Tag: Manufacturing

What we learned at Career Exploration Day 2021

By Andrea Crisantes Suarez,

San Diego’s economy, made up of innovative companies doing life-changing work, is fueled by skilled talent. Each job in the innovation economy supports another two jobs in the region, allowing for San Diego’s rapid economic growth despite a global pandemic. However, future growth is threatened by barriers to quality employment that many San Diegans face. Changing skill requirements, existing demographic gaps in educational attainment, and a nationwide battle for talent, coupled with a soaring cost of living, continue to threaten San Diego’s competitiveness as a region.

As we work to get San Diego’s recovery right and build a more equitable, inclusive region, EDC’s Advancing San Diego (ASD) program aims to better prepare San Diegans for quality jobs, and expand access to diverse, qualified talent for San Diego companies. As part of this work, ASD hosted its second annual Career Exploration Day and Virtual Career Fair. Sponsored by Qualcomm Incorporated, the virtual event served to connect students from all over San Diego County, who are enrolled in employer-verified training programs, with opportunities across a diverse range of industries and professions. Via an online platform, ASD connected nearly 100 local students with 22 companies including startups Smartville and Flock Freight, established firms Booz Allen Hamilton and San Diego Gas & Electric, and many more. In the day-long event, students and employers had the opportunity to network and interview, share job opportunities, and listen in on career exploration panels with professionals in high-demand roles and industries.

“At Qualcomm, we’re looking to expand our recruitment of diverse talent while cultivating new opportunities to hire locally”, said Heather Ace, Chief Human Resources Officer at Qualcomm Incorporated. “Career Exploration Day offers us the opportunity to both connect with potential local candidates and support the broader talent development efforts being driven by the EDC here in San Diego.”

ICYMI, we’ve compiled for advice for students from the event

1. Be a chameleon; learn to adapt:

COVID-19 has made one thing clear: Your plans may change. Different externalities will force you to change your strategies and the way you work. Take this opportunity to learn to be adaptable; this will help you be successful into the future.

As Sharp Healthcare’s Talent Acquisition Specialist Jason Pijapaert shared in the Healthcare and Life Sciences panel, “Being able to roll with the punches and having the ability to work collaboratively with a diverse group of people that have different mindsets, expertise, and opinions is vital in any workplace. Being adaptable to your environment and the different challenges that you will inevitably be presented with will allow you to grow and be better at what you do.”

2. Consider opportunities to say “Yes”:

Now, we’re not talking about taking on unimaginable workloads or saying yes beyond your boundaries. Instead, we mean saying yes to new opportunities, yes to learning new things, yes to working with a different team, yes to taking risks.

Lalitta Ghandikota, Senior Director of Talent at Element Biosciences, shared in the Healthcare and Life Sciences panel the key to her success has been saying yes to every opportunity. In the beginning, it may seem like you know nothing about what you just got yourself into, but those will be the times when you will have the most fun growing and learning. “I always say that the time in your career where you are having the most fun is also probably when you are most terrified,” she said.

3. Take time to learn: 

With millions of websites and video tutorials available, taking the time to learn a new skill or improve an existing one will give you an important advantage when looking for a job or an internship.

Dr. Michael Alston, Senior Staff Engineer at Qualcomm Technologies, Inc., says our most valuable employees innovate in ways that increase the productivity of other employees or create new products or services. On the Engineering and Manufacturing panel, he shared, “for students, websites like code.org (which teaches computational thinking), and Python.org (a versatile, widely-used coding language) are great platforms for building skills useful for innovation.”

4. Don’t forget about soft skills:

While hard skills like coding or data mining are crucial for certain roles, leveraging your soft skills can help you stand out. The ability to manage your time effectively, think critically about a problem, absorb constructive criticism, communicate effectively both internally and externally, and collaborate across teams is just as valuable as knowing a particular programming language.

Regardless of your industry or position, you’ll always need to work effectively with people of different backgrounds and skills to get a project done well. Leverage these skills when you’re speaking with recruiters to showcase a different facet of professional strength.

What now?

  • Interested in careers in key industry sectors? Visit ASD’s Preferred Provider Map where you can find leading training programs that have been certified by employers.
    • Looking to join our network of Preferred Providers? Sign up to get updates on ASD’s future talent pipeline management work.
  • Looking for skilled local talent? Contact Taylor Dunne, Talent Initiatives Manager, and we will help you get in touch with San Diego’s skilled talent pool.
  • Check out jobs at Qualcomm and many other local firms hiring across San Diego.
  • Learn more at AdvancingSD.org

8 reasons we love things #MadeInSD

By Kaylee Hudson,

San Diego is home to a vibrant manufacturing cluster that spans many industries, including defense, shipbuilding, medical devices, cleantech, craft brewing, and sports and active lifestyle. And thanks to a highly-skilled workforce, robust training programs, and close proximity to Mexico, the San Diego region boasts nearly 3,150 manufacturing companies currently supporting more than 108,000 jobs. More on the industry here.

In celebration of National Manufacturing Day 2021, here are just a few reasons everyone can benefit from the goods/services made in San Diego:

1. To up our sports game

Skateboarding, surfing, biking, golfing…you can do it all with San Diego’s best sports tech.

Check out: Solid Surfboards, Xterra Skate, Juiced Bikes, ElliptiGO, Callaway Golf, TaylorMade Golf

2. To set trends

It’s easy to support San Diego manufacturing and set trends, with companies like Nixon, Pura Vida, and Knockaround designing fashion-forward accessories.

Check out: Nixon, Blenders, Knockaround, Allett, Pura Vida

3. To enjoy the outdoors

It’s hard not to spend time outdoors when you live in year-round sunshine. Luckily, San Diego companies have you covered, whether you need to capture your adventures on camera or protect your skin for a day in the sun.

Check out: GoPro, Coola, Sun Bum, Amavara Skincare, Lotus Sustainables

4. To improve our homes

One product, dozens of uses… San Diego manufacturers like WD-40 and Dr. Bronner’s are big believers in efficiency when it comes to household products.

Check out: WD-40, Dr. Bronner’s

5. To make music

San Diego manufacturing is music to our ears with beautifully crafted guitars and banjos made right here in our own backyard.

Check out: Taylor Guitars, Deering Banjos

6. To help planet Earth

With San Diego’s proximity to beautiful beaches, mountains, and parks, our companies know how important it is to care for our planet through thoughtful sustainable products.

Check out: Lotus Sustainables, Verity Case

7. To taste something delicious

San Diego knows how to deliver on taste, whether you’re in the mood for craft beer or something sweet. Though North County leads the way with its many breweries and Bitchin’ Sauce, there are plenty of treats to go around no matter where you are in the region.

Check out: Stone Brewing, Bitchin’ Sauce, Suja Juice, White Labs, Modern Times, GelatoLove, Maya’s Cookies, The Mulk

8. To make the world a healthier place

From research to medical device manufacturing, San Diego is a thriving hub for biotech in all its forms. Device companies like BD and Illumina are leading the way when it comes to both preventative health and effective care.

Check out: BD, Illumina, DermTech, NuVasive, Thermo Fisher Scientific, Dexcom

More on manufacturing:

Does your San Diego manufacturing company need help finding resources, or just want to know more about San Diego’s thriving manufacturing scene? Click here to learn more, and get in touch with EDC for custom help. 

More on MFG Day 2021

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San Diego’s Changing Business Landscape: Companies struggle to keep up with resurgent growth

By Eduardo Velasquez, Research Director,

Welcome to the fourth edition in EDC’s Changing Business Landscape Series, which will be published bi-monthly in the San Diego Business Journal and here on our blog. If you missed them, check out the March, May, and July editions.

Surveying the changing business landscape in San Diego

The COVID-19 pandemic has impacted every facet of life, including how businesses operate. Companies in every industry are rapidly re-evaluating how they do business, changing the way they interact with customers, manage supply chains and where their employees are physically located. This has massive immediate and long-term implications for San Diego’s workforce and job composition, as well as regional land use decisions and infrastructure investment.

To identify evolving trends in local business needs and operations, ensuring their ability to grow and thrive in the region, San Diego Regional EDC is surveying nearly 200 companies in the region’s key industries on a rolling basis throughout 2021 to monitor and report shifts in their priorities and strategies. In addition, EDC constructed the San Diego Business Recovery Index (BRI)—a sentiment index to measure companies’ perceptions of current conditions, as well as expectations for the future across several factors such as business development, employment, and commercial real estate needs. (An index value >50 reflects expansion, and a value <50 reflects contraction. More information on the index and how it is calculated is available here.)

These insights will help inform long-term economic development priorities around talent recruitment and retention, quality job creation and infrastructure development. Companies are surveyed on several topics, with varying emphases in each wave.

Here are three key findings from the fourth wave of surveying conducted in August 2021:

  1. Life Sciences companies struggle to keep pace. Employers reported higher earnings and headcount but also increased difficulty attracting and retaining talent
  1. Supply chain disruptions hurt business development. The more profound impact of prolonged supply chain issues may be on San Diego business operations not local consumers.
  1. Remote work is driving companies to scale down office space. Life Sciences and Manufacturing are the exception, where rising sales and increased staffing will require companies to add space.

The BRI slid 8.4 points in August to settle at 55.3 after coming in at a solid 63.7 in June. August’s read suggests that the recovery could be slowing and reflects deteriorating views of present business conditions and slightly less upbeat expectations for the next six to 12 months.

All but two subindex values declined in August. The renewed challenges faced by businesses led many to temper their future expectations somewhat, though the expectations subindex remained comfortably in expansionary territory at 61.8. While companies still anticipate an improving local economy over the next six to 12 months, the economic expectations subindex for six months out fell 16.4 points from 83.2 in June to 66.8 in August. Meanwhile, the subindex for economic conditions 12 months out fell 15.3 points from an exuberant 92.0 to a more measured but still optimistic value of 76.7.

Life Sciences companies struggle to keep pace

Employers surveyed reported an acceleration in hiring; the first time the employment subindex moved into expansionary territory. While this is welcome news, employers also reported increased difficulty hiring new workers. Though much attention has been given to the suggestion that extended unemployment benefits are keeping the unemployed from returning to work, the data doesn’t seem to support it. In fact, many of the pre-pandemic hiring trends have persisted and the industries having the hardest time filling jobs are those that are high-skill and high-paying. There were more than 118,000 unique job postings across the region during the month of August. The top job posting industries fall into the Tech and Life Sciences clusters and the most posted occupation was Software Developer (yet again).

San Diego Life Sciences companies have been struggling to add talent fast enough. These companies have been at the forefront of developing treatments and producing medical devices aimed at combatting COVID-19. As such, they have grown rapidly, drawing more than $9 billion in venture capital funding since the pandemic began. While Life Sciences companies reported higher revenues, earnings and employment relative to before the pandemic began, they also report the greatest difficulties filling new positions, keeping their highly in-demand talent from competitors, and dealing with suppliers and vendors. Despite these challenges, most have great expectations for the year ahead, with plans for increasing staff, their physical footprint and remote work capabilities.

Supply chain disruptions hurt business development

One of the longest lasting impacts of the pandemic has been on global supply chains. Companies across the country remain light on inventory even as demand for goods from furniture and clothing to recreational goods and electric bicycles has jumped. In San Diego, consumer spending is now up 11 percent compared to February 2020 before any COVID-related shutdowns began. Many consumer goods are manufactured overseas, and as the Delta variant has spread in many parts of Asia, production has slowed or even halted. While supply chain disruptions may be affecting what San Diegans can buy and the prices they will pay, the more profound impact may be in what San Diego companies can sell and to whom.

Across all industries, San Diego companies noted continuing difficulties with managing suppliers and vendors. From Aerospace and Manufacturing to Software and Life Sciences, supply chain struggles have become more disruptive throughout the summer months. Upstream labor shortages have reduced production, port and travel delays led to late or canceled shipments, and the unavailability of microchips and plastics prevented companies from delivering finished goods and even services. This may help explain that while revenues and earnings are up, new business development is becoming increasingly difficult for companies surveyed, with the subsegment BRI falling sharply into contractionary territory of 36.1 in August from 51.7 in June.

These delays and disruptions not only hurt the companies that depend on raw materials and intermediate goods, they also directly impact the more than 54,000 people employed in San Diego’s Transportation and Logistics value chain. Furthermore, supply chain disruptions to San Diego companies hinders their ability to serve customers across the world. San Diego is a top 10 services-exporting metro, specializing in Professional, Scientific, and Technical Services like Research and Development (R&D), Cybersecurity, Engineering, and Software. These industries have massive impacts on the local economy with each 100 direct jobs supporting 200 more elsewhere in the region.

Remote work is driving companies to scale down office space

After more than 18 months of remote work, with multiple fits and starts to get back into the office, many companies are coming to terms with some form of permanent remote work for their staff. The high levels of efficiency gains reported in the June survey has since subsided but remain net positive and strongly so. Employers are not necessarily looking to further expand their remote work capabilities or adopt new technologies for remote work, but many report a high desire among their workforce to maintain remote work options. Several reports from across the country and industry show that workers are primarily interested in flexible work arrangements that allow them to go into the office as needed while being able to manage their personal lives and avoid unnecessary commutes when possible. This flexibility is especially important to working parents facing unpredictable school and daycare disruptions as the Delta variant causes classrooms to temporarily shut down, sending their children back home.

With fewer workers in the office full time, more companies are making the decision to reduce their physical footprint. Many Technology and Software companies report difficulty justifying large, empty offices and thus plan to scale down significantly over the next year. Even companies in Education and Healthcare, that serve customers in-person, are moving back-office workers to either hybrid or fully remote work environments.

However, there are still companies looking to add space. These are mostly concentrated in Life Sciences and Manufacturing, where strong sales and increased hiring require more room to accommodate this growth. While many of these companies indicated plans to add office space, even more need industrial and lab space for R&D. Currently, there is almost 7.7 million square feet of industrial and flex space available and nearly 19 million square feet of office available across the region. The growing needs of companies suggests the balance may need to shift in the other direction.

Whether pharmaceuticals or beer, San Diego companies have long produced the things that make life more comfortable and more enjoyable. These companies also drive economic growth in our region. It is important that they have the assets they need, both in terms of physical infrastructure and skilled talent, to grow and thrive in San Diego.

Stay tuned for more on San Diego’s changing business landscape. EDC will be back every other month with more trends and insights. For more data and analysis visit our research page.

Take the next survey here

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San Diego’s Data Bites: September 2021

By Nate Kelley,

Presented by Meyers Nave, this edition of San Diego’s Data Bites covers August 2021, with data on employment and more insights about the region’s economy at this moment in time. Check out EDC’s Research Bureau for even more data and stats about San Diego.

KEY TAKEAWAYS

  1. San Diego establishments added a less-than-stellar 5,300 jobs in August, undoing July’s seasonal loss. Gains were concentrated in Construction and Government as teachers and school staff were brought back onto payrolls in preparation for kids’ return to the classroom.
  1. The unemployment rate dipped to 6.6 percent in August from July’s 6.9 percent. However, this was due to 11,800 people leaving the workforce, not job gains.
  1. August’s employment report provides more evidence that emergency federal unemployment insurance (UI) benefits are not sidelining workers, contrary to popular belief. Yet the data do point to another potential reason: workers are refusing to return because of the risk of exposure to COVID amid low pay and no healthcare benefits.

The data

San Diego companies added an underwhelming 5,300 jobs in August, while the exit of 11,800 workers lowered the unemployment rate to 6.6 percent from July’s 6.9 percent. August’s jobs build erases July’s loss, but the region still lags behind the national jobs recovery. Just over half of the jobs shed during the pandemic have been recovered locally, compared with about 80 percent nationwide.

Public agencies led the charge in August, adding 3,500 positions as teachers and school staff were brought back onto payrolls as kids prepared to return to the classroom. Construction came in at a close second, adding 3,400 jobs last month. However, Leisure and Hospitality, which has led job gains for nearly all of the recovery, added just 2,000 payrolls, potentially reflecting a change in preferences and attitudes among workers (more on that below). Transportation, Warehousing, and Professional and Business Services added another 600 jobs combined.

Gains in those industries were partially offset by losses in Other Services (gyms, salons, building and grounds maintenance, etc.), Finance, Wholesale Trade, Manufacturing, Retail, Healthcare, and private Educational Services.

Exposure, health insurance, and the jobs recovery

August’s employment report provides more evidence that UI benefits are not sidelining workers, contrary to popular belief. The line of thinking has been that an extra $300 per week in federal UI benefits is substantial enough for lower-paid workers in service industries to not return to the workforce. However, those emergency UI benefits terminate in early September, so the expectation would be for thousands of idle workers to return as the UI windfall is rolled off ahead of that.

To be sure, $300 per week amounts to just less than half of the gross pay received by workers in San Diego’s Leisure and Hospitality sector. Yet, Leisure and Hospitality establishments added a mere 2,000 net positions last month with another 33,200 jobs yet to be recovered.

The data may not support the notion that UI benefits are keeping workers home, but they do point to another potential reason: workers are refusing to return because of the risk of exposure to COVID amid low pay and no healthcare benefits. San Diego COVID cases, including the Delta and Mu variants, have fallen since peaking in mid-August, thanks to the County’s high vaccination rate, but they nonetheless remain higher than levels seen in May and June of this year. Many workers in lower-paying, public-facing positions may have therefore concluded that going back to work at $15 per hour isn’t worth the risk of exposure, even if it means forfeiting an extra $1,200 per month in federal UI benefits.

The San Diego region is yet to recoup 107,900 jobs lost during the pandemic, 60 percent of which are in industries that are either public-facing or have limited capacity for social distancing, such as Leisure and Hospitality, Retail, Education, and Manufacturing. However, most of these industries are closing in on pre-pandemic employment levels, while Leisure and Hospitality is not.

A combination of steady job growth and the rollout of health insurance mandates through the Affordable Care Act significantly reduced the number of uninsured San Diegans during the 2010s. Even with the expansion of insurance coverage, however, EDC estimates that anywhere from 11,000 to 17,000 people have been left without any health benefits since February 2020 as their jobs evaporated or they left the labor force.

Worse, many can’t even rely on getting jobs for health coverage. Nearly 10 percent of employed people in San Diego still lack any sort of health insurance; that number jumps to 16 percent for food preparation and serving-related positions at restaurants and bars and climbs as high as 29 percent for building and grounds maintenance positions. But those figures also include public insurance. Excluding public insurance options, some 54 percent of food prep workers and servers and 60 percent of building and grounds workers receive no health insurance through their employer or union.

Estimates for average hospital costs associated with COVID-19 treatment range from $30,000 to $50,000. A Kaiser Family Foundation study also found that 72 percent of major health insurance plans across the U.S. have already stopped full coverage of COVID-related treatments, and that will increase to 93 percent by year-end. Meanwhile, the average annual salary for food prep workers and servers in San Diego is $29,500. Hence, being infected by COVID or one of its variants could easily spell financial ruin for these workers even if they already have health coverage. Faced with those statistics, it would be more financially irresponsible to return to work than to stay home and wait out the recent spate of COVID infections.

Taken together, it’s safe to assume that many lower-paid service workers in public-facing jobs may not return anytime soon until the benefits clearly outweigh the risk. This puts low-margin local businesses in service industries in a precarious position: either lure workers back with higher pay and/or benefits and pass on the additional costs to customers, or run the risk of operating at less than 100 percent capacity, which would crimp revenues and also hurt bottom lines.

Regardless of the answer to that question, these data underscore the desperate need for more quality jobs in the area, particularly at smaller companies, if we ever hope to restore a sense of normalcy in the job market going forward. Humans may be creatures of habit, but large-scale economic displacement has a way of fundamentally altering our preferences and routines. The pandemic-fueled recession last year has almost certainly led workers to place greater importance on their personal safety and health than before, and employers will need to adapt in order to attract and retain talent.

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Advancing San Diego Company Spotlight: Misadventure & Co.

By San Diego Regional EDC,

The Advancing San Diego (ASD) Internship Program launched in Summer 2020 in a remote-capacity amid the COVID-19 pandemic and aims to provide up to 100 San Diego-based employers with fully subsidized interns. This program targets small employers with 100 employees or less, which comprise 98 percent of all businesses in San Diego, employ nearly two thirds of San Diegans, and account for 70 percent of job growth. A key issue for these companies has been a lack of time and resources to recruit the skilled talent necessary to continue their growth.

As students close out their Spring business internship experiences, EDC has rolled out this blog series to highlight the innovative local companies that comprise the third cohort of the program, and the interns they hosted. To date, ASD has placed 93 student-interns in local businesses, with $455,000 in total wages and support services paid. 

In this edition, we sat down with Romi Rossel, Content Marketing Manager at Misadventure & Co., a leading provider of vodka production and sustainability.

Read on for more about ASD intern host Misadventure & Co.

Romi Rossel, with Advancing San Diego interns, Andreapaola Loda (right) and Michelle Bodi (left).

Tell us about your company.

Misadventure & Co. is the world’s first carbon negative distillery, and the first and only to upcycle excess baked goods into an award winning spirit. Our vodka is smooth and upcycled certified. The best part? Consumers get to help save the world just by having a drink! Our tasting room and production facility are located in Vista, and we are known for our delicious craft cocktails, sustainable vodka, and wonderful atmosphere.

Why was your company founded?  

It all started in 2013 with a chance meeting at a North County San Diego bar between the two founders. Whit Rigali, the bartender, wanted to create local craft spirits as tools for other bartenders. Sam Chereskin, the Agricultural Economist, wanted to find ways to improve food systems and show that doing good can also be viable. Their conversation over a glass of whiskey led to the creation of Misadventure & Co. Our vodka is not just a product of four years of R&D, but lessons learned through the San Diego brewing and distilling communities, and our wonderful friends and family. We desire to make quality spirits and create them sustainably. With food waste prevention being the number one solution to climate change, we are focusing on educating our community on finding creative ways to help the environment, and choosing products that can help make the world a better place.

What does growth look like over the next few years?

We are excited to further develop both our hospitality and distribution channels. Increasing our production would allow us to make a bigger positive impact on the environment.

How has your company pivoted as a result of COVID-19?

As a result of the pandemic, we expanded our forecasting capabilities beyond traditional weather variables like temperature and relative humidity, as we were involved in a project in collaboration with NASA scientists to understand the effects of COVID-19 in the upcoming forest fire season. Further, Misadventure pivoted into producing hand sanitizer to support the uptick in sanitation needs amid pandemic. That experience not only allowed us to stay in business through 2020, but also opened up a whole different set of possibilities for us. We realized that we are not only a distillery producing high quality spirits, but also a sustainable ethanol manufacturer that can be used in many other industries from food production to cosmetics.

Tell us about your experience building a small business/startup in San Diego. 

We have been extremely lucky to work with other amazing organizations and companies that support what we do. San Diego has a very tight sustainable community as well as a great distilling and brewing community that encourages collaboration and assistance. CAL Recycle has been extremely helpful in providing grants to fund pieces of equipment that have helped us increase and improve our production. We also love working with other anti-food waste organizations such as Kitchens for Good and Oceanside Kitchen Collaborative, and we are proud to say we are founding members of the new nonprofit organization Sustainability is Sexy.

The most special thing about the San Diego business community is that is a very collaborative community. There is always a genuine interest from people to help each other and grow together, especially when it comes to making positive changes in the world.

How did you find out ASD and how has your experience been? Tell us a little bit about your interns and the value they bring.

We found out about ASD through a contact at California Manufacturing Technology Consulting (CMTC) who shared the internship opportunity with us. Our interns provided strong support for our marketing campaigns by doing market research that allowed us to grow our social media presence and bring more foot traffic to our tasting room.

Learn more about Advancing San Diego and our internship program.

Company contact info and additional information:

  • Website: misadventure.co
  • Social Media: @misadventureco
  • Email: info@misadventure.co

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San Diego’s Data Bites: August 2021

By Nate Kelley and Jesse Nasland,

Presented by Meyers Nave, this edition of San Diego’s Data Bites covers July 2021, with data on employment and more insights about the region’s economy at this moment in time. Check out EDC’s Research Bureau for even more data and stats about San Diego.

KEY TAKEAWAYS

  1. San Diego lost a net 7,800 payroll jobs in July, but this is largely due to seasonal fluctuations. Public and private educational services employment dropped by 16,200 as teachers and staff break for summer. Barring those losses, payrolls grew by 8,400, led by a build of 6,100 positions at Leisure and Hospitality establishments.
  1. The unemployment rate ticked lower to 6.9 percent from June’s 7.0 percent even as an additional 16,100 workers joined or rejoined the labor force last month. The labor force has grown by more than 24,000 people since June, further debunking the assertion that workers are sidelining themselves amid extended emergency federal unemployment benefits.
  1. Recent data on COVID cases have been flashing red, but there’s good reason to believe that San Diego will not suffer as badly as other regions across the country where fewer people have been fully vaccinated. Additionally, the data clearly support the idea that the region’s recovery hinges in large part on how many more San Diegans get the vaccine in the coming weeks.

The data

San Diego establishments shed 7,800 jobs in July, primarily the result of seasonality. The vast majority of job losses came from public and private Educational Services as teachers and staff began summer break and durable goods Manufacturing as factories undergo annual retooling. As such, job losses in July are common and not unexpected, and it’s worth noting that last month’s losses were less severe than in prior years leading up to the pandemic.

Local Government Education (K-12 schools), State Government Education (colleges and universities), and private Educational Services gave up a combined 16,200 positions, leading the region’s losses for the month. Meanwhile, durable goods Manufacturing employment fell by 1,100.

On the bright side, Leisure and Hospitality continued to lead job growth, adding 6,100 jobs in July, followed by an additional 2,800 Construction jobs.

Notwithstanding last month’s minor setback, employment is up 4.5 percent from a year earlier, another positive indication that San Diego is restoring jobs lost during the COVID pandemic. In particular, Accommodation and Food Services employment, which was hit the hardest during the pandemic, has jumped 36.7 percent compared to July 2020.

What about COVID?

Recent headlines have focused largely on the “fourth wave” of COVID-19 infections across the country, as the Delta variant spread through communities and mask mandates and business restrictions were relaxed over the summer. To be sure, the seven-day average for new cases in the U.S. spiked more than tenfold to 140,000 as of August 18 after settling at around just 11,000 to 12,000 new cases per day in the second half of June.

Cases in the San Diego region have also climbed significantly in recent weeks, although the story is more nuanced here. Vaccination has been a key asset to the region: According to the U.S. Centers for Disease Control (CDC), 45.4 percent of all residents in San Diego County are fully vaccinated (have received at least two doses), placing the region in the 75th percentile for all counties in the United States. Vaccination does not provide 100 percent immunity to COVID-19 or its variants, but it does reduce the severity of symptoms, including the possibility of death. In fact, looking across all counties, the death rate is reduced by 0.1 percentage point for each additional five percent of the population that gets vaccinated. Put differently, for every 500 people who get vaccinated, another San Diego life can be saved.

So, even though the regional seven-day average has increased from just two cases per 100,000 residents in June to 38 new cases per 100,000 residents as of August 18, the death rate, at 1.1 percent, remains significantly lower than the U.S. (1.7 percent), California (1.5 percent), and the surrounding counties (1.6 percent to 2.3 percent). Moreover, despite the increase in cases, San Diego’s rate of 38 per 100,000 people still lies below the nation’s 43 case per 100,000 Americans.

The CDC releases county- and state-level COVID caseload forecasts based on models that account for local vaccination rates and assumptions surrounding social distancing, among other items. Similar to California as a whole, San Diego’s relatively high vaccination rate led the CDC to forecast an essentially flat trajectory for cases through mid-September. This is in fairly stark contrast to the projections for U.S. case numbers, which are expected to climb substantially over the next several weeks as unvaccinated populations become susceptible to the profusion of the Delta variant and are exposed to the virus as Main Street businesses reopen.

While another climb in COVID cases is less than ideal, San Diego should be able to emerge from the most recent wave better off than other regions where the local populations are not as widely vaccinated. This should help to mitigate the economic fallout here as residents rebuild the confidence to engage in public life again.

Even so, it is crucial that this analysis not be misconstrued as a reason to let our guard down. If anything, this analysis shows just how critical it is for everyone to get vaccinated to better protect ourselves and our economy. Increased vaccination will help to accelerate the region’s recovery while simultaneously reducing uncertainty around the COVID virus and its variants.

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San Diego’s Changing Business Landscape: Increasing optimism despite continued challenges

By Eduardo Velasquez, Research Director,

Welcome to the third edition in EDC’s Changing Business Landscape Series, which will be published bi-monthly in the San Diego Business Journal and here on our blog. If you missed them, check out the March and May editions.

Surveying the changing business landscape in San Diego

The COVID-19 pandemic has impacted every facet of life, including how businesses operate. Companies in every industry are rapidly re-evaluating how they do business, changing the way they interact with customers, manage supply chains, and where their employees are physically located. This has massive immediate and long-term implications for San Diego’s workforce and job composition, as well as regional land use decisions and infrastructure investment.

To identify evolving trends in local business needs and operations, ensuring their ability to grow and thrive in the region, EDC is surveying more than 200 companies in the region’s key industries on a rolling basis throughout 2021 to monitor and report shifts in their priorities and strategies. In addition, EDC constructed the San Diego Business Recovery Index (BRI)—a sentiment index to measure companies’ perceptions of current conditions, as well as expectations for the future across several factors such as business development, employment and commercial real estate needs. (An index value >50 reflects expansion, and a value <50 reflects contraction. More information on the index and how it is calculated is available here.)

These insights will help inform long-term economic development priorities around talent recruitment and retention, quality job creation, and infrastructure development. Companies are surveyed on several topics, with varying emphases in each wave.

Here are three key findings from the third wave of surveying conducted in June 2021:

  1. We are amid a great talent reshuffling. Businesses report increasing difficulty hiring and retaining talent, meanwhile the quits rate is at historic highs.
  1. Supply chains remain knotted up. The strategic importance of our cross-border trade has never been clearer.
  1. Space needs are in flux as companies prepare for return to office. Demand for office space may be waning, but life sciences companies are looking to add lab space.

San Diego County firms built on the enthusiasm expressed in April’s survey, with the BRI advancing from 58.9 in April to 63.7 in June. The topline index was pulled higher by more upbeat views of, both, present conditions and expectations for the future. The present conditions index segment rose from 56.1 in April to 59.3 in June while the expectations segment climbed from 65.4 to 73.9 during that time. Business respondents in the region confirmed several trends that have made headlines recently. Companies stated that business conditions have improved significantly over the past two months (due in no small part to California’s reopening in June) while also noting that sourcing talent and suppliers has become significantly more difficult.

A great talent reshuffling

Companies reported that revenues and earnings have improved since April and thus optimism over the next six to 12 months has increased. Expectations are also strong in San Diego’s Innovation cluster. Businesses in this group conveyed that they plan to hire more aggressively in the coming months. This is particularly good news, since each new Innovation job supports another two jobs elsewhere in the regional economy.

Nonetheless, companies also reported having a tougher time attracting new talent as well as increased difficulty retaining existing workers. There has been much ado about labor shortages and the impact of increased and extended unemployment benefits, but the data show that there is a much more nuanced story. First, there is a large mismatch between the talent in-demand and the talent available to work. As of May (most recently available data at time of writing), there were 104,400 people unemployed in the San Diego region and more than 115,000 job openings. However, the top hiring industries are Administrative and Support Services, Professional Services and Manufacturing industries (nearly 40 percent of unique postings), whereas the bulk of the unemployed come from Leisure and Hospitality.

Second, there are record numbers of workers quitting their jobs. The Bureau of Labor Statistics measures the proportion of workers who voluntarily leave their job relative to total employment. This “quit rate” sat at 2.5 percent in May 2021 after falling from 2.8 percent in April—the highest ever recorded. The Conference Board survey’s labor market differential, another measure of views on whether jobs are plentiful or hard to get, vaulted from 36.9 in May 2021 to 43.5 in June. That is the highest level since 2000.

All this quitting not only reflects confidence in the availability of work, but also the changing needs and desires of workers. The San Diego Association of Governments surveyed both employers and employees earlier this year and found that only 36 percent of employers expect to have one or more employees working from home at least one day per week. Meanwhile 44 percent of employees surveyed expect to work from home an average of 1.2 days per week. This difference in expectations partly reflects differences in opinion of how remote work has impacted productivity—only nine percent of employers reported increased productivity during the pandemic versus 48 percent of employees.

Flexibility will be key to keeping and attracting the best and brightest of workers. Perhaps the companies EDC surveyed understand this better than most, as they indicated both improved efficiencies from, as well as increased planned future utilization of, remote work technologies in June compared to April.

Investing in supply chains locally, binationally

Hiring challenges are also impacting supply chains globally. Companies reported a sharp decrease in the accessibility and reliability of their suppliers and vendors. Here, BRI fell from 54.7 in April to a categorical low of 26.5 in June. This corroborates the headlines regarding shortages in lumber and microchips, which has in turn stalled production of higher end goods and led to spikes in commodity prices and other item such as used cars. A lot of these supply chain disruptions are temporary in nature, directly linked to safety measures and restrictions associated with pandemic (this is why longer-term inflation expectations remain stable).

Ports and businesses across the country have experienced ongoing shortages of labor, containers, truck chassis, and more; shipping vessels have been forced to wait in harbors, in some cases for more than two weeks. This global traffic jam has impacted schedule reliability so profoundly it has forced companies to revisit the ways in which they manage risk. Many companies have moved from a just-in-time strategy to just-in-case. This means firms now keep additional inventory on hand, anything from raw materials to the final product. The lack of supply and rising costs have disproportionately impacted small and mid-market suppliers and buyers. This has resulted in direct capital investment from smaller buyers into smaller suppliers to stabilize supply chains and build necessary redundancies.

The pandemic-induced constraint on the movement of goods has only exacerbated trends from the past few years. Trade wars, changing consumer behavior, and e-commerce were already disrupting global supply chains, all of which has highlighted the strategic importance of supply chain management as well as the region’s bi-national assets. The Cali Baja Binational Mega Region is already vertically integrated in Manufacturing, and a warehousing boom in Otay Mesa is increasing capacity for goods coming via land and sea. Cali Baja is an ideal location for companies that want to move operations closer to home but maintain a binational advantage. Continued investment in trade infrastructure, such as our ports of entry and direct route service, will further cement Cali Baja as a binational innovation hub.

The return to office will be in a lab

Back in April, companies indicated a modest desire to increase their physical footprint upon returning to the office. However, companies appear to be less sure as the return approaches. In June, companies expressed plans for a net reduction of space, but a deeper dive into the responses reveals that it is demand for office space that is waning. In fact, there is increasing demand for commercial space—life sciences companies in need of laboratory space. This reflects the influx of investment and rapid hiring we are seeing in these industries, as they lead the fight against the global pandemic. Fortunately, there is nearly 10 million square feet of industrial and flex space across San Diego County currently available for lease or purchase that could potentially accommodate this demand. Current hot spots include Sorrento Valley, Vista, and Otay Mesa; Downtown San Diego is also building capacity rapidly.

The headline story is a positive one for San Diego’s economy, but sentiment is far from identical across business sizes and industries. For example, small companies with fewer than 50 workers logged BRI of 53, which is modestly in expansionary territory, while companies with 250 or more employees measured an index value of 63.7. This makes sense, because San Diego’s Leisure and Hospitality businesses tend to be smaller establishments and were the hardest hit during the pandemic. While companies are enthusiastic to get back to full capacity and add workers, it will likely take a few more months for supply chains and the labor market to normalize again. The pandemic is a generational disruption with widespread ramifications, accelerating several trends already underway, including how and where people are willing to work.

Stay tuned for more on San Diego’s changing business landscape. EDC will be back every other month with more trends and insights. For more data and analysis visit: sandiegobusiness.org/research.

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Meet the companies: Advancing San Diego, Manufacturing interns

By Kate Gallagher ,

Through our Advancing San Diego initiative, EDC provides San Diego-based businesses with paid interns in high-demand fields. This program targets companies with 100 employees or less, which comprise 98 percent of all businesses in San Diego, employ nearly two thirds of San Diegans, and account for 70 percent of job growth. A key issue for these companies has been a lack of time and resources to recruit the skilled talent necessary to continue their growth. Through the COVID-19 pandemic, these challenges were especially salient.

With the help of our staffing partner Manpower, between 2020 and 2021, EDC has provided 53 San Diego companies and non-profits with interns in the fields of software, engineering, and business.

Now, we’re excited to announce 14 more companies who have been selected to host Manufacturing interns in engineering technician and machinist roles this Summer. Interns are sourced from programs designated as Preferred Providers of Manufacturing Talent, with internships running from July to November 2021.

Please join us in welcoming our next cohort of Advancing San Diego intern hosts:

  1. American Lithium Energy is a company developing and manufacturing high performance, next generation lithium ion (Li-ion) batteries.
  2. Artience Lighting is an architectural lighting design and manufacturing company that brings beauty to spaces through tunable white technology as well as UVC disinfection technology.
  3. Bitchin’ Sauce is a family-owned and operated company that manufactures an almond-based dip.
  4. Diakont  Advanced Technologies is a leader in providing specialized services and solutions for the energy industry, primarily in the oil and natural gas, and nuclear industries.
  5. Discflo Corporation Inc. is a global pump manufacturer that sells industrial pumps into the “hard to pump market.”
  6. Drewfab is a family-owned machine shop that services several industries including the power generation, marine, automotive, and racing. The company does engineering, machining, fabrication, and 3D printing.
  7. Fuse Integration is a veteran-owned business that has earned recognition as an emerging leader in airborne, maritime, and ground networking. The company was founded with the noble cause of bringing the benefits of commercial human-centered design processes to first responder and military systems engineering.
  8. Left Coast Engineering offers full-service, electronic product design resources and specializes in custom electronic product design and rapid prototyping in the R&D space.
  9. Microtek is a bioengineering company that specializes in design, development, and fabrication of miniaturized devices, which are often medical in nature.
  10. Smartville Inc. is a rapid-growing renewable energy company that specializes in electric vehicle battery repurposing and lifecycle management.
  11. SurfDurt manufactures a natural, reef-safe sunscreen.
  12. Survival Systems International is a company in the safety lifeboat industry and holds 30 years of experience as a supplier of ballistic foam, fuel cell foam, and aerospace assemblies to the aviation community.
  13. The Broken Token designs and manufactures storage and organization solutions, component upgrades and accessories for the tabletop board gaming industry.
  14. Watershed Idea Foundry, Inc. is an additive manufacturing company specializing in the 3D printing of titanium medical devices

Hosting interns is an investment in the next generation of talent in San Diego. Through the Advancing San Diego internship program, local students gain valuable work experience while supporting our local small businesses. Students are paid $22 an hour and receive access to $500 in flexible funds to support their success in the workplace.

Introducing the Advancing San Diego Host Company Map: 

All small companies that have hosted interns through Advancing San Diego can be found on this interactive map!

Adaptive Launch Solutions

Aeromutable Corporation

ALD Technical Solutions LLC

American Lithium Energy

AndAlways

Artience Lighting

BeanStock Ventures

Benchmark Labs

Bitchin’ Sauce, LLC

BLKBOX Music

Boys & Girls Club of San Marcos

Chicano Federation of San Diego County

Clear Blue Sea

Deckard Technologies

Diakont Advanced Technologies

Discflo Corporation Inc.

DREWFAB

Ectron Corporation

Educational Vision Technologies

Eton Bioscience, Inc

EUCO – Electric Unicycle Collective

Family Proud, Inc.

Fenix Space, Inc.

Fuse Integration

GigaIO Networks

Impact Resources, Inc

Intellecy Inc.

KIGT Inc.

Lazy Surfer

Learn Academy

Left Coast Engineering

MedCrypt

MemComputing, Inc.

Memjet US Services, Inc.

Meri Consulting Services

Microtek

Misadventure & Co.

Nanome

ObjectSecurity LLC

Omni2Max, Inc.

Paragrine Systems

Perspectium Corp.

Programination

Qualer

Rady Children’s Institute for Genomic Medicine

Reveal Biosciences

reVessel

San Diego Loyal Soccer Club

SeodaPop

Smartville Inc.

SurfDurt

Survival Systems International

Tag-N-Trac

The Broken Token

The Commons XR

Tourmaline Wireless, LLC

Trabus Technologies

Traits AI, Inc.

Voltera

Watershed Idea Foundry, Inc.

Welfie

WithHealth, Inc.

ZUM Radio, Inc

  • Adaptive Launch Solutions
  • Aeromutable Corporation
  • ALD Technical Solutions LLC
  • American Lithium Energy
  • AndAlways
  • Artience Lighting
  • BeanStock Ventures
  • Benchmark Labs
  • Bitchin’ Sauce, LLC
  • BLKBOX Music
  • Boys & Girls Club of San Marcos
  • Chicano Federation of San Diego County
  • Clear Blue Sea
  • Deckard Technologies
  • Diakont Advanced Technologies
  • Discflo Corporation Inc.
  • DREWFAB
  • Ectron Corporation
  • Educational Vision Technologies
  • Eton Bioscience, Inc
  • EUCO – Electric Unicycle Collective
  • Family Proud, Inc.
  • Fenix Space, Inc.
  • Fuse Integration
  • GigaIO Networks
  • Impact Resources, Inc
  • Intellecy Inc.
  • KIGT Inc.
  • Lazy Surfer
  • Learn Academy
  • Left Coast Engineering
  • MedCrypt
  • MemComputing, Inc.
  • Memjet US Services, Inc.
  • Meri Consulting Services
  • Microtek
  • Misadventure & Co.
  • Nanome
  • ObjectSecurity LLC
  • Omni2Max, Inc.
  • Paragrine Systems
  • Perspectium Corp.
  • Programination
  • Qualer
  • Rady Children’s Institute for Genomic Medicine
  • Reveal Biosciences
  • reVessel
  • San Diego Loyal Soccer Club
  • SeodaPop
  • Smartville Inc.
  • SurfDurt
  • Survival Systems International
  • Tag-N-Trac
  • The Broken Token
  • The Commons XR
  • Tourmaline Wireless, LLC
  • Trabus Technologies
  • Traits AI, Inc.
  • Voltera
  • Watershed Idea Foundry, Inc.
  • Welfie
  • WithHealth, Inc.
  • ZUM Radio, Inc

For our next round of internships, we will be recruiting small healthcare companies interested in hosting students from medical assistant programs. Applications to host interns in these fields will open in Fall 2021.

If your company is interested in hosting students in the next round, sign up here receive program announcements.

 

San Diego’s Changing Business Landscape: Turning the pandemic corner

By Eduardo Velasquez, Research Director,

Welcome to the second edition in EDC’s Changing Business Landscape Series, which will be published bi-monthly in the San Diego Business Journal and here on our blog. If you missed the first edition, read it here.

Surveying the changing business landscape in San Diego

The COVID-19 pandemic has impacted every facet of life, including how businesses operate. Companies in every industry are rapidly re-evaluating how they do business, changing the way they interact with customers, manage supply chains and where their employees are physically located. This has massive immediate and long-term implications for San Diego’s workforce and job composition, as well as regional land use decisions and infrastructure investment.

To identify evolving trends in local business needs and operations, ensuring their ability to grow and thrive in the region, EDC is surveying more than 200 companies in the region’s key industries on a rolling basis throughout 2021 to monitor and report shifts in their priorities and strategies. In addition, EDC constructed the San Diego Business Recovery Index (BRI)—a sentiment index to measure companies’ perceptions of current conditions, as well as expectations for the future across several factors such as business development, employment and commercial real estate needs. Review the BRI concept and methodology here.

These insights will help inform long-term economic development priorities around talent recruitment and retention, quality job creation and infrastructure development. Companies are surveyed on several topics, with varying emphases in each wave.

Here are three key findings from the second wave of surveying conducted in April 2021:

  1. The worst of the pandemic is behind us. Companies are very bullish about the next six to 12 months and, as a result, plan to accelerate hiring.
  1. San Diego’s innovation cluster is (mostly) booming. Life Sciences companies lead the way while Cyber and Aerospace firms are still working through pandemic-related challenges.
  1. Companies are seriously reevaluating their space needs. Smaller firms are looking to expand their footprint, while traditional Tech companies may be scaling down.

The worst is behind us

San Diego companies indicated that they think the worst of the pandemic has passed. With a BRI of 58.9 in April, regional firms noted that they plan to hire or rehire workers at a slightly faster pace than they have up to this point, while also expanding remote work capabilities going forward.

Last month’s index reading reflects bullish assessments of, both, present conditions (the present conditions subindex registered a value of 56.1) and expectations for the future (subindex of 65.4). Companies noted some lingering effects from a full year in lockdown, including difficulties with business development and job losses, and neutral to slightly negative feelings on remote work over the past year. Nonetheless, firms reported bright views on the current state of the regional economy and noted that San Diego businesses and key industries have adapted to the pandemic better that those in peer regions.

Regional companies were even more upbeat when it came to expectations for the future. All of the index’s expectations subindex values were north of 50, and companies overwhelmingly believe that the regional economy will have improved significantly in the next six months (subindex of 72.7) and even more so within the next 12 months (subindex of 86.2). This is important because many companies make decisions today based on their assessments of business conditions in the near future.

Most companies shared in the optimism, but to varying degrees. Small companies with fewer than 50 employees that were hardest hit during the pandemic held slightly dimmer, though still generally positive, views than their larger counterparts. In particular, smaller firms cited ongoing difficulties accessing new customers, managing suppliers and vendors, and hiring and retaining workers. Even so, assessments of current earnings trends were only slightly negative, and small firms held a sunny disposition when it comes to the current state of the San Diego economy and business climate.

Interestingly, however, companies with fewer than 50 workers had the highest level of optimism for the future across business size cohorts, which could signal an inflection point for the pace of hiring in the coming months. This bodes especially well for the jobs recovery heading into the second half of 2021, as 96 percent of San Diego’s businesses have fewer than 50 employees and small businesses have historically accounted for roughly half of all job growth.

San Diego’s innovation cluster is (mostly) booming

San Diego’s innovation cluster overwhelming expressed optimism entering 2021, as companies shifted toward meeting the demand for life-saving technologies, treatments and personal protective equipment leading to record venture capital investment and renewed job growth. However, a closer look reveals mixed results within the cluster. Industries like Cleantech, Software and Biomedical Device producers all held especially confident views (BRIs in the mid-60s), while Telecommunications, Cybersecurity and Aerospace each signaled ongoing challenges from the pandemic (BRIs ranging from 43 to 50).

Biotech and Biomedical Device manufactures hold strong expectations for the regional economy, with plans to increase their headcount and real estate footprint during the next year. In addition, they expect to increase their use of remote work over the same time frame. While this may seem contradictory, it reflects the modifications and enhancements that many companies are making to protect workers on the production floor, as well as those necessary to attract workers back into the office. Workers want to feel safe once back on company property and they also want to maintain the flexibility that working remotely has provided. To accommodate these needs, employers are preparing for a flexible or hybrid workplace once reopen. In addition, many companies are reconfiguring and even seeking new space to keep workers spread out, adapting space to be more comfortable in a post-pandemic environment. This includes ‘hoteling’ and ‘neighborhooding’ models to help reduce the flow of people and simultaneously allow teams to collaborate in person. Companies are preparing for a gradual return to the office to give workers adequate time to warm up to pre-pandemic routines. More on that below.

While Telecommunications and Cybersecurity firms all share this optimistic regional economic outlook with their Life Sciences peers, these industries are much more subdued about their own expansion plans for the next year. On net, they see their needs for space as unchanged, with some modest reductions in hiring compared to typical years. This reflects the challenges these industries have faced during the pandemic, namely with respect to increased difficulty with sales, hiring and, somewhat surprisingly, inefficiencies from remote work. Aerospace has not yet recovered from the initial impacts of the pandemic, still reeling from significant hits to both sales and employment, as well as disruptions in their supply chains from lockdowns and restricted international travel and transportation.

Smaller firms are looking to add space

After more than a year of implementing remote work and reduced onsite staffing, companies are beginning to plan for a return to the office. However, how much space awaits those returning to the office will vary by industry as well as firm size.

It is small- and medium-sized firms that are looking to expand their commercial real estate footprint over the next year rather than larger firms. In fact, the proportion of firms surveyed that expect to increase space by 10 percent or more of their current square footage is nearly double that of those planning to reduce their current space by 10 percent or more (16 percent to 8.4 percent, respectively). However, when you factor in the size of each company, those planning significant real estate growth represent only three percent of the jobs compared to 13 percent of jobs for those looking to reduce space significantly (companies surveyed collectively employ nearly 200,000 workers).

When we look at the innovation companies, we see some stark differences between traditional Technology and Biotechnology industries. Eight percent of respondents representing 22 percent of jobs plan to reduce their space by more than 10 percent—mostly in the Telecommunications industry. However, nearly 26 percent of respondents representing 41 percent jobs expect to add modest amounts of space less than 10 percent of their current footprint. Here many respondents are in the Biomedical Device and Biotech industries and likely in need of additional production or lab space.

Understanding these evolving and distinct trends is important because San Diego’s innovation cluster is leading the region out of this pandemic-driven economic downturn, just as it has in each past downturn. Each job added in the innovation cluster supports another two jobs elsewhere in the economy. Yet, these innovation companies do not necessarily need to be physically located in San Diego in order to operate. Making sure these companies have the infrastructure and access to talent that they need to flourish is critical to our region’s prosperity.

Stay tuned for more on San Diego’s changing business landscape. EDC will be back every other month with more trends and insights. For more data and analysis visit: sandiegobusiness.org/research.

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Employee ownership and why it might be a good fit for your business

By Taylor Dunne,

On April 20, San Diego Regional EDC hosted the second in our Right Recovery Town Hall series underwritten by San Diego Gas & Electric. With a focus on employee ownership as a means of business resilience, EDC partnered with San Diego Workforce Partnership and invited experts and employee-owned companies to offer their perspectives.

Why employee ownership?

As San Diego recovers from the COVID-19 pandemic and subsequent economic downturn, EDC is hosting a series of events that highlight employer-driven, market-based strategies for creating a more resilient economy, deeply rooted in the region’s inclusive growth agenda.

Employee ownership is a business model that takes many forms and can support San Diego firms in getting this recovery right. The transition to employee ownership offers an effective and meaningful way for businesses to retain a dedicated workforce, take advantage of a significant tax benefit, and ensure wealth-building that will lead to more thriving households across the region.

Together with partners, we aim to raise awareness about this option for a wide range of businesses (from restaurants to major corporations, and everything in between). This is especially important as baby boomers own about half of all privately-held businesses in the United States; and as this population reaches retirement age, we will see a massive ownership changeover of locally-held businesses, whether through sale, M&A, IPO, family transition or worse, closure.

Employee ownership benefits all who are involved:

  1. Owners receive a competitive sale price and can exit the company knowing that their legacy and values will live on through their employees.
  1. Workers receive better compensation and benefits, and feel the success of the company directly contributes to their own financial success, which oftentimes results in more engaged and harder working employees.
  1. The business sees higher productivity, largely due to the new sense of responsibility held by the employees.
  1. The community sees wealth building, reinvestment, and a sense of dependability as businesses remain anchored to the area.

What we learned from a brewer, a staffing agency, and a music staple

At the virtual event on April 20, audience members heard from Mitch Miller, a Senior Consultant at The Beyster Institute who shared the Beyster story along with a data-driven case for employee ownership. A 2019 Rutgers study showed that Americans with part ownership in their company approaching retirement age had ten times more wealth than those who did not have part ownership. Additionally, a National Center for Employee Ownership 2017 study showed that companies with an Employee Stock Ownership Plan (ESOP) were associated with 92 percent higher median household net wealth.

Sandie Taylor, director of people operations at Modern Times Beer, spoke on the employee perspective—describing increased employee engagement and a ‘we’re in this together’ culture as the company strategized ways to keep the lights on during the pandemic. An ESOP since July 2017, Modern Times’ management feels like they can speak more openly with their teams. Sandie shared, “this means a kind of trust and transparency” within our staff. Ultimately, the innovation and commitment of team members helped the company remain above water during the worst of the 2020 economic recession.

Seth Stein, CEO of Eastridge Workforce Solutions, explained how his company has developed digital tools to help employees watch their investment grow, so they can better understand and conceptualize the benefits of employee ownership in real-time. He shared that Eastridge’s voluntary turnover rate is down 57 percent, while involuntary turnover is down 40 percent—a striking decline he attributes to the employee ownership model. Seth also shared that the company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) was up seven percent in 2020, even amid an economic recession. “[Employee ownership] has been a game changer for our company, and I am really excited to see what happens next,” he said.

Our third employee-owned company is a household name that made history with this business model, becoming the first (reported) multi-national company to offer ownership to ALL employees, domestic and international. Taylor Guitars made waves when it transitioned to an ESOP in January 2021 after much deliberation to ensure that the move would maintain the familial culture that founders Bob Taylor and Kurt Listug had spent decades instilling. CFO Barbara Wight was honest with the audience about the legal and financial legwork that went into making this happen, largely accomplished due to the help of Chartwell Financial Advisors, who she highly recommends to large companies hoping to transition to an ESOP. She also shared that the significant tax benefits that come with employee ownership helped Taylor Guitars make the transition as lucrative as possible.

Finally, our audience heard from Project Equity and San Diego Workforce Partnership on resources available to San Diego companies. The two organizations are currently working together with Mission Driven Finance, Alliance Healthcare Foundation, and BFed to offer flexible capital for businesses transitioning to employee ownership. San Diego Workforce Partnership will be hosting a workshop on June 17 at 10 a.m. to help businesses identify specific needs and access these funds. You can register for that event here. Other resources for transitioning to employee ownership are listed below.

Resources and contacts for your business

Chartwell Financial Advisors
Greg Fresh, Managing Director, Head of Corporate Finance
Email: greg.fresh@chartwellfa.com
Phone: 612.230.3125

Project Equity
Alison Lingane, Co-founder
Email: alison@project-equity.org

Evan Edwards, Director of Strategic Partnerships and Business Engagement
Email: evan@project-equity.org

San Diego Workforce Partnership
Email: business@workforce.org
Phone: 619.28.2900 (press 4)

You can watch the full event here: