Quick reaction translates to early tech recovery

The technology sector, the eye of the 2001 recession, could prove to be the silver lining in the currently cloud-riddled economy.

When the economy hit a brick wall in fall 2008, large technology companies felt the impact fairly quickly — and reacted just as quickly. Locally, many technology employers implemented cost-cutting and restructuring initiatives, so while year-over-year sales in high-tech markets were dismal early in 2009, sales and orders appear to be picking up as the industry heads into 2010.

Fort Collins-based Advanced Energy Industries Inc. made sweeping cuts to employment, implemented executive pay cuts and instituted a yearlong series of shutdown weeks that resulted in employees working an entire quarter less. Following the 2009 employment cuts, the Fort Collins headquarters had 450 employees, down from 630 at its peak in 2008.

However, the company appears to be on the rebound. During its third-quarter earnings call, the company announced that the shutdowns would not continue.

“The management team feels that given the increase in business that we have seen, we will need our AE employees to return to full-time work and pay status in January of 2010,´ said CFO Larry Firestone during the call.

AE hosted a mid-December grand opening of its Solaron manufacturing facility in Fort Collins. Up until mid-2009, production on the solar inverter product line, launched in 2007, was easily handled at AE’s main campus. Firestone said that starting in July, order volume had increased to a level that would exceed the company’s capacity of three units per week.

The new manufacturing site can produce 10 units per week, but he could not comment on the level of production. He did say that employment has not increased as a result of the new facility yet, but all Solaron manufacturing will be done in Fort Collins. The inverters are large pieces of equipment that are not cost-effective to ship, and the sales have largely been to U.S. customers.

The company saw sales climb throughout the year — $32 million in the first quarter, $35 million in the second quarter and $52 million in the third quarter. The estimate for fourth quarter sales — as of the third-quarter earnings report — was in the range of $56 million to $62 million, putting it just shy of 2008’s $67 million.

Solar inverters, while a growing market, are just one of AE’s revenue generators. The company has seen sales increase into the semiconductor market, where AE sells equipment and provides maintenance and repair services. Firestone said that an uptick in AE sales typically tracks with the semiconductor market.

Large tech companies operating in Northern Colorado have seen sales creeping up each quarter. Advanced Micro Devices Inc., Intel Corp., Hewlett Packard Co. and Agilent Technologies Inc. saw revenue improvement throughout the year. However, that doesn’t always translate into jobs for the region.

Intel reported 420 jobs at its Fort Collins site for 2009, up from 400 in 2008. However, HP approved a major restructuring initiative in May that would eliminate 5,000 positions. HP has not divulged local employment numbers since 2002.

While employment in the region’s traditional high-tech sector is not likely to recover quickly, an increasing number of startups — often founded by displaced tech workers — promises to fill those voids. Additionally, Northern Colorado’s clean energy sector stands to benefit from stimulus program rollouts into 2010.

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