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Big Picture San Diego Blog

March 12, 2013

175 projects. 6, 215 jobs. What a year 2012 was. Check out our annual report, detailing some some of the highlights and programs from last year.

To all of our investors, partners and the rest of the San Diego business community, thank you for helping us carry out EDC’s mission is to maximize the region’s economic prosperity and global competitiveness. 

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March 12, 2013

Malin Burnham, Irwin Jacobs and Ernest Rady recently had a chat about the future of San Diego in front of the 700 people attending USD’s Annual Burnham Moores Real Estate Conference. One idea in particular, that San Diego can become the medical center of the Southwest US, has all the characteristics of an achievable dream: the right target, a solid foundation of resources, and current growth that can propel the idea to reality.

These men put their philanthropy behind the key ingredients needed to build a medical powerhouse. The Burnham, Rady and Jacobs names can be found on research institutes (Sanford-Burnham Medical Research Institute), state-of-the-art existing healthcare centers (Rady Children’s Hospital San Diego), and the emerging UC San Diego Jacobs Medical Center which envisions putting “the world’s best medical care in our backyard.”

Combine this medical research and clinical infrastructure with San Diego’s developing wireless health sector and you’ve got a compelling vision for future economic growth based around healthcare. For example, Qualcomm Life, a Qualcomm company, is working on device connectivity and data management to enable medical device manufacturers to deliver wireless health applications quickly and easily to those who need it.

Health services already employ 10 percent of San Diego’s workforce – including 7,000 physicians. Current employment numbers for healthcare in the region do not include life sciences or wireless health. As biotech, information technology and health service delivery increasingly intersect, employment in this super-sector will become an even more central economic driver. To prepare for the future, major healthcare construction projects are underway in the region. The four largest projects account for nearly $1.5 billion in contracts and 14,000 onsite jobs.

In addition to Rady Children’s Hospital and UC San Diego Health System, San Diegans have a range of choices for healthcare including Scripps Health, Sharp HealthCare, and Kaiser Permanente. What will drive national and international interest and demand is the growing number of nationally ranked specialties. Currently, UC San Diego Medical Center has nationally ranked specialties in Pulmonology, Nephrology, Geriatrics, and Urology. Scripps La Jolla Hospitals and Clinics have national rankings in Cardiology and Heart Surgery.

 

March 4, 2013

CaliBaja MegaRegion

How many positive articles about Mexico does it take to confirm a trend? Three seems about right, but add in a major think tank calling 2013/2014 the “Year of Mexico,” and you’ve got a full-fledged movement going on.

First came Chris Anderson’s New York Times opinion piece titled “Mexico: The New China,” where he describes his cross-border company 3D Robotics. With facilities in both San Diego and Tijuana he is able to do what he calls “quicksourcing,” where the short supply chain between the two locations enables the company to innovate faster and control inventory more efficiently. Anderson, who was the editor of Wired before he left to join 3D Robotics full time, compares the Hong Kong and Shenzhen special economic zone of the late 1990s and early 2000s to today’s experience working between San Diego and Tijuana. “The sense of possibility I felt when I first crossed from Hong Kong to Shenzhen in 1997 is what I now feel when I cross from San Diego to Tijuana,” said Anderson.

Flat-worlder Thomas Friedman weighed in from Monterrey, Mexico on “How Mexico Got Back in the Game,” with stats on Mexico’s trade with the U.S. – a staggering $1.5 billion a day. Friedman cites The Financial Times reporting that Mexico has signed 44 trade agreements, which is more than any country in the world, and exports more manufactured products than the combined exports of all other Latin American countries. “Better integration of Mexico’s manufacturing and innovation prowess into America’s is a win-win. It makes U.S. companies more profitable and competitive, so they can expand at home and abroad, and it gives Mexicans a reason to stay home and reduces violence,” wrote Friedman.

Violence is where USA Today’s article “Mexico’s commerce crawls back from drug war’s chaos,” started – but the story focused on the fact that border violence has been dropping steadily in the last year –  quoting a study from the University of San Diego’s Trans-Border Institute citing that organized crime-related murder in Mexico dropped 21 percent in 2012. In Mexico’s six border states the drop was a dramatic 32 percent.  San Diego Regional EDC’s Christina Luhn, who leads the Cali Baja Bi-National Mega-Region initiative, worked closely with the reporters and introduced them to people on both sides of the border.

EDC Vice President Sean Barr was in Washington DC last week for meetings at the Brookings Institution regarding their Metropolitan Export Exchange program where teams of metropolitan leaders are working on developing Metropolitan Export Plans to improve their global trade strategies so the nation can remain a center of growth and innovation for years to come. At the meeting Brookings announced that 2013/14 will be the “Year of Mexico.” According to Barr, the ongoing reshoring and nearshoring trends have attracted their attention. Their effort will start with an in-depth study of US-Mexico supply chains.  “The Mega-Region Initiative is of considerable interest to them,” he told the EDC team.

Let’s make sure it’s really the year of cross-border progress.

 

March 1, 2013

A message from Mark Cafferty

 
As you are aware, the law of sequestration will likely take effect today. The result – essentially a 10 percent across-the-board cut of all federal programs, projects and activities – will bring a dense rolling wave of financial implications for our region.
 
The impact to our military economy is significant. The impact to our innovation economy is troubling. The impact to our tourism economy compounds the problem we already have with the region’s TMD standoff. Effects throughout the local economy will be felt in the coming months and thousands of jobs are at risk, quickly making this a harsh reality for families and businesses across the region.
 
These cuts have the potential to set back medical research and our innovative economy by a generation or more, according to former NIH director Dr. Elias Zerhouni. Imagine all that will be lost – life-altering innovations, technological breakthroughs, not to mention jobs and businesses. There will be immediate impacts, for sure. We’re already seeing some. But the long-term effect – the slow and steady burn – is what really has the potential to hurt San Diego most. 
 
Our partner Larry Blumberg, Executive Director of the San Diego Military Advisory Council (SDMAC), put it this way: “Defense contractors are going to be the first ones let go — and we know some of them are already starting to receive pink slips. In mid-April, the Department of Defense is going to furlough civil servants one day a week. This would impact 25,000 San Diegans, and a day’s pay for each of them is a lot of money to take out of the local economy.”
 
Just this past Tuesday, EDC received notice from GD NASSCO that the company has informed 1,040 employees in San Diego, Norfolk and Mayport that layoff notices would likely be issued in early April. Notices from BAE, Continental Maritime and other shipbuilders also have been received by our office over the past month totaling an additional 1,321 job losses. The job numbers are real and estimated to total more than 5,500 in the shipbuilding industry alone.  
 
It’s also worth noting that sequestration is only one of the challenges coming out of Washington.  We face additional threats in the weeks ahead.
 
On March 27th, the current continuing resolution (CR), the mechanism through which the federal government draws funds it needs to operate, will expire. A federal government shutdown is on the horizon without a new CR in place before the end of March.
 
At some point toward the end of March, President Obama is expected to deliver a budget for fiscal year 2014. Based on everything we are hearing in Washington, I believe a request for another round of base realignment and closures (BRAC) will likely be included within that 2014 budget.
 
On May 19th, the current debt ceiling will be reached, which represents an unprecedented fourth fiscal event in three months with serious implications for the country and San Diego’s economy.
 
There is plenty our region must do. EDC, SDMAC, the Chamber of Commerce, CONNECT, BIOCOM and other partners are ramping up efforts in Washington, Sacramento and throughout the region to ensure that our military and innovation economies are protected. We thank you all for your interest and support to date. As always, we will work to keep you informed of both the implications and challenges we face, along with our plans for addressing them in the weeks ahead. 
 
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February 28, 2013

If you ask most U.S. sports fans to identify the fiercest rivalry in professional sports, many would quickly say, “Yankees and Red Sox.” Fans for both teams are incredibly loyal, united both in their regional pride and mutual distaste for the competition. But when you look closer at the actual numbers, it isn’t really a rivalry at all…in the past century, New York has clenched 27 World Series compared to four for Boston.

As a native Bostonian (side note: he now considers himself a proud San Diegan), Mark made it clear today at a breakfast forum hosted by the San Diego Press Club that this is very similar to California’s “rivalry” with Texas. In this scenario, California is the New York of job creation. Although both sides may have loyal contenders, when you look at the success Texas has had poaching jobs from the Golden State, there is no comparison. The numbers speak for themselves. California is leading the nation in private sector job creation. It is No. 1 in biotech, agriculture, high tech, entertainment and tourism.

As California and San Diego continue to face criticism from out-of-state politicians, the press and others for its “anti-business” policies, we must remember one critical fact. Time and time again, studies have shown that short-term economic incentives do nothing for long-term job growth. Yes, it’s fair to say that California could benefit from more business-friendly policies, but in San Diego, our traded economies –– military, tourism and innovation – are anchors for our growing economy.

All of that said, Mark told s crowd of about 40 local business leaders today, it’s not Gov. Perry’s $24K media buy that worries us, but some actual reforms/legislation (or lack thereof) that does:

●     TMD controversy— Removing ourselves from the legal side of this battle, we are looking at the sheer importance of these dollars for regional economic development. San Diego’s tourism industry is responsible for $18.3 billion in economic impact and employs 160,000 San Diegans. In 1993, Colorado eliminated its TMD, resulting in a 30 percent drop in its share of the U.S. travel market over four years.

●     Enterprise Zone Reforms—Although poaching jobs from other states and grandiose economic incentives don’t help long term growth, the EZ is a powerful growth tool for California helping companies like Soitec and the Wheat Group.

●     Sequestration/ Military Cuts—With the highest concentration of military in the world and 60 percent of California’s military assets, sequestration will be a devastating blow to San Diego’s economy, with approximately 30,000 jobs at stake. Many people also don’t realize the impact it would have on the high-tech and life sciences industries as well.

As Mark told the Press Club at the New School of Architecture + Design, at San Diego Regional EDC, our job is to attract, retain and expand businesses in the region. Everything we do, whether it’s advocating for certain policies or implementing strategic programs, is to grow jobs across the region.

And create jobs we do! In 2012, San Diego Regional EDC worked on 175 projects, creating 8,550 jobs in the region.

In addition to releasing the job numbers today, Mark stressed that San Diego needs to do more promoting and less comparing. Too often, San Diegans get caught up in comparisons with New York, Chicago, San Francisco and other great cities instead of focusing on the fact that San Diego is one of the very best places in the world for families and businesses.

He closed with one wish for San Diego: “gaining a little bit of confidence and whole lot of swagger.”

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February 26, 2013

Mayor Bob Filner was the SD Press Club's first Newsmaker of 2013; Mark Cafferty will be its second. Join the San Diego business and journalism community for a breakfast this Thursday, Feb. 28 at 7:30 a.m. Mark will provide new EDC updates including the recent successes the organization has had generating and maintaining jobs throughout the region. He also will tell you how he really feels about attempts to lure businesses from California to Texas, and you'll get the latest update on efforts in Washington to curtail across-the-board budget cuts (known as Sequestration) scheduled to take effect Friday. You won't want to miss it.

Everyone is welcome! Please find more details and RSVP here

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February 21, 2013

San Diego Venture Group gathered a diverse panel of San Diego-based venture capitalists recently to talk about their focus, how they spend their time, and what they recognize as red flags for prospective investments.

Jason Brown of Thomas McNerney & Partners made the first meeting/first date comparison with the comment that the venture investor/company relationship is like a marriage of sorts, except that you don’t want it to last … Compatibility is important when you’re going to spend so much time together. Brown concentrates on life sciences investing which carries huge risks and costs. “Getting to ‘yes’ is difficult. The elements of risk have to be achievable,” Brown said, “We have to look at clinical risk, scientific risk, regulatory risk, commercial and competitive risk.” Later, when a question came up about healthcare reform, he added reimbursement risk to the list. Despite these daunting odds, Brown said he spends as much as 50 percent of his time looking at new investments.

Steve Hamerslag of TVC Capital invests in software and software services. TVC Capital looks for investments where there is already $2 - $10 million in revenues and the company has reached a point where it is time to professionalize the organization. Hamerslag said TVC invests anywhere from $4 - $10 million in each company and expects to take an active mentoring role. Red flags for Steve? Issues with bad management or trust and inconsistent answers to questions about the business. He spends about 20 – 25 percent of his time looking at new deals and said that a recommendation from a trusted source really helps a company get his attention.

Afif Khoury of Scatter Ventures invests in many different areas. A quick look at the firm’s portfolio shows everything from farming to pharma. He spends about 20 percent of his time looking at new investments and will probably make two new investments in the next 12 months. Red flags for Afif? Too rosy an outlook and overselling. When asked what was most important – team, idea or opportunity, he answered that all are important. While he made it clear that Scatter invests in people, they’re looking for markets as well as management.

David Wise of Qualcomm Labs invests both internally (Qualcomm Life, Qualcomm’s wireless health subsidiary, originated in Qualcomm Labs) and externally with a focus on platforms that will drive new business for Qualcomm technologies. Wise spoke about their venture with EvoNexus, an incubator program within CommNexus where Qualcomm Labs @ EvoNexus has funded three companies. Wise says creating companies outside the walls of Qualcomm gives small start-ups more freedom while still having access to Qualcomm’s business and technology resources. Wise estimates he spends 30 – 40 percent of his time looking at new investments.

San Diego Venture Group and San Diego Regional EDC share office space. It’s great to have someone as knowledgeable as Dave Titus, SDVG’s President, within easy reach. Access to capital is a key requirement to maintaining and growing an innovation economy. Dave’s insight and connections within the industry help us work more effectively with entrepreneurs.

February 13, 2013

As a provocative speaker and evangelist for building innovation economies, Rules of the Rainforest author Greg Horowitt asks questions, lots of questions. Horowitt was back with the EDC board recently and came with a list of questions that demand to be asked and answered if we aspire to take the regional economy to the next level of prosperity and raise awareness of San Diego as a global player. Here is the first question:

  • Who are your leaders and what are their characteristics and effectiveness?

It’s a good group to ask about leadership. Depending on what you read, you might look around to find the “San Diego 20,” as a Voice of San Diego article quoted someone calling them. If you’re a fan of Jim Clifton’s book “The Coming Jobs War,” you might see San Diego’s “tribal leaders.” Representatives of San Diego’s trade associations and the venerable CONNECT in attendance personify what economic competitiveness guru Michael Porter calls the “informal networks” that make San Diego’s innovation economy work.

Assuming that – by any definition – many of the region’s leaders were present, how can we describe their characteristics and effectiveness? As a long-time observer of San Diego’s civic organizations and institutions, I offer these primary traits of San Diego’s leaders:

They are open – here’s how Hank Nordhoff put it in a recent UT San Diego article: … "there’s an informality and unpretentiousness about San Diego. People will welcome you to these various boards, and you can have an impact almost immediately…” Nordhoff is the former CEO of Gen-Probe (now Hologic Gen-Probe) and current executive chairman of Banyan Biomarkers. He is also a past chairman of EDC. But at one time he was a new guy in town and he clearly never forgot the warm welcome.

They get along – In the last year, EDC, San Diego Regional Chamber of Commerce and CONNECT, along with other partner trade organizations, convened a coalition of senior business leaders from their boards of directors and key contributors to focus on the global competitiveness of the region. They also defined their terms so that everyone is speaking in the same language about the economy.  The groups agreed on four fundamental pillars of our economy—Military, Innovation, Tourism, and Local. Just having a common vocabulary has made communicating the strengths of our region more effective.

They are curious – Why else would they ask Greg Horowitt to come back a second time? They want to understand what’s working and they really want to understand what’s not. Being curious means looking at barriers and judging how high to jump, not how fast you can stop. Being curious gives you the confidence to engage in self-reflection without the baggage of doubt.

Posted by Andrea Moser. How would you describe San Diego’s civic leadership? We’re open to feedback. Tweet us @SDRegionalEDC and let us know.

February 8, 2013

 

With more than 660 theaters in 52 countries across the globe, IMAX has established itself as an innovative name in the entertainment, technology, and distribution sphere. In 1973, when IMAX was in search of a location to erect its first dome theater, it seemed logical to do it in an innovative city like San Diego.
 
40 years and myriad movie theaters later, IMAX executives are back in San Diego as part of CommNexus’ MarketLink program. The program, which connects innovative regional companies with multinational corporations, provides another outlet for emerging businesses to showcase their technology to companies such as LG, SONY Electronics, Motorola Mobility, Verizon Wireless and British Telecom.
 
IMAX executives, Canadian Consulate representatives, and San Diego elected officials recently had the opportunity to link up and celebrate this innovation milestone at the site of the first dome theater, the Ruben H. Fleet Science Center. City of San Diego Mayor Bob Filner was on hand to emphasize his appreciation of companies like IMAX that continue to place value in San Diego, and also commented on the dynamic economic ecosystem that is encouraged by programs like MarketLink.  As chair of the City's Economic Development Committee, Councilmember Sherri Lighter also discussed the importance of maintaining the region’s competitive edge through generating new ideas and establishing new businesses.  
 
The anniversary also highlighted the important longstanding relationship between San Diego and Canada. Canadian Consul General David Fransen noted that IMAX was not the first Canadian company to participate in MarketLink. Research in Motion — which recently changed its name to BlackBerry after its signature device – came to San Diego in 2010. With support for other regional programs including WBT Innovation Marketplace, Canada—and through its regional consulates— has demonstrated a strong partnership between the two locales.
 
If the longstanding relationship between IMAX and San Diego tells us anything, it’s that we don’t see this partnership slowing down anytime soon. 
 
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February 6, 2013

 

Statement from Mark Cafferty,  president & CEO of the San Diego Regional Economic Development Corporation, on Texas Governor Rick Perry's attempts to lure businesses out of California:
 
“At EDC we spend our days attracting, growing and retaining businesses. People choose to do business here because we are San Diego…because we are California, and because we have created a synergy and culture like no other. Companies make investments where big things happen, and big things happen here.
 
"Can California take steps to be more business friendly? Absolutely, but the fact remains that we are still number one in biotechnology, agriculture, high-tech, entertainment, foreign direct investment, and the list goes on and on. In San Diego, we are home to one of the nation’s most diverse economies, anchored by the largest military installation in the world.
 
"We are always open for business in San Diego and we welcome Governor Perry’s tourism dollars anytime he wants to drop into town.”
 
 
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