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The Big Picture San Diego Blog


Economic Development 101

April 15, 2016

The California Competes Tax Credit is an income tax credit available to businesses that want to locate in or expand in California. Since its launch in 2014 as part of Governor Jerry Brown’s economic development initiative, the California Competes Tax Credit will award close to $380 million in credits to California companies.

On April 14, 103 companies were awarded more than $68 million in tax credits, creating close to 9,370 jobs over the next five years. In total, these companies will invest more than $1.3 billion over the next five years, aiding the state’s long term growth.  

San Diego boded especially well in this round. Eighteen San Diego companies are receiving more than $11.2 million in tax credits, ranking second among all metropolitan regions in the state. San Diego also ranked second in the amount of jobs created among all metros, with more than 1,330 jobs. Some of the companies that will be will awarded the credits include: Hunter Industries and Sentek Global, and many more. These funds will help the 18 San Diego companies invest more than $139.7 million into the community and pay more than $252.8 million in wages over the next five years.

 

April 15, 2016

Over the past year, EDC has partnered with the Brookings Institute’s Bilateral Cities Exchange to refine the economic development approach between Tijuana and San Diego. In parallel, EDC’s recent engagement with the site selection industry through Explore San Diego – a tour hosted for 12 site selector consultants earlier this year – enabled our facilitation of a cross-border business attraction project that will provide jobs and investment on both sides of the border. Per terms of confidentiality, this project is being referred to as Project Scout.

During EDC’s inaugural Explore San Diego tour, we focused not only on success stories in San Diego, but highlighted companies who had set up operations on both sides of the border, including Thermo Fisher and BD. Although we frequently hear about cross-border collaboration in San Diego, we soon realized that it was a story that many outside the region – including these site selectors – hadn’t thought about; companies can easily do business on both sides of the border.

In early March, EDC received a request from an Explore San Diego attendee whose client was looking to scale manufacturing operations outside of its current high-cost pilot facility. Given the consultants’ recent exposure to the bi-national mega region, San Diego-Tijuana made the long list of 20 potential sites. In response, EDC provided data, real estate market figures and other strengths regarding our cross-border economy. Just two weeks later, a call came in that San Diego-Tijuana had made the top three, alongside North Carolina and Texas.

In a tour on behalf of Project Scout, EDC rallied the necessary business and political partners in order to put the region’s best foot forward – making the case for a cross-border operation. With partners including CaliBaja, city of San Diego, city of Tijuana, San Diego Mayor Faulconer, Tijuana EDC and UC San Diego, EDC showcased Tijuana’s dynamic manufacturing facilities. Here, the group shattered stereotypes by exposing not only the quality and efficiency of Tijuana manufacturing, but also the cross-border collaboration that makes our region so unique.

Project Scout ultimately chose to scale 80,000 square feet of manufacturing operations in San Diego-Tijuana – beating out North Carolina, Texas and other competitors. The local operation will provide jobs on both sides of the border beginning in August.

Stay tuned for more as Project Scout develops. 

March 4, 2016

Phil Blair

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“The local economy picked up steam in January after slowing a bit toward the end of 2015 – a typical trend as seasonal, holiday jobs phase out. Key sectors like manufacturing, construction, engineering, and health care all posted outstanding figures this month. These trends are also reflected in the demand for staffing services, which posted seven percent growth in employment in January.”
Phil Blair, Executive Officer
Manpower San Diego


This post is part of an ongoing monthly series dedicated to the California Employment Development Department (EDD) monthly employment release and is brought to you by Manpower

 

The California Employment Development Department (EDD) released statewide county employment data today for the January 2016 period, as well as revisions for 2015. This month’s data shows that San Diego's labor market fundamentals remained strong, as unemployment continued to fall amid solid and steady job growth.

The unemployment rate fell to 4.7 percent in January, the lowest since September 2007. The rate is down 0.1 points from the revised December number and 1.2 points from the previous year. The San Diego rate remained much lower than the statewide unemployment rate of 5.8 percent. The national unemployment rate rose substantially to 5.3 percent, well above the San Diego rate. The rate dropped in part due to a typical seasonal decline in the labor force from December to January, but the annual labor force increased by 6,100, with 16,900 fewer unemployed persons since January 2015.

Employment dropped back below 1.4 million in January, but seasonal declines are typical after the holiday season. More importantly, year-over-year employment went up by 38,200, a 2.8 percent increase. San Diego’s growth rate was again much higher than the 1.9 percent national rate. While the year-over-year growth slowed as 2015 progressed, the growth rate climbed again in January, which is a positive sign of momentum in the region.

The private sector drove employment growth in January, as private employment accounted for 90.3 percent of all employment growth over the year. The total private sector grew by 3.1 percent year-over-year, out-pacing the private U.S. growth rate of 2.2 percent.

Private growth was driven largely by service providers, but goods producers experienced another strong month. Manufacturers and construction companies drove 24.0 percent of private job growth in January. The two industries added a combined 8,300 jobs in January. The manufacturing industry in particular had a very strong month, posting 3.4 percent growth, compared to the national growth rate of 0.4 percent in the industry. Revisions showed that 2015 was an even stronger year than previously understood, with an annual 2015 growth average of 3.7 percent.


Professional, scientific, and technical (PST) services, which is strongly associated with the region’s innovation economy, slowed substantially in January, but it is unclear if there are complications with the EDD revision. Prior to the revision, the industry showed6.6 percent growth in 2015. With revisions, that growth is only 1.9 percent. It is unclear if job growth previously categorized as PST was moved to another sector like manufacturing or management, as national revised figures don't show the same dramatic shift. Architecture and engineering, a subset of PST services, showed solid growth of 5.1 percent despite the overall PST figure.

Other key drivers for growth included the region’s healthcare sector, which added 7,100 jobs and accounted for roughly one fifth of the region’s private job growth in January. Tourism experienced strong year-over-year growth, adding 5,900 jobs and contributing to 17.1 percent of growth.

In all, the January report released today showed many continued positive signs for San Diego's economy. The dramatic adjustment to PST employment raises some questions, and we will have to wait and see what was behind this revision by EDD. Otherwise, the region posted another month of solid yearly job growth, in large part due to the booming manufacturing and construction industries. Unemployment fell despite statewide and nationwide increases, and growth was spread out across a variety of key high-wage and base sectors in the region.

This report was performed with assistance from the CBRE research team in San Diego.

 

March 3, 2016

By Matt Sanford, director of economic development

As I fly over Palmdale and glance down at one of the last large aerospace manufacturing facilities in the Southern California, it is a reminder that the aerospace industry as a whole is experiencing dramatic change. Some of the large industrial centers still exist and are highlights of the heritage of the industry. But the landscape as a whole is changing.
 
San Diego is the place where Charles Lindbergh built the Spirit of St Louis and since then, Southern California has been at the forefront of aerospace innovation. Today, it continues to be a hub for innovators looking to push the envelope. But instead of erecting more large manufacturing facilities, we will see this innovation in entrepreneurs and startups, in tech companies that are entering the industry, and in legacy industry leaders who are pioneering new technologies, and driving convergence with other tech sectors to create new capabilities.
 
Now, we are creating new sensors and systems to push the envelope even further. The James Webb Space Telescope being developed by Northrop Grumman in El Segundo will give us the most comprehensive look at the universe to date. The technology developed at ViaSat in Carlsbad is creating the fastest satellite broadband available to the public. San Diego is also home to Brain Corporation, 5D Robotics and the Center of Excellence for Northrop Grumman’s unmanned systems division. These companies, among others, are creating systems that will work autonomously to take on the dull, dirty and dangerous tasks that put people, both services members and private citizens, at risk.
 
So how do we quantify this activity? Through a report by the Los Angeles County EDC and San Diego Regional EDC covering the eight county Southern California region, we learned there are over 85,000 direct jobs in our aerospace industry. The total employment impact is nearly a quarter million people and it’s growing. In San Diego County alone, the industry has grown by 66.7 percent since 2004. 
 
The rich heritage of the industry has brought companies and talent to Southern California and San Diego to create a formidable ecosystem. But there are challenges. As we move forward, we must continue to support our aerospace manufacturers. We must also be proactive in identifying and supporting new sectors by aligning our universities to stay at the forefront of research and innovation, and working with the state to refute the claims that aerospace is a dying industry. Finally, we must stay at the forefront of the convergence between tech and aerospace, as it will continue to be where Southern California and San Diego can lead the industry. 
 
Even with new large contracts to develop platforms like the Long Range Strike Bomber, we must realize that as a percentage, those in the industry will be fewer on the factory floor, and more in labs and behind computers.
 
It is an exciting time for the aerospace industry in Southern California. The ecosystem is changing rapidly. It brings with it opportunity for seemingly endless growth and development of new technologies.
 
For more information, see the full study and fact sh eet.
February 29, 2016

Today, we welcomed Wrike, a Silicon Valley-based SaaS startup to San Diego. While Wrike is certainly a unique company, its situation is one we know well.

Recognizing the talent footprint in the region, Wrike chose to expand to San Diego, bringing with it 150 jobs over the next three years. Located a stone’s throw away from UC San Diego, Wrike is looking to attract talent from the region’s top universities, including SDSU and CSUSM. The company considered Raleigh, Phoenix and Chicago as alternative locations, but in the end, chose San Diego as the place to expand its California footprint.

"We're thrilled to expand to San Diego and open this location as a launch pad for our growth here,” said Seth Shaw, Wrike’s Chief Revenue Officer and San Diego expansion lead. “We've been really impressed with the high caliber of talent in the region and the enthusiasm for growing professionally in a startup environment."

EDC’s recent data can attest to the depth of San Diego’s talent pool. In 2014, San Diego gained 72,000 degree holders – more than any other major metro area. However, it’s not just the talent pool that attracted Wrike here, but the quality of life the region offers to employees. Not only are the region's beaches ranked among the best in the country, but San Diego ranks fourth in number of sunshine hours (yes, that’s a metric), and has the lowest average commute time among our peer metros. Life most certainly works here, and we’re proud that Wrike agrees.

February 23, 2016

By Mark Cafferty, President & CEO

Kia ora!

Just back from a long trip to Auckland, New Zealand and Sydney, Australia. I wanted to share some updates and observations from my time representing EDC and marketing our region to our friends Down Under and in the City of Sails.

Unlike many of my recent international trips, I spent a great deal of time over the past few weeks engaging with our economic development peers at the Auckland Tourism, Events and Economic Development agency (ATEED) and the leadership of the Committee for Sydney – two very different and interesting models in two very different and interesting cities. EDC’s relationships with these highly regarded organizations have been continually strengthened and enhanced through our work with JPMorgan Chase and Brookings Institute. Our colleague Greg Clark from Brookings was especially instrumental in setting up several of these meetings over the course of my trip.

Most exciting for me to see was the buzz EDC’s work has created over the past few years. Both the ATEED and the Committee for Sydney were familiar with our research and gave high praise to our work with the region’s traded clusters. Quite surprisingly, the organizations knew about our transition away from politics/policy over the last four years and praised EDC for being a leader in redefining regional economic development through a collaborative, employer-led approach – a strategy that has served us well.

In Auckland, they are building a "sports and active lifestyle" sector strategy based on the research EDC conducted a few years ago in partnership with San Diego Sports Innovators. They have also analyzed our export strategy and Go Global efforts, and are working to mirror several of our programs/initiatives – now spearheaded by the WTC San Diego housed within EDC.

In Sydney, the highly influential Committee for Sydney was excited about what they have seen/read regarding our collaboration with Mayor Faulconer's office. Specifically, they are hoping to set up a video conference in May with their business and political leadership in Sydney to hear about the "San Diego Story" from the Mayor and the EDC team. From there they are hoping to open the door to a large-scale trade/investment mission in 2017. Stay tuned...

Along the way I also had a fantastic meeting with Baseball New Zealand set up through the San Diego Padres, meetings with the airline industry set up by our colleagues at the San Diego County Regional Airport Authority, and continued engagement with leadership from two of our greatest San Diego/Sydney business connections: Cubic and ResMed. Lastly, I met with an Auckland-based VC firm who will likely be visiting businesses in San Diego within the next few months.

As always, San Diego’s universities, world renowned research institutions, biotech industry, defense technology and proximity to Mexico dominated conversations throughout the course of my trip. And with international commerce opportunities increasing and expanding through the Trans Pacific Partnership (TPP), everyone I spoke with saw San Diego's geography, entrepreneurship and economic diversity as key assets for expanded international trade and investment.

But what was incredible to see was how much better San Diego's economic story was understood and appreciated in comparison to my first visit to Auckland and Sydney just two years ago.

With and through our partners/investors, EDC is successfully placing San Diego on the radar of international businesses, investors and thought leaders across the world. The National Geographic Smart Cities documentary and our work with Brookings and JPMorgan Chase have a lot to do with this, but so does the hard work of our economic development team, the outstanding research we have been producing and the creative way in which our marketing team is framing our work and telling our story. For that, we have nobody to thank more than our board members and investors whose leadership, guidance, support, direction and vision are helping to change the way the world sees our region and our economy. And the best is yet to come.

A fascinating person I met with during this trip told me that an old Australian Aboriginal Proverb states:

"We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love...and then we return home."

Thank you for sharing this time and place with us, and thank you for continuing to support our efforts to observe, learn and grow. 

February 18, 2016
By Matt Sanford, director of economic development
 

Could the 78 Corridor be the next hub for Information and Communications Technology (ICT) companies? At a roundtable discussion with industry companies, academic institutions and city economic developers this week, EDC posed this question.

With a concentration of more than 650 ICT employers in the five cities along the 78 Corridor - Carlsbad, Escondido, San Marcos, Oceanside, Vista - there is a reason companies are choosing to locate here. Some of those reasons are the quality of talent and engineers, quality of life, and strategic positioning between San Diego and Orange County. If we are able to better capitalize on those reasons and understand the issues and opportunities of doing business along the Corridor (and the broader San Diego region), we can proactively set the framework to accelerate industry growth and clear hurdles.

The discussion identified several key challenges to overcome as well. Key among them: talent accessibility, infrastructure improvements, university/academic relationships and the ability to work together to make the region more attractive for those who might consider working here. 

EDC plans to dive deeper into these challenges with our partners, cities and institutions to find creative solutions to turn those challenges into opportunities. 

Learn more about San Diego's Upside at Innovate78.com
February 8, 2016

By Shea Benton, economic development manager 

Late January, EDC ventured into new territory by hosting ExploreSD, a three-day showcase of San Diego’s economy and talented workforce for site selection consultants from all over the country. Our goals were twofold: 1) pilot a replicable multi-day tour of the best companies our region has to offer to tell the San Diego story; and 2) proactively promote our region’s unique economy in an effort to generate new business attraction opportunities.

Over the past year, our team has engaged with a select group of consultants whose business is to compare and contrast regions for their clients, based on a gamut of criteria from real estate and utility costs to talent and quality of life, in order to help companies decide where to expand or relocate. As you can imagine, many in this industry have an aversion to California due to perceived and real barriers to doing business in the state. EDC’s strategy was to sell the San Diego region based on our thriving innovation economy, talented workforce, collaborative relationship with local and state government and unmatched quality of life.

Day 1: Joined by Mark Field, CTO of Thermo Fisher Scientific, Melissa Floca, director of the Center for US-Mexican Studies at UCSD, and Erik Caldwell, director of economic development for the City of San Diego, we kicked off day 1 with an overview of our mega-region. The conversation turned quickly to cross-border manufacturing and our proximity to Mexico, an asset previously overlooked by this group. After a multi-hour discussion, the stage was set for the next two days of company tours.

Day 2: Starting with a visual overview of downtown from the top of Diamondview Tower, our morning featured tours of Red Door Interactive, ESET and EvoNexus incubator. This portion of the event showcased San Diego’s downtown, with visit to both tech startups and established companies. The afternoon included trips to three companies with some of the most unique stories in San Diego: Illumina, iBoss Cybersecurity and BD/Carefusion. Not only are these three of the most recognizable names in the region, but they also have something else in common: they all explored expanding or relocating to other regions, only to increase their presence in San Diego.

Day 3: We began our final day in North County with tours of General Atomics and D&K Engineering to help these individuals better asses our advanced manufacturing industry. After a quick lunch at Stone Brewing Bistro & Gardens - a necessary stop for anyone visiting the region that doubled as a highlight of our craft beer industry - we explored all 5 cities along the 78 corridor. With stops at CSU San Marcos, a drive through Ocean Ranch Business Park and Carlsbad giants ViaSat and Thermo Fisher Scientific, we finished out our tour strong.

One thing was clear throughout the tour – our region’s innovation economy, talented workforce, and quality of life permeated every discussion in an organic way. With the help of an articulate group of business leaders and San Diego’s leading industry and real estate experts, we effectively articulated the benefits of business location in our region over peer metros including Austin, Denver and San Francisco. Moving forward, we intend to replicate and use this style of tour as an effective method to tell the San Diego story. 

February 4, 2016
By Nikia Clarke, director of World Trade Center San Diego
 
Konichiwa from Osaka!
 
Given the deep linkages between our regions, it is fitting that the World Trade Center San Diego 2016 calendar of trade and investment activities begins with a targeted focus on Japan. Sean Barr sent his reflections from Tokyo last week, where he was supporting a UC San Diego Technology Symposium and representing our region at an international nanotechnology and robotics show.
 
And this week I am traveling across the country with SelectUSA, the federal government’s foreign investment attraction agency. Japan is the second largest source of foreign direct investment to the United States, and more than 800,000 Americans are employed by US subsidiaries of Japanese firms. San Diego is a microcosm of this larger relationship, with companies like Takeda, Kyocera, Ajinomoto, and Murata employing thousands of San Diegans.  
 
On Monday we kicked off the Roadshow in Tokyo with HE Caroline Kennedy, Ambassador to Japan; Ambassador Vinai Thummalapally, Select USA Executive Director; and Mr. Tatsuhiro Shindo, Executive Vice President of JETRO for the signing of an historic MOI. We then moved on to Nagoya and Osaka, meeting with groups of potential investors at each stop.  
 

Representatives from the head offices of Japanese companies that have made long term investments in our region joined me on the road. Their eagerness to support our efforts here and tell their own San Diego story to their peers is a testament to the deep ties between our two economies.
 
In Tokyo, Toshitake Kobayashi from Takeda Pharmaceuticals joined me to speak to the group of 200 potential investors about how collaboration between Takeda California and Takeda Japan drives innovation in drug discovery for the firm as a whole. This is why Takeda closed its Bay Area facility and consolidated operations in San Diego. Takeda is Asia’s largest drug manufacturer, employing more than 30,000 people worldwide.
 
This emphasis on innovation was echoed by Naoki Sekizawa from Denso, a global manufacturer of parts and technology for every major auto maker from Toyota to GM. He explained to a group of 60 investors in Nagoya that Denso’s operations in Vista – located along the 78 corridor – remain the multinational’s North American research headquarters because of the talented workforce available in ‘telecom valley.’ 
 
Naoki Mori, from Nitto Denko, a water technology company that acquired Oceanside firm Hydranautics in 1987, joined me in Osaka to share his perspective on the advantages of our region. He emphasized the premier universities and research institutions as we spoke to another packed room of over 100 investors interested in the US market. 
 
Three companies from diverse industries delivering the same message: San Diego’s innovation ecosystem – with its strong research institutions and top-tier talent - is a world-class asset. And yet, it is clear that in terms of maximizing these assets, we could be doing more. Out of over a dozen states and metros participating in the roadshow, San Diego is the only one without a Japan trade office staffed with dedicated investment personnel. 
 
Our investors and partners have done tremendous work over the last few years to generate a comprehensive trade and investment plan for the region. And our Port, Airport and City are driving the execution of that plan through the revitalization of World Trade Center San Diego. That kind of regional coalition building is both rare and formidable, and for that we are grateful. 
 
So you will be hearing much more about Japan in the coming months, as we prepare to host several incoming delegations of Japanese companies in advanced industries. And you will also be hearing from Auckland, Sydney, London, Toulon, and Stockholm, as we work to grow exports to, investment from, and relationships with the markets that matter most to San Diego’s growth, prosperity and resilience.
 
Big thanks and kanpai to the San Diego leadership of Takeda, Denso, and Hydranautics for coordinating support on the road, and for the language lessons too.
 

January 28, 2016

By Sean Barr, senior vice president of economic development

Greetings from Tokyo, Japan. This week, behind a newly relaunched World Trade Center San Diego, EDC kicks off its 2016 international program. Our goals are clear – grow exports and position the region as a choice location for investment and science and technology partnerships.  

I am here in Tokyo the next few days with the Jacobs School of Engineering at UC San Diego. From day one, we were met with great enthusiasm for expanded partnerships with the University of Tokyo, University of Osaka, and private industry leaders such as Mitsui, Honda and the Japan Venture Capital Association, to name a few.

Japan represents San Diego's largest trade and investment market, making the relationship key to our economic growth. Tokyo alone accounts for nearly 25 percent of all foreign owned establishments in the region. With operations in San Diego, Japanese companies such as Kyocera International, Sony, Ajinomoto, and Takeda are some of the most active and community-minded companies, employing hundreds of San Diegans. Japan leads the way as an export market, consistently ranking among the top five most important markets for San Diego. From water technology, to microelectronics, to tourism, to telecommunications to renewable energy and craft beer, Japan punches way above its weight in the consumption of San Diego products and services. 

The relationship, however, is not one-sided. A number of organizations in San Diego have long recognized the importance of Japan to our economy, with some committing to a fulltime presence abroad, including Biocom, the San Diego Tourism Authority, the San Diego International Airport, the Port of San Diego, SDSU and of course, UC San Diego. We are looking to build on, amplify and support their work to advance the region's trade interests. 

Leading with our universities and science and engineering talent, San Diego is successfully attracting attention to our global innovation economy. In partnership with Al Pisano, Dean of the Jacobs School of Engineering at UC San Diego, EDC co-hosted a symposium this week for more than 30 Japanese investors. As investors traveled from Osaka, Kyoto, and throughout Tokyo to attend, it was evident that San Diego’s technology and engineering prowess has garnered global attention, with many inquiring about the region’s business climate and international presence.

 

The global outreach continues next week, through the end of April, and beyond. Next stop: Tokyo (return visit), Nagoya, Osaka, Auckland, Sydney, London, Toulon and Stockholm. We will certainly keep you updated from the road.