New Economy: Where Chips Overtake Potatoes

12/23/1997

Eric Ellis takes to the road and arrives in downtown Boise, Idaho, in the first of a series tracking the revolutionary re-invention of America.

TO SAY it's quiet in Boise is like saying Idaho is famous for its potatoes.

In Boise, a traffic jam would be an arresting diversion, an exotic meal a sit-down burrito and Pepsi at Taco Bell. It took an emigre Korean opening a downtown deli to introduce the delights of cappuccino and croissants. Boise is so exciting that the casual arrival quickly yearns for the Mormon capital of Salt Lake City, Utah, another five hours down the I-84.

But recreationally challenged Boise is a standard-bearer of the United States' "New Economy" that is re-drawing the world's economic map.

Sprawling along 1km of the I-84 east of town amid frozen paddocks is head-quarters of Micron Technologies, one of the world's leading computer chip makers. Employing 12,000, Micron dominates the regional economy in a way that would make Bill Gates envious in Seattle.

With Hewlett-Packard, which also set up shop in Boise recently, Micron and its neighbours employ more people than the timber and food industries, which have long been the bedrock of the Idaho economy. Micron alone contributes 40 per cent of Idaho's corporate tax collections.

It's a similar story in Jackson, Mississippi, home to what many Wall Street analysts regard as the most exciting and dynamic company in the US and, by extension, the world.

WorldCom carries a most un-Jackson-like name but it is as much a Mississippi native as the Ku Klux Klan that has made the State traditionally one of the most derided in the union.

WorldCom's emergence as one of the globe's biggest companies - it recently set a world takeover record in its $US38 billion agreed bid for MCI Communications - underlines one of the fundamental strengths of the US economy. Any past assessment of the US economy has been geographically restricted to the Boston-New York-Philadelphia conurbation, Chicago-Detroit or Los Angeles. Today, as the brief promise of emerging Asia slides quicker than a slumping baht, it's the Middle American heartland that is propelling growth.

The US has sprouted at least 20 major centres of the New Economy to complement the old centres of economic power - which are no slouches themselves in keeping up. They include the wealthy "Pugetopolis" region of Seattle-Tacoma. It is home to Boeing, Microsoft and even new wealth creators like the Starbucks coffee retailer, online bookseller Amazon.com and the Paul Allen investment group, the eponymously named vehicle of Bill Gates' former partner.

And, of course, there is Silicon Valley, a mostly suburban 100km strip which re-generated nearby San Francisco's genteel swagger after its was eclipsed by Los Angeles during the 1980s.

Most of Silicon Valley's giant companies - Intel, Oracle, Apple, Cisco Systems and Sun Microsystem - could theoretically all be squeezed into a large office building in Sydney.

But you need a huge bank to store the wealth they have generated for an area that has double the national take-home pay and ten times the millionaires.

Where the Australian economy, wealth and power has tended to be tilted to the eastern seaboard, and then further still to the south-eastern population centres, the New Economy means you no longer need a big feeder population to prosper.

Consider the leisure giant Rollerblade Corporation, a booming business closely associated with New York yuppies. It hails from a small community in Minnesota - the land of lakes.

Or Nike, the sportswear behemoth. Its head office is outside Portland, Oregon, a city that would find Adelaide a big smoke.

When one usually thinks of Denver it's either cowboys or skiing. But Colorado's biggest city is becoming one of the world's biggest media centres, sprouting huge cable and satellite companies like the TCI Group and Rupert Murdoch's erstwhile partner, Echostar.

The Salt Lake City region hosts Novell, the computer giant. Texas may be big but its population is thin - yet it is the home patch for computer makers Compaq and Dell.

Atlanta, not Manhattan, is the centre for the medical insurance industry, as well as the home of Coca-Cola.

The reasons for this aggressive and mostly successful decentralisation of the US economy are manifold.

New technology obviously has a lot to do with it. Ultra-competitive tendering among the States is another big factor.

Driving along the highway from Jackson, Mississippi to Birmingham, Alabama -both States with murky civil rights pasts and relatively thin populations - a gleaming Mercedes Benz plant hoves into view around Tuscaloosa.

In nearby Mobile sprouts a Mitsubishi Electric plant that will soon make about a tenth of the world's silicon for compact discs and microchips.

Why? Because Alabama out-hustled neighbouring Tennessee, Kentucky and the Carolinas with tax breaks and incentives to get Mercedes and Mitsubishi's business.

The other States had previously done the same to get Toyota, BMW and Nissan. Population simply didn't come into it.