and research institutions are making major advances in telecommunications, biomedicine, electronics, computer software, advanced materials and environmental technology.

Between 1990 and 1997, the number of technology establishments in Illinois has grown from 7,970 to over 13,250, a 66 percent increase. During this time, technology-intensive companies created 41,600 new jobs. Today, technology companies employ over 352,000 Illinoisans (see chart, page 2), and account for an estimated 15 percent of our Gross State Product. The principal business of nearly 20 percent of the 100 largest companies in the Chicago area—the center of Illinois’ high-tech industry—lies in electronics, computers, or communications technology. That’s up nearly 5 percent in just one year.

Telecommunications

Illinois is a major telecommunications hub, home to over 1,480 telecommunications companies employing approximately 80,000 people. With its large financial services industry and world-class research institutions setting a high standard for the state’s telecommunications infrastructure, Illinois has long been a leader in the research and deployment of innovative telecommunications technologies. Fiber-optic communications, rapidly now becoming the state-of-the-art, was first tested in Illinois 20 years ago.

Today, Illinois has over 200,000 miles of fiber-optic cable. AT&T’s Bell Laboratories, based in Lisle, developed the digital switch in 1982 and Illinois Bell was the first commercial customer to adopt the technology. Today, more than 80 million phone lines in 49 countries worldwide use these switches. By the end of 1999, Illinois’ entire telecommunications infrastructure will be “wired” for digital switches. Illinois’ telecommunications sector profits from a strong core of high-tech vendors. And the state’s telecommunication laws are the most effective in the nation in promoting competition. Within the past few years, telecommunications companies such as Motorola and Tellabs have announced expansions that are expected to create a combined 8,000 new jobs within the next several years.

Biomedical

More people are employed in the health care and biomedical fields than anywhere else in the country. With over 240 hospitals in the state, Illinois is renowned for its concentration of world-class health care and medical research facilities. The depth of our research capabilities and quality of our care draws grants, scientists, doctors and patients from around the world. Since 1990, employment in the health and biomedical sectors has grown by over 20 percent.

Biotechnology

The agricultural biotechnology revolution began in Illinois, and now there are over 1,400 biotechnology, biomedicine, and pharmaceutical firms located here. Some of the nation’s largest medical products manufacturers are located in Illinois, including Abbott Laboratories, Baxter International, Medline and Dade International. Dozens of firms are involved in the research and manufacture of bio-related materials in agriculture, bioremediation and food processing, including Archer Daniels Midland and A.E. Staley.

Electronics

Illinois has one of the highest concentrations of electronics firms in the country, including General Instruments Corp., Zenith Electronics, Molex, Bell and Howell, Methode Electronics and Cherry. Illinois’ leadership in this field goes back to the 1930s when the state led the nation in the design and production of vacuum tubes and radio equipment, which was the high technology of that period. Wartime leadership in electrical components and the postwar boom in television production followed those days.

Today, Illinois’ 1,710 electronics firms profit from the region’s large original equipment manufacturers in the automotive and telecommunications industries, and aggressive international marketing. Illinois’ electronics manufacturers lead all other industry sectors in the state in the value of their exports.

Software

Software developed at the University of Illinois has opened up the graphics-rich World Wide Web to millions. The new technology not only has transformed the Internet, but made millionaires out of state computer whizzes. Today, Illinois is home to over 4,530 software companies, generating $3.2 billion in revenue annually and employing more than 55,130 people. Our software designers and engineers are working on the leading edges of the newest in high-performance computing hardware and software, virtual prototyping, visualization, networking, security, and benchmarking tools.

Advanced Materials

In today’s competitive global marketplace manufacturers demand new materials with the potential to improve quality and reduce production cost. Illinois-based companies have been among the first to respond by making high-quality advanced materials better, faster, and less expensively. Illinois companies are now developing ceramic engine parts, fabricating the world’s first mass-produced superconducting materials, developing super-hard thin-film coatings and increasing product lifetimes by reducing friction and wear with advanced lubricants. Further leadership in materials research will be made possible by Argonne National Laboratory’s Advanced Photon Source (APS). The APS’ super-intense x-ray beams, the brightest in the world, will have important impacts on the development of new or improved semiconductors, drugs, polymers, ceramics, superconductors and composites.

Environmental Technology

Environmental technology is one of the fastest growing sectors in the Illinois economy, with 1,759 companies employing 42,263 people. Industry sales exceed $6 billion. A combination of factors including the support of academic research and a specially trained work force have helped give Illinois’ environmental industry a big head start in getting to the global market first. Companies like Amoco, WMX Technologies, Nalco and SafetyKleen make Illinois a global leader in this rapidly expanding sector.

Manufacturing

Illinois has always been a major manufacturing center for mass-produced goods such as automobiles, heavy machinery, chemicals and food products. Today, Illinois firms are developing a new form of manufacturing: flexible production using concurrent engineering to produce custom-designed solutions for niche markets. Research into and refinement of these advanced techniques is being conducted at the three University of Illinois at Urbana-Champaign research centers: the Manufacturing Research Center, the Machine Tool Agile Manufacturing Research Institute, and the Institute for Competitive Manufacturing.

Technology Talent

Illinois colleges and universities supply a wealth of talent for industry in the fields of computer sciences, life sciences, mathematics, physical sciences and engineering. More than 21,000 students are enrolled in graduate science, engineering and health programs at Illinois universities, ranking the state 5th in the nation in the number of graduate students educated. Importantly, Illinois also ranks 6th in the number of scientists and engineers in the workforce, indicating a strong ability of the technology sectors to employ these knowledge workers in the state.

Illinois leads much of the nation in the number of patents granted, reflecting a key competitive advantage of Illinois companies: the ability to innovate. This capacity for innovation is also seen in areas like transportation technology and high performance computing. In addition, our knowledge creation sector (e.g. universities, research and development facilities, consulting, engineering, and law) has always been one of Illinois’ most valuable resources.

Research and Development (R & D) Leader

Illinois ranks among only a handful of states in terms of its ability to support scientific research and technology development, produce high-quality graduate students, and develop patentable technologies. Illinois ranks 7th in the nation in total R&D performed by industry, research universities and federal laboratories, conducting $7.5 billion in FY 1995, the last year for which data is available. The state ranks 5th in the number of scientists educated and 4th in the number of patents issued. The state is home to over 30 federal R&D centers.

These research strengths matter. Illinois’ technology-intensive industries depend on a vital science and technology infrastructure. Illinois’ world-class research universities are an important source of technology and technical talent, and have spawned the creation of many new enterprises and new industries. Illinois’ federal laboratories serve important national interests, are sources of basic research, have created the billion dollar medical imaging, the superconductivity industry and spawned more than 30 companies.

Technology Venture Funding

Home to the Chicago Board of Trade, the Chicago Mercantile Exchange, the Chicago Board of Options Exchange, the Chicago Stock Exchange and many major banks; Chicago is one of the world’s most competitive and innovative financial centers.

Less known, but equally important is the growing number of Illinois-based venture capital firms making investments in technology companies. Illinois’ 60 professional venture firms held $13 billion in 1997, and invested approximately $2.1 billion. Illinois technology companies attracted over $200 million in venture-backed investment in 1997. Established in 1997 by the Illinois Coalition and the Illinois Development Finance Authority, the Technology Development Bridge invests exclusively in seed stage technology startups.

In International Markets, Illinois Technology Companies are Real Players

Long before the term “global marketplace” was part of the business lexicon, Illinois technology companies were making their mark in the world economy. Illinois ranks third in the nation in the total export of electronics, computer, and industrial machinery, totaling $17.7 billion in 1997. Technology products now account for 51.7 percent of Illinois’ exports, making them the largest contributor by far to the state’s export performance. Our state is a national leader in each element of the innovation process, including research and development, the availability of a skilled workforce, and venture capital. This foundation is preparing Illinois for a prosperous and rich future that will enable younger generations to start and grow their companies throughout the state. Although Illinois will continue to be affected by economic cycles, continued cutting-edge growth in the state’s high-tech sector will drive the longer-term economic prosperity of our region and continue to result in high-wage industries and a more diverse economy.

Illinois' Information Technology Industry leads all other Midwestern states in the number of firms, employment, average wages, and exports