COS Economic Development Corporation Promotes Many Peaks

BY JEANNE DAVANT & WAYNE HEILMAN

Colorado Springs made its name during the final decades of the 20th century as home to semiconductor and electronics manufacturers ranging from Apple and Digital Equipment to Mostek and Intel.

By the 1990s, the city had developed “Silicon Mountain” as a marketing tagline to reflect the growth of semiconductor operations that, at one time, included eight manufacturing operations employing thousands of people. The industry included big names like Ford, Honeywell and United Technologies that built local plants, but also startups like Ramtron International and Simtek.

Many of those operations shut down during waves of offshoring, leaving just one major chip plant — operated by Arizona-based Microchip Technology — and a handful of smaller niche players and design operations.

Colorado Springs built its semiconductor and electronics manufacturing industry on its reputation as a low-cost place to operate a business, says Robert “Rocky” Scott, who headed the Greater Colorado Springs Economic Development Corp. The group, now part of the Colorado Springs Chamber & EDC, recruited many of the technology industry’s biggest names to the city.

“During much of the 1980s and 1990s, Colorado Springs had abundant cheap homes, labor, real estate and buildings,” he says. “If you wanted to expand or relocate your business, we were a bargain. At that point, home prices were good and the talent (pool) was good.”

Since then, those advantages have disappeared as the local cost of living has surged past the national average and neither homes nor buildings are cheap or abundant.

With the 2022 passage of the CHIPS and Science Act, some business leaders are wondering if the Pikes Peak region could recapture some of its previous Silicon Mountain glory. The federal law makes $52.7 billion available for U.S. semiconductor research and development, manufacturing and workforce development through grants and tax credits.

Microchip plans to spend $940 million expanding semiconductor production at its 50-acre campus near the Broadmoor World Arena and has received preliminary approval for $90 million under the CHIPS Act. The company, which was awarded $47 million in state and local incentives for the project, employs nearly 1,000 people in Colorado and expects to add another 400 jobs as part of the expansion.

Chip-industry supplier Entegris is spending $600 million building a plant in northwest Colorado Springs to produce liquid filter and wafer handling products for semiconductor plants, and is seeking $130 million in CHIPS Act funding for its project. The company employs 350 at another local plant and expects to hire 200 for the new plant scheduled to open late this year.

The Colorado Springs area still hosts plenty of high-tech employers — a report provided to The Digest by Tasha Baker, the Chamber & EDC’s director of business intelligence, found 67 companies in Teller and El Paso counties listed under North American Industry Classification System codes for semiconductor and advanced manufacturing. Fourteen of those companies — such as InnovaFlex Foundry, SemQuest, Semtech Corp. and Symetrix Corp. — are listed as part of the semiconductor industry, while others — such as Northrop Grumman, Collins Aerospace, Philips, Aerospace Corp., Navsys and L3 Harris Corp. — are classified as advanced manufacturers producing high-tech navigational, measuring, electro-medical and control instruments and components. Baker compiled the data from DatabaseUSA and independently verified it.

While the city’s semiconductor industry is expanding more rapidly than at any time in the past 30 years, local officials aren’t trying to build an economy or even a marketing campaign on a single industry or two. The city’s high-tech sector today also includes cybersecurity and a variety of companies developing software and other technology products for the defense and aerospace industries.

Those industries are growing fast locally after President Joe Biden last year reversed a decision by former President Donald Trump to move the headquarters of U.S. Space Command from Colorado Springs to Huntsville, Ala. Scott says the decision triggered “an explosion of defense contractors expanding in Colorado Springs” to create “an area of opportunity” for economic development.

Johnna Reeder Kleymeyer, president and CEO of the Colorado Springs Chamber & EDC, says the group isn’t concentrating its economic development efforts on one or two industries.

“I don’t think we should put labels that say, ‘this is what we’re known for, and this is what we will only focus on,’” she says. “In the ’80s, they went all in on semiconductors, and then the market changed.” While the CHIPS Act is a major opportunity for the Colorado Springs area that the Chamber is pursing, she says, “we have to be sure that we have a balanced economy. That’s why we’re known in aerospace and defense, cybersecurity, IT and advanced manufacturing.”

Diversified economy

That diversified economic development strategy is paying off — 14 of the 21 economic development projects announced during the past two years are in the defense and aerospace sector. Those projects will generate 2,762 jobs; two-thirds of the overall total.

The Chamber & EDC helps state and local funding sources put together economic development packages for Microchip and many of the defense and aerospace contractors, including several based in Colorado Springs, Kleymeyer says. The Titans of Economic Development Council, composed of 78 business and industry leaders, assists in the sales process. [Disclosure: Colorado Media Group’s and The Digest’s publisher, Dirk Hobbs, is a member of the council.]

These leaders talk to prospects about their industry and what it’s like to do business here, from workforce needs to business regulations, Kleymeyer says. When it comes to talent, they can tout UCCS’s strong offerings in engineering and cyber, and credentialing offered by Colorado Technical University and Pikes Peak State College.

“We have one of the highest educated populations in the country,” she says. “That’s the kind of thing we can sell on.”

Site availability is another big factor, and the Chamber & EDC is launching a site readiness program in the second quarter to find shovel-ready sites, evaluate existing buildings and look at utilities and infrastructure, Kleymeyer says.

Kleymeyer and Scott agree that state legislation in the past several years that imposed new requirements on business has damaged Colorado’s reputation as a business-friendly location. Kleymeyer says the Chamber opposes legislation that adds regulatory and other burdens for businesses, and also is lobbying for measures like SB24-106, the construction defects reform bill, as part of a larger effort to expand housing options.

The Chamber & EDC also is reaching out to prospects through conferences, trade shows and direct contact, Kleymeyer says.

“Our pipeline for projects is strong,” she says. “We will have more announcements soon.”