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The Big Picture San Diego Blog


Big Picture San Diego Blog

December 3, 2012


From left to right: Cathy Berg, Regional Vice President Passenger Sales Western United States, American Airlines; Jun Niimi, Consul General of Japan in Los Angeles; Yoshiharu Ueki, Representative Director/President, Japan Airlines; Thella Bowens, President/CEO,  San Diego County Regional Airport Authority; Hiroyuki Hioka, Senior Vice President-The Americas, Japan Airlines

It was a day of firsts at San Diego International Airport (SDIA) on Sunday, December 2, as Japan Airlines (JAL) flight #66 arrived from Tokyo and flight #65 departed. It was also the first commercial flight out of SDIA for the highly touted Boeing 787 Dreamliner. "Let's think of all the real people who will benefit from this flight," said Thella Bowens, President and CEO of the San Diego County Regional Airport Authority, adding that half a million people from San Diego travel to Asia every year. Bowens described the Dreamliner as a dream aircraft for the San Diego market because it is the first aircraft with the size, airfield performance and range to make the nonstop oceanic flight viable.

San Diego Regional EDC worked with the Airport Authority and other organizations to make the case for the San Diego-Tokyo flight. Before now, business executives had to fly to Los Angeles, San Francisco or other west coast cities to connect to Asia. The new Tokyo service will link directly to 15 other destinations in Asia.

Bob Filner, new Mayor of the City of San Diego, attended the press conference held prior to the arrival of the inbound flight and reiterated his desire to strengthen San Diego's image as an international center. "I want to make San Diego a far more cosmopolitan center," said Filner. He also recognized the economic benefits the new flight will bring to the San Diego region.

The ceremonies that accompanied the launch of the new service were marked by elegant protocol and buoyant enthusiasm. White gloved dignitaries simultaneously cut a ribbon with multiple pairs of large gold scissors. JAL President Yoshiharu Ueki, invoking the Spirit of St. Louis (which was built in San Diego), said "San Diego is so connected to aviation history. Time has brought us more innovation in the new Boeing 787 Dreamliner and it has special meaning to me to take this historic journey with you."

The flight will operate four times weekly (Monday, Wednesday, Friday, Sunday) until March 2, 2013, when it becomes a daily flight. The current configuration for the San Diego flight consists of 42 business-class seats and 144 economy seats.

December 1, 2012

The goal of Big Picture San Diego is to expand the understanding of economic development and highlight the innovative ways in which the San Diego community is coming together to build a stronger region for the benefit of all of its residents.

There’s a lot being written and discussed about the future of the San Diego region. Big Picture San Diego is an attempt to synthesize information about what’s going on in the region with commentary on how current events and policies affect San Diego’s ability to grow and prosper. Here’s a broad definition of economic development from Business Exchange, a Bloomberg blog:

“Economic development is the development of wealth in countries or regions for the wellbeing of their citizens. From a policy perspective, economic development is any effort that seeks to improve the economic wellbeing and quality of life for a community by creating and/or retaining jobs and supporting (or growing) incomes.”

At EDC, we feel that the true definition of economic development is reflected in our mission: To maximize our region’s economic prosperity and global competitiveness. We believe that this is best accomplished through thoughtful collaboration and open communication. As we build the blog, the hope is to offer good working examples of economic development and start a new conversation about how San Diego can best use its unique assets to grow jobs and the economy.

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November 30, 2012

Dr. Lynn Reaser recently delivered the Fermanian Business & Economic Institute Economic Outlook for 2013. With the election behind us but the fiscal cliff still looming, Reaser sided with many observers to predict that the fiscal cliff will either be avoided or – if it is allowed to happen – would not last longer than a few weeks. However, she pointed out that “if there is no political solution, there will be a market solution.” The government has been running annual deficits of more than a trillion dollars for the last four years and that is not sustainable.

Some highlights from the report:

California is currently outperforming the nation in job growth.
California’s economy continues to see job gains in construction, finance, professional and business services, trade, health care, and leisure and hospitality. The state should add about 275,000 new jobs in 2013, following the estimated 260,000 new jobs created in 2012.

In San Diego, job growth should yield a gain of about 29,000 jobs.
The growth will be driven by San Diego’s key economic drivers – the military, technology and tourism – and a revival in the housing market.

The military continues to be the most important economic driver in San Diego’s economy.
Although the region will not totally escape the impact of budget cuts – even under the best case scenario – the most likely outcome for 2013 is for defense dollars coming into the region to hold relatively steady. San Diego’s strengths fit very well with a defense strategy that is 60 percent focused on Asia and the Pacific with an emphasis on cyber security and unmanned aerial systems.

California State Controller John Chiang joined Reaser at the event. Chiang spoke about the challenges he has faced since coming into office in early 2007, including dealing with a cash deficit within seven months of taking over as State Controller. His focus is on determining a competitive tax structure to create a high standard of living while keeping California competitive as a location for business.

November 30, 2012

There was little suspense about the topics when U.S. Senator Dianne Feinstein spoke to a group of business and community leaders recently. Both the Senator and her audience are well aware of the pressing federal issues facing California and the rest of the country. Feinstein came prepared with exhibits to illustrate the changes in spending and revenues between 2001 and 2012 and projected federal outlays for 2012. From 2001 to 2012, defense and war spending increased 64 percent, while tax revenues declined 13 percent. Mandated federal outlays in 2012 (entitlements and interest on the national debt) account for 64 percent of federal expenditures.

These figures would be sobering facts in any situation, but the looming threat of sequestration makes the current budget woes seem to pale in comparison. Feinstein has been working with Mark Zandi of Moody’s Analytics to develop a compromise approach that would enact half the cuts (approximately $109 billion) and reduce the projected impact on GDP from three percent to one percent of GDP. She compared the current plan to using a hard cleaver that would throw the U.S. back into recession. Feinstein is advocating for a more targeted approach that she likened to using a scalpel rather than a meat ax.

As part of the Senator’s visit to San Diego, she also met in a small group with leaders from the San Diego Regional Chamber of Commerce, CONNECT, San Diego Regional EDC and other local organizations. The briefing included an update on the progress of the Cali Baja Bi-National Mega-Region initiative, initially funded with an Economic Development Administration grant. Feinstein must have been impressed because she said she would like to come back to see more of the mega-region, including a first-ever official visit to Mexico.

Senator Feinstein recognized San Diego Mayor Jerry Sanders, saying he had accomplished much in his time in office. She also had high praise for the sponsoring groups – EDC, the Chamber and CONNECT – saying that the fact that these groups work together for the region is one of the reasons San Diego has been so successful. Her closing comment was that she rated the San Diego business community AAA+++…

 

November 29, 2012

A series of recent articles and reports emphasize what San Diego mega-region watchers already know: Mexico’s auto industry is quickly becoming one of the country’s major manufacturing success stories. A publication released by Jones Lang LaSalle outlined why they believe Mexico “is an increasingly attractive supply chain (manufacturing and distribution) location when looking to access the United States and elsewhere.” They mention low labor costs (while China’s are increasing), a skilled workforce (more than 90,000 students graduate from engineering and technology programs every year) and ever-improving supply chain infrastructure – with shipping lead times a fraction of what they are from China (15-20 days or more to US ports from China versus 48-72 hours direct to market by truck from Mexico).

The Wall Street Journal weighed in on the topic with an article detailing the plans major car makers have for expanding production facilities in Mexico, including Volkswagen, Honda, General Motors, Mazda, Fiat and Nissan. Volkswagen’s Audi division is planning a new plant with a $1.3 billion price tag.

According to the Wall Street Journal, one in 10 cars sold in the US last year was made in Mexico. The country ranks fourth in auto exports behind Germany, Japan and South Korea but the Mexican government believes they will pass South Korea in the coming years based on the level of planned expansions.

Finally, a special section dedicated to Mexico appeared in The Economist magazine with one article aptly titled “Seńores, start your engines.” In addition to the same positive comments regarding labor costs, skilled workers and transportation, their commentary points to the ambition of new president Enrique Peńa Nieto to increase annual growth in the Mexican economy to 6% during his six-year term. The auto industry will play a significant role in making that growth a reality.