This February alongside San Diego Councilmember Raul Campillo and program underwriters JPMorgan Chase & Co. and Procopio, World Trade Center San Diego (WTCSD) welcomed the sixth cohort of San Diego companies to its MetroConnect export accelerator.
Since the program’s debut in 2015, the 80 small- and medium-sized (SMEs) companies in MetroConnect have collectively added 269 new regional jobs, signed more than 543 new contracts, and set up 22 new overseas facilities. On average, cohort companies grow their exports by an average 63 percent and revenues by 40 percent as part of the program. Notable alumni include Blue Sky Network, Aira (acquired by Blue Diego Investment Group), Scientist.com, Modern Times, Dr. Bronner’s, Cypher Genomics (acquired by Human Longevity Inc.), Planck Aerosystems, Bitchin’ Sauce, White Labs, and dozens more.
Now, WTCSD is pleased to welcome the newest group of MetroConnect companies representing the diversity of San Diego’s innovation economy. Below, meet the Tech companies:
About: Benchmark Labs is a Techstars-backed agricultural and IoT technology company that uses IoT sensors to assist farmers in implementing more sustainable practices and help them save natural resources by using in-situ environmental forecasts.
Hopes for program:Target market research, e-commerce strategy
About: GigaIO democratizes Artificial Intelligence and High-Performance Computing architectures by delivering the elasticity of the cloud at a fraction of the price.
Hopes for program: Identify distribution partners in target markets, create strategic export plan
About: Primo Energy was founded in 2013 to design and build hybrid distributed energy platforms using wind, solar, and battery storage. Distributed power can provide energy for remote locations, island territories, disaster relief, and back up power, and urban areas that have no power available. The company has installations across the globe, from the Bahamas to the Arctic and from California to Spain.
Hopes for program: Identify distribution partners in target markets, create strategic export plan
About: The Good Face enables companies to formulate, create, launch, and grow demand for transparent, compliant, and competitive products. Its platform features the fastest growing formulation and regulatory compliance SaaS solution, Good Face Formulator, which is used in R&D and catalog management by brands, manufacturers, and retailers in personal care and cosmetics. The Good Face Formulator has been adopted globally (France, Switzerland, UK, Canada, USA, Brazil, Philippines, S. Korea, Japan, China, Australia) and its customers include industry leaders such as L’Oreal, Target (Private Label), Grove Collaborative, JC Penney, and KDC-One.
Hopes for program: Determine target markets, identify effective channel partners
About: Trabus is a minority-owned, service-disabled veteran-owned small business (SDVOSB) with portfolios including Wireless Technologies, AI & Data Science, Cybersecurity, Maritime Transportation, and Environmental Informatics.
Hopes for program: Identify effective channel partners, adapt products for international markets
Next up for MetroConnect VI
The cohort will gain access to a suite of resources to support expansion into international markets, including executive workshops, flight discounts, language translation, and up to $30,000 in grant funding.
“Programs like MetroConnect help ensure the world knows just what San Diego is made of—innovative, high-impact products and services across a wide range of industries,” said San Diego City Councilmember Raul Campillo. “I’m proud to support and welcome WTCSD’s new cohort, and look forward to seeing the companies’ impact on a global scale.”
Interested in growing your business internationally?
World Trade Center San Diego (WTCSD)’s MetroConnect awards companies with matching funds, connects them with relevant export-oriented partners and resources, and arranges specialized workshops to increase their knowledge and awareness of global export trends and regulations.
Since the program’s debut in 2015, the 80 small- and medium-sized MetroConnect companies have collectively added 269 new regional jobs, signed more than 543 new contracts, and set up 22 new overseas facilities. Notable alumni include Scientist.com, Dr. Bronner’s, Cypher Genomics (acquired by Human Longevity Inc.), Planck Aerosystems, White Labs, and more.
Now, WTCSD is pleased to welcome the newest group of MetroConnect companies representing the diversity of San Diego’s innovation economy. Below, meet the Life Sciences companies:
Meet the four Life Sciences companies going global with MetroConnect:
Description: Nano PharmaSolutions’ NanoTransformer™ technology turns insoluble drug molecules to nanoparticles so they can be more effectively absorbed.
Key bottlenecks: Building out international marketing plan, outreach to identify prospects
Description: iAssay®’s Point-of-Care Test (POCT) diagnostics solution tests patients wherever they are. Multi-tech/format POCT cartridges commercialized by hundreds of companies are used with iAssay® designed adaptors. Its AWS Cloud validates devices before testing can start, captures raw data, and offers time/date stamped results available through internet portals.
Key bottlenecks: Building out international marketing plan, outreach to identify prospects
Description: As manufacturers deal with variable raw material quality, rising costs for energy, and increased quality standards for their finished products, Solecta helps improve separations processes through membrane solutions like microfiltration, ultrafiltration, nanofiltration, and reverse osmosis filtration products.
Key bottlenecks: Effective outreach to potential clients, targeted market research, local language barriers, understanding of local regulatory requirements
What’s next?
The 15 MetroConnect VI companies will gain access to a suite of resources to support expansion into international markets, including executive workshops, flight discounts, language translation, and up to $30,000 in grant funding.
“Programs like MetroConnect help ensure the world knows just what San Diego is made of—innovative, high-impact products and services across a wide range of industries,” said San Diego City Councilmember Raul Campillo. “I’m proud to support and welcome WTCSD’s new cohort, and look forward to seeing the companies’ impact on a global scale.”
Interested in growing your business internationally?
In Q2 2022, here’s what you need to know about San Diego’s global trade, investment, and engagement:
The crisis in Ukraine and its impact on San Diego businesses
The conflict in Ukraine has major implications for Russia’s relationship with Western nations and the global economy—and has already led to significant changes in the regulation of trade. The WTCSD team sat down with San Diego trade attorney Bob Bowen and law firm Procopio to learn how San Diego companies—particularly in energy, defense, and dual-use technologies—can prepare for these changes.
SIDUS Solutions strengthens brand in Europe, Asia with MetroConnect
San Diego’s SIDUS Solutions, which generated 15 percent of revenue from exports but faced canceled trade shows due to COVID-19, needed to find new ways to connect with its international customers and retain revenue. Leveraging MetroConnect’s expert workshops, translation tools, and $5,000 grant, SIDUS strengthened its digital presence to expand brand awareness and build relationships in target overseas markets.
How Tijuana can address San Diego’s battle for talent
When your San Diego business needs to find qualified digital talent in a competitive market, consider staying regional and look to Tijuana. Just 20 minutes south of San Diego and in the same time zone, firms like Thermo Fisher Scientific are already leveraging the benefits of a binational team, including visa flexibility, easy sample transport, and proximity for culture-building and quality assurance.
What San Diego companies need to know about the crisis in Ukraine
The situation in Ukraine has devolved rapidly over the past week and a half, in a conflict that has shaken the foundations of the post-Cold War world order. What happens in Ukraine has major implications for Russia’s relationship with Western nations and the global economy—and has already led to significant changes in the regulation of trade. It is important for San Diego companies—particularly in energy, defense, and dual use technologies—to be aware of these changes and prepare accordingly.
Our team spoke withBob Bowen, a San Diego trade attorney who, throughout his career, has worked at major defense, aerospace, and tech companies, and helped them navigate the complexities of global trade and compliance. He points out the following aspects of new U.S. export control laws in response to the evolving situation in Ukraine:
The U.S. Export Administration Regulations (EAR) now apply to a broader range of items destined for Russia or Belarus, including items manufactured outside of the U.S. with components subject to the EAR
The EAR now require U.S. Department of Commerce export licenses for items destined for Russia or Belarus that previously did not require such export licenses
This includes items subject to the EAR that are intended for Government of Russia end-users or users at state-owned enterprises in Russia
There is a policy to deny applications for such export licenses
Nearly all items subject to the EAR are prohibited from going to military end-users, or for military end-uses, in Russia or Belarus without U.S. Department of Commerce export licenses (which are subject to a policy of denial)
Items subject to the EAR are prohibited from going to the Donetsk and Luhansk regions of Ukraine without U.S. Department of Commerce export licenses (which are subject to a policy of denial)
The Entity List of individuals, companies, and organizations in Russia and Belarus who are now prohibited from participating in transactions subject to the EAR has recently grown and is likely to continue growing
San Diego-headquartered law firmProcopio lists additional guidance to help ensure U.S. companies comply with federal law:
This is going to help you understand whether an export license is required for the product
It is highly unlikely that you will be able to secure license exceptions for Russia, Belarus, and the Donetsk and Luhansk regions of Ukraine at this time
Restricted entities include individuals, so your company needs to ensure that hiring processes properly screen and keep up with the latest version of the Entity List on the Bureau of Industry and Security (BIS) website
Foreign Direct Product (FDP) Rules extend the reach of US export regulations to include foreign-produced items comprising US-origin content
San Diego companies should be screening customers and evaluating for prohibited end-uses. Companies may request a Letter of Assurance from a foreign customer if needed
As always, it is critical that companies properly classify export itemsANDscreen all parties to a transaction.
As the war in Ukraine unfolds, we are cognizant of and compassionate toward those personally affected and their loved ones. More than a million Ukrainians have already fled into neighboring countries, with hundreds of thousands more expected in the coming days. As the world grapples with this humanitarian crisis, there are organizations you can support to help make a difference:
Locally, the San Diego branch of the International Rescue Committeeprovides opportunities for refugees, asylees, victims of human trafficking, survivors of torture, and other immigrants to thrive in the United States via immigration assistance and family reunification, financial literacy, and free English classes.
Charity Navigator is a resource to help you identify and evaluate 501(c)(3) foundations around the world to ensure that your charitable contributions are responsibly deployed.
In Q1 2022, here’s what you need to know about San Diego’s global trade, investment, and engagement:
WTCSD’s MetroConnect to help 15 new SMEs go global
WTCSD welcomed the sixth cohort of companies named to its MetroConnect export accelerator, made possible by JPMorgan Chase & Co., Procopio, and more than a dozen additional sponsors. These 15 small and mid-sized companies represent a diverse cross-section of San Diego’s economy, from a Bay Area tech transplant to a hard kombucha brewer to an environmental science firm and many more. In its first five years, MetroConnect has helped San Diego firms grow exports by an average 63 percent.
Blue Sky Network turns $5K grant into 36% export increase
Satellite-based communications and fleet management company Blue Sky Network encountered COVID-19-related supply chain issues and a substantial drop in revenue from aviation and oil and gas customers. Upon joining MetroConnect, it leveraged the program’s $5,000 grant, translation software, and market intelligence resources to generate a 36 percent increase in exports. Plus, as a top performing company, Blue Sky Network pitched—and won—MetroConnect’s Grand Prize Pitchfest, netting an additional $25,000 grant to support continued expansion into Brazil and other key markets.
White Labs reduces Australian customs holds by 84% with MetroConnect
A yeast and fermentation innovator, San Diego-based White Labs needed support navigating customs and logistics regulations for exporting live cultures to target countries such as Australia, where it continued to encounter product returns. Equipped with expert knowledge from MetroConnect workshops, new partners, and access to critical tools, White Labs tackled its biggest logistics challenge—decreasing its annual customs holds in Australia by 84 percent since the start of the program.
Together with San Diego Councilmember Raul Campillo and program underwriters JPMorgan Chase & Co. and Procopio, World Trade Center San Diego (WTCSD) welcomed its sixth cohort of San Diego companies in its MetroConnect export accelerator.
Since the program’s debut in 2015, the 80 small- and medium-sized (SMEs) companies in MetroConnect have collectively added 269 new regional jobs, signed more than 543 new contracts, and set up 22 new overseas facilities. On average, cohort companies grow their exports by an average 63 percent and revenues by 40 percent as part of the program. Notable alums include Blue Sky Network, Aira (acquired by Blue Diego Investment Group), Scientist.com, Modern Times, Dr. Bronner’s, Cypher Genomics (acquired by Human Longevity Inc.), Planck Aerosystems, Bitchin’ Sauce, and dozens more.
Now, WTCSD is pleased to welcome the newest set of MetroConnect companies representing the diversity of San Diego’s innovation economy.
In a competitive application process, MetroConnect judges from Biocom, Connect, CMTC, U.S. Commercial Service, Procopio, and Mitsubishi Electric selected the sixth cohort based on interest in new markets, interest in targeted metro markets, assessed impact of funds, current international traction, and more.
“I’m proud to support and welcome WTCSD’s new cohort, and look forward to seeing the companies’ impact on a global scale,” said San Diego City Councilmember Raul Campillo. “Programs like MetroConnect help ensure the world knows just what San Diego is made of—innovative, high-impact products and services across a wide range of industries.”
Why go global?
Against the backdrop of pandemic-driven supply chain disruption and small business closures, it is more important than ever to support SMEs in building resilience by going global.
In 2021 alone, San Diego exported more than $22 billion in goods overseas, as well as billions more in services like software, cybersecurity, engineering, and research. SMEs produce 92 percent of those goods—driving home the importance of programs like MetroConnect.
“As the San Diego economy continues to recover from the pandemic, we are optimistic about the future. We’re seeing the return of international flights to key markets; firms settled into their remote and tech-centered environments; and strong job growth across sectors,” said Nikia Clarke, executive director of WTCSD. “Thanks to JPMorgan Chase and Procopio, the MetroConnect program will continue to build on this momentum and help ensure San Diego’s small and mid-sized businesses have the tools needed to weather future economic downturns, grow quality jobs, and share San Diego’s life-changing innovation with the world.”
Next up for MetroConnect VI
The cohort will gain access to a suite of resources to support expansion into international markets, including executive workshops, flight discounts, language translation, and up to $30,000 in grant funding.
“Since its launch, the City of San Diego has been a proud supporter of MetroConnect and the nearly 100 businesses it has helped grow internationally,” said San Diego Mayor Todd Gloria. “As Mayor, I’m committed to supporting San Diego’s small businesses on our road to recovery; and international connectivity is an important tool in building economic resilience.”
Interested in growing your business internationally?
Like we do every year, our team spent the last few months of 2021 working with EDC’s executive committee, board, and investors to establish annual goals that are informed by current economic realities, led by employers, and have measurable outcomes that contribute to prosperity and competitiveness across the binational region. As San Diego emerges from a global pandemic to an economy full of contradictions—strong job growth, eye-watering VC numbers, and massive capital investment as well as widespread labor shortages, small business closures, and housing prices almost 30 percent higher than 2019—it is abundantly clear that smart economic development is inclusive economic development.
In 2021, EDC reframed our organizational goals around these fundamental building blocks of a strong economy—quality jobs, skilled talent, and thriving households—and committed to working with and through our investors to accelerate progress towards these Inclusive Growth goals. In 2022, resilience means connecting more people to innovation industries; competitiveness means more San Diegans have the skills the economy needs; and prosperity means that working families can afford to live here. Please find EDC’s 2022 goals outlined below.
JOBS
Goal: The region needs to create 50K quality small business jobs by 2030.
EDC will contribute to this goal in 2022 through:
Industry Insight: Track regional business sentiment and economic resilience via regular research publications, and complete AI industry series.
Business Services: Execute 250+ business expansion, attraction, and retention projects and support major mixed-use projects, leading to 5,000 quality jobs. Leverage the Life Sciences Task Force to establish a “one-stop-shop” framework for expansion support for Life Sciences industry and major development projects.
Goal: The region must create 20K degreed and credentialed workers per year by 2030.
EDC will contribute to this goal in 2022 through:
San Diego: Life. Changing.: Communicate opportunities for diverse, skilled talent in San Diego—especially to strategic competitive markets by enhancing Life Sciences recruiting tools.
Advancing San Diego: Maintain employer working groups and network of 40+ Preferred Providers for high-demand occupations, update and release regular talent demand reports, and place 80+ Healthcare and Life Sciences interns.
HOUSEHOLDS
Goal: The region must create 75K newly thriving households by 2030.
EDC will contribute to this goal in 2022 through:
Anchor Collaborative: Set shared regional procurement goals for region’s largest purchasers, identify $100 million in new small business spend, and create supplier navigation map.
Global Identity: Advance San Diego’s global agenda, support investments in critical infrastructure, and lead Mayoral Thriving Cities trade mission to international market.
Inclusive Growth: Create regional alignment on Inclusive Growth goals, launch downtown research and policy collaboration at UCSD’s Park & Market, and execute demonstration project on infrastructure needs.
EDC programs have real, measurable outcomes—supporting thousands of quality jobs, placing hundreds of interns and job seekers, and creating opportunities for millions of dollars of new contracts for small businesses. But ultimately, even the most driven and passionate team won’t substantially move the needle on these ambitious regional goals; we do not ourselves create jobs, train workers, draft policy, or build roads, high-rises, or housing.You do.
EDC can draft the roadmap, but you all—our region’s largest employers—are the only ones who will get us there, through working collaboratively and creatively to accelerate progress towards our regional 2030 goals. That is what “with and through” our investors means, and we at EDC can’t wait to get started.
World Trade Center San Diego (WTCSD), an affiliate of San Diego Regional Economic Development Corporation (EDC), cultivates a pipeline of export-ready firms, maximizes foreign direct investment (FDI) opportunities, and enhances San Diego’s global identity. A globally-connected economy creates quality jobs and makes the San Diego region more prosperous, competitive, and resilient – especially crucial amid COVID-19 and its aftershocks.
As we look toward 2022, here are four key ways WTCSD helped make San Diego a more globally competitive, resilient region:
1. MetroConnect V helps companies go global, awards fifth winner
2021 was an exciting year for WTCSD’s MetroConnect export accelerator program as the fifth cohort of incredible small to mid-sized San Diego companies wrapped up participation in the program.
These companies received $5,000 grants to bolster their export initiatives and international expansion efforts. Amid a pandemic, companies needed more digital support services than ever to help navigate growing e-commerce needs during the pandemic. To support, WTCSD held a Digital Trade Series, which assessed each client’s needs and arranged one-on-one counseling sessions with contracted e-commerce experts.
Over the course of the program, one company stood out – with MetroConnect’s support, satellite-based communications and fleet management company Blue Sky Network generated a 36 percent increase in monthly recurring revenue in Brazil, as well as its largest order to date. To support this growth, the company hired seven new full-time employees. Ultimately, WTCSD crowned Blue Sky Network MetroConnect V’s winner and awarded it a $25,000 grant toward its international expansion goals.
Over the past five years of MetroConnect, 80 companies collectively leveraged $890,000 in export grants, resulting in a $95 millionnet increase in exports from the San Diego region.
2. WTCSD debuts a regional trade and investment strategy for 2025
In 2015, San Diego Regional EDC’s release of “Go Global: San Diego’s Trade and Investment Initiative,” launched the World Trade Center in San Diego, bringing regional companies and stakeholders together with a global vision. Throughout 2020 and early 2021, WTC engaged many of the same partners, and new ones, in an effort to gauge how the region measured up to it, more than five years later. This 2021 update analyzed the state of exports, foreign investment and VC, as well as the extraordinary impact of COVID. Through rigorous data analysis dozens of interviews with public and private-sector leaders, WTC synthesized a set of five key priorities the region should focus on over the next five years. Find out what they are here. Key findings include:
2020 saw $3 billion in foreign investment into San Diego
73 percent of investment into San Diego is in Life Sciences
San Diego exports $22 billion in goods each year
San Diego is a top 10 services exporter among U.S. metros
Heading into 2022, we expect to see FDI investment portfolios return to the same levels seen in 2019.
3. Export Small Business Development Center (SBDC) supports export and COVID-relief projects
Beyond MetroConnect, the Small Business Development Center (SBDC) at WTCSD provided 35 export-ready small companies with the support needed to navigate international goals, including exports, manufacturing support, and more.
In addition to expansion support, the Export Specialty Center continued to offer COVID-19 recovery resources at no cost, helping San Diego companies like Funki Adventures apply to Economic Injury Disaster Loan (EIDL), Paycheck Protection Program (PPP) 2nd Draw, Shuttered Venue Operators Grant, and City and County small business grants.
Finally, the Global Readiness Program saw a partnership between WTCSD and the University of San Diego help local small to mid-sized businesses secure STEP grants to grow the regional export pipeline.
4. WTCSD serves as a key source of market intelligence
WTCSD conducted a series of business surveys to better inform decision making of regional partners and affiliates. These included:
Corporate Travel Survey:
Survey of 12 large businesses and two non-profits in the region to better understand travel and budgets forecasts for the year ahead. This information was critical for the retention of existing service out of SAN and for the attraction of future direct flights. It found:
79 percent of respondents are willing to pay a premium to fly on a San Diego nonstop route versus flying out from Tijuana or Los Angeles
56 percent of respondents expressed a desire for nonstop service to Mexico City and Sao Paulo
EDC Changing Business Landscape Survey:
Survey of more than 100 business in the San Diego region, aimed at informing long-term development priorities, across business areas. It found:
14 percent of respondents currently import and/or export out of the Port of San Diego
24 percent of those surveyed would be interested in using the Port of San Diego if they provided service to the types of goods they ship
In December 2021, here’s what you need to know about San Diego’s global trade, investment, and engagement:
Blue Sky Network wins $25K MetroConnect V Grand Prize
WTCSD named Blue Sky Network, which provides satellite-based communications and fleet management solutions for aviation, maritime, and IoT customers, as the winner of the MetroConnect export accelerator program, now in its fifth year. Made possible through a grant from JPMorgan Chase & Co. and Procopio, Blue Sky Network will use the $25,000 award to expand its presence in Brazil and promote the launch of its new SkyLink product in global markets. ➝ Read More
MetroConnect VI application deadline extended to December 17
Last call: Want to take your business international, but need support? Apply for the MetroConnect export accelerator and a shot at $30,000 in grant funds, free translation software, discounted international flights, and hands-on consulting on expansion into international markets. Over the last five cohorts, WTCSD helped 80 small and mid-sized companies grow their exports by 63 percent, and total revenue by 40 percent on average. ➝ Read More
Is my company ready to export?
Exporting can help diversify your company’s customer base, derive more value from your product in international markets, and make your company more resilient. Bottom line: If your company has enjoyed domestic success and you want to take your business to the next level, WTCSD has summarized what you need to know in order to export. ➝ Read More
Welcome to the fifth 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 all past editions 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, 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 wave of surveying conducted in October 2021:
For software companies, the struggle is now real. They have been among the most optimistic industries surveyed, but now face similar challenges to other industries.
The market for skilled talent has never been hotter. A great convergence of talent needs is turning hiring difficulties into slower job growth.
Supply chain disruptions appear to be pinching profit margins. Input prices have risen for many companies, but most are reluctant to pass along higher costs to their customers and opting to sacrifice earnings for now.
The BRI took a step back in October to settle at 54.1, marking the second consecutive decline since June. The topline index value edged 1.2 points lower from August’s 55.3 but is 9.6 points off its June high of 63.7. The deterioration stems from weaker perceptions of present conditions, but slightly more hopeful views of the future helped keep the overall BRI in expansion territory.
Companies reported a slowing of both revenues and earnings. This comes after a period of record earnings in some industries but could also be the result of prolonged supply chain disruptions that have choked off necessary inputs and simultaneously prevented sales. Yet, businesses surveyed also expressed continued difficulty hiring and retaining workers, driving a significant slowdown in job growth.
For tech companies, the struggle is now real
Firms in industries with limited remote work capabilities, such as Healthcare and Aerospace, continued to express relatively pessimistic views. Joining this list are Information and Communications Technology (ICT) and Software companies, which up to now have been among the most optimistic industries surveyed.
Software companies signaled revenues have begun to fall, along with an even steeper decline in earnings. Supply chain disruptions play a role here, as San Diego is top 10 exporter of services. Limited availability of or access to key inputs, as well as travel restrictions, have hindered San Diego Technology companies from growing their businesses. Making matters worse, these businesses also expressed far greater difficulty finding people to hire compared to the summer months, which is driving a significant slowdown in job growth. Taken together, these headwinds led respondents to sour on the economy—both presently as well as future expectations for the next six months to a year.
ICT firms have also lost some faith in their current and future economic prospects. Companies in this vertical are facing even greater supply chain difficulties than Software firms. Business development and hiring pose far greater challenges than they did in the summer. Worse still, worker retention has become nearly impossible as a record number and a record rate of people quit their jobs in September.
The market for skilled talent has never been hotter
Talent recruitment and retention challenges have undermined employers since before the pandemic began. What is new is employers reported a sharp slowdown in job growth as workers drive a hard bargain. Not only are workers seeking higher wages and more flexible work arrangements, but employers find themselves competing across industry for an increasingly limited pool of skilled talent.
The top posted occupation in San Diego during the last year, outside of registered nurses, was for software developers and software quality assurance testers. There were more than 23,000 unique job postings for those occupations going back to October 2020. The top posting companies for these jobs are tech giants, such as Qualcomm and Apple, as well as startups receiving record venture funding. However, manufacturers comprised a formidable second with 4,514 unique positions during that time.
Manufacturing in San Diego has long been advanced—producing everything from jet engines to medical devices—so elevated demand for software developers working on unmanned aerial systems or DNA sequencing may not be all that surprising. Nevertheless, digging a bit deeper, we find the second most listed skill among Manufacturing job postings was for Teradata SQL, an open-source database management system. In fact, during the past 12 months, Manufacturing job postings that included Teradata SQL quadrupled and represent nearly 71 percent of all postings seeking that skillset. The median advertised annual salary for jobs requiring this skillset is $126,000, which is up 40 percent from a year earlier, and about $5,000 more than in either San Francisco or San Jose, and about $30,000 more than in Seattle.
The demand for skilled talent is rising rapidly and spreading across industries. Unfortunately, the supply of that talent has not kept pace. In fact, census data show an overall decline in the number of total degree holders in the region since 2017. A rising cost of living against a backdrop of increasing competition from “tech markets” across the globe poses a real challenge for local companies. With still more than 86,000 people unemployed, it has never been more important that the region invest in upskilling and building a pipeline of local talent to fuel San Diego’s recovery and future growth.
Supply chain disruptions appear to be squeezing profit margins
Supply chain disruptions and inflation continue to dominate headlines. While these challenges appear to be temporary, they are impacting consumers and the business decisions of local companies. Companies surveyed indicated supply chains are just as challenging now as they were in June. Furthermore, these challenges are directly tied to increases in input prices. This is leaking downstream into business development and sales, which employers, on balance, now rate as only slightly expansionary.
As such, some companies are considering passing along higher input costs as margins get squeezed from both sides. This decision largely depends on the magnitude of price increases that companies are facing themselves. Most companies are willing to absorb the bulk of increased costs when those increases are relatively small; tolerance for deeper margin cuts were much smaller. Only one in four companies indicated wanting to pass along at least half of those increased costs, where input prices have risen less than five percent. However, companies are nearly twice as likely (44 percent) to do so where input prices rose more than five percent—principally those in Manufacturing.
Passing along increased costs is a short-term strategy to a complex problem. As such, some companies are reevaluating their supply chains, not just in terms of suppliers but also the networks they rely upon to receive inputs or distribute products. Of the companies surveyed, only 14 percent indicated currently using the Port of San Diego. However, nearly double (27 percent) expressed a willingness to do so in the future.
The survey results continue to reflect an uneven recovery across industries. The reported trends in employment line up squarely with recent jobs reports for the region. In total, San Diego establishments added an underwhelming 3,600 jobs to the economy in September. The sharp slowdown in job growth helps explain the upward shift in remote work adoption as well as future expectations for remote work accommodations. There are many surveys of workers, both locally and nationally, indicating that desires for flexibility and remote work are strong and sticky. Despite these challenges, employers surveyed remain optimistic about the next six to 12 months albeit somewhat more modest plans for expansion.
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.
