Making munitions for the phone wars.

With long-distance telephone companies looking to offer local service,

But the increased competition will also heighten demand for improved telecommunications equipment and services, so the state's high-tech industries should see more opportunities to boost sales. "You don't have telecommunications advancements without software, and you can't have it without electronics," says Betsy Justus, president of the North Carolina Electronics and Information Technologies Association.

One of the primary beneficiaries should be Canada-based Northern Telecom, Nortel for short. An expected surge in demand for its switching equipment, software and other products means more work for Nortel and its 8,300 employees in Research Triangle Park. Switching sales for the first nine months of 1996 topped $3 billion, a 14% increase over a year earlier, but less than the company's overall growth of 21%. In March, Nortel made RTP the headquarters of its largest business unit, the public carrier networks group, which makes equipment and provides support services for local telephone companies. The move of top executives puts the group's management, research and manufacturing in one place.

Other companies expected to benefit from the telecom tango are suppliers of fiber-optic cable and equipment. In July, BroadBand Technologies Inc., a Durham-based maker of fiber-optic linking equipment, got a boost from a six-year, multimillion-dollar deal to supply Bell Atlantic.

North Carolina already makes 60% of the world's fiber-optic cable, according to NCEITA, and more manufacturing capacity is on the way. Corning, N.Y.-based Corning Inc. plans to break ground in 1997 on a $90 million, 600-job fiber-optic cable plant in Cabarrus County. International Fiberoptic Technologies in Mebane plans to hire 75 in the next year to make fiber-optic couplers at a former Duke Power plant.

The state's biggest high-tech presence, IBM, changed chiefs in Charlotte and in RTP. It also added about 1,000 workers to its RTP site, already the company's largest, bringing its total in the state to 17,000. The computer giant is putting a big emphasis at both sites on network computing.

Growing high-tech businesses and start-ups are straining a tight labor market. For example, at Keane Inc., a Boston-based technology-consulting company, 20% of the 105 people it hired in its Durham office in 1996 came from out of state.

Few software companies are as busy as Charlotte-based MetaSys Inc., a maker of transportation software that helps companies control shipping costs. It nearly doubled its payroll to 115 in 1996 and expected to double sales to about $10 million.

EMPLOYMENT AND WAGES

(electronics and electrical-equipment manufacturing)

                             1991          1993          1995

Employers                        365           410           385
Employment                    52,997        56,860        60,883
Annual wages (000s)       $1,527,483    $1,724,015    $1,998,585
Average weekly wage          $554.27       $583.08       $631.29

Source: Employment Security Commission
FASTEST-GROWING COMPANIES

                                     1995 REVENUES      FIVE-STAR
                                         (000s)          GROWTH

Indelible Blue, Raleigh                  $10,389           8,571%
ComputerAge, Charlotte                     1,918             959
The Optinfo Co., Charlotte                 1,051             855
Computer Professionals, Charlotte         28,463             819
DataNet, Raleigh                           8,113             770
BroadBand Technologies, Durham            22,705             759
Digital Recorders, Durham                  6,362             697
Alphanumeric Systems, Raleigh             19,200             638
EMJ America, Apex                         10,158             599
DP Connections, Charlotte                  9,099             527
Butler & Curless Associates, Raleigh       8,530             492
Strategic Technologies, Cary              20,000             488
Seer Technologies, Cary                  117,180             485
Atlantic Network Systems, Cary            14,650             419

Source: TechNews Inc., companies
TOP ELECTRONICS EMPLOYERS

N.C. EMPLOYMENT

Northern Telecom, Nashville, Tenn.          8,300
General Electric, Fairfield, Conn.          7,000
BellSouth, Atlanta                          6,425
Sprint, Westwood, Kansas                    5,410
AMP, Harrisburg, Pa.                        5,200

Source: companies, 1996
SOFTWARE CENTERS

(cities with most software developers)

Raleigh                                       228
Charlotte                                     185
Durham                                         84
Cary                                           54
Greensboro                                     48
Research Triangle Park                         40
Winston-Salem                                  36
Chapel Hill                                    33
Wilmington                                     15
Apex                                           12

Source: Droege Computing Services,           1996
TOP COMPUTERS EMPLOYERS

N.C. EMPLOYMENT

IBM, Armonk, N.Y.                          17,000
SAS Institute, Cary                         2,200
Electronic Data Systems, Plano, Texas       1,300
Cisco Systems, San Jose, Calif.               600
National Technology Group, Durham             600
Medic Computer Systems, Raleigh               550
CDI, Philadelphia                             525
Microsoft, Redmond, Wash.                     485
HBO & Co., Atlanta                            450
Broadway & Seymour, Charlotte                 350

Source: companies, Droege Computing Services, 1996

But some high-tech public companies experienced hard times in 1996. Cary-based Seer Technologies Inc. struggled to wean itself from big-contract, mainframe-based accounts to a more balanced array of products. Its sales dropped 9% in the first half of 1996, and the company lost $15.5 million. Charlotte-based Broadway & Seymour Inc. got off to a slow start in 1996 after an $11.4 million loss the year before. The computer-services company has changed management and sold off divisions to tighten its focus.

At Cree Research Inc. in Durham, revenues jumped 53% to $17 million in the year ended in June, spurred by sales of its superbright blue-light-emitting diodes, but the company had trouble controlling manufacturing costs. Cree's future doesn't look nearly as bright as its products unless it can carry out its plans to improve capacity and efficiency.

The state's high-tech industry got good news from the General Assembly in June, when it turned back an effort to repeal the state's investment tax credit. The credit, which helps Tar Heel entrepreneurs attract capital by giving investors a tax break, was attacked as unconstitutional because it discriminated against out-of-state start-ups.

To save the credit, legislators dropped the in-state requirement. To ease worries that outsiders would drain the state's coffers, legislators also lowered the ceiling on total tax credits, from $12 million a year to $6 million.

FOR MORE INFORMATION

North Carolina Electronics & Information Technologies Association; Box 13425, RTP, N.C. 27709-3425; (919) 572-2505