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The Big Picture San Diego Blog


June 2014

June 25, 2014

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Timing is everything. With BIO 2014 in full swing, Jones Lang LaSalle (JLL) has released its list of the top U.S. life sciences clusters. No stranger to life sciences stardom, San Diego comes in third on the list. From algae biofuels to genomics, medical devices, and even beer, San Diego has seen a strong surge of cross-convergence throughout the biotech sector.

San Diego’s innovation economy is anchored by our strong biotech cluster. Not only are we home to what MIT researchers have dubbed ‘The World’s Smartest Company’ – Illumina – but the region’s leadership in stem cell research and the mapping of the human genome is second to none,” said Mark Cafferty, president and CEO of San Diego Regional EDC.

A combination of top-tier universities, a strong talent pool, and innovative companies have made San Diego a bio hub. Additionally, BIOCOM has worked to accelerate San Diego’s dynamic life sciences community.

This year’s rankings were based on life sciences employment concentration, employment growth, establishment concentration, venture capital funding and patents as well as NIH funding. If you are up on your rankings, you may realize that San Diego has dropped a spot since JLL 2013 rankings. In terms of job creation, San Diego is number one for life sciences employment concentration and number two for life sciences employment growth.

Adding employment growth and patent applications to the Global Life Sciences Cluster Report scorecard this year, two areas where the San Francisco Bay Area particularly excels, meant that San Diego dropped a spot from last year’s report,” said Brian Cooper, senior vice president at JLL. “However, as former president Bill Clinton declared on national television, San Diego has become the ‘human genome research capital in America,’ which bolsters our city’s strength in developing and supporting a collaborative cluster so attractive to emerging life science companies.”

One area where San Diego’s ranking has dropped is venture capital:  “Although we saw a dip in venture capital, this can be partially explained by the rise in local biotech companies going public. Last year was one of the strongest years for biotech IPOs in the past decade, which means in many cases companies did not need to raise late-stage money,” said Cafferty.

Eight San Diego companies went public in 2013 including Fate Therapeutics and Tandem Diabetes.          

June 20, 2014

This post is part of an ongoing monthly blog series dedicated to the California Employment Development Department (EDD) monthly employment release. Click images to enlarge in a new tab/window.

[Unemployment Chart]

The California Employment Development Department (EDD) released statewide county employment data today for the May 2014 period. San Diego's unemployment rate continued to decline from April to May, with the rate now down to 5.8 percent, the lowest it has been since May 2008. Unlike the major decline in April (read the full report here), the decline in May came without a drop in the region's labor force. From April to May, 3,000 joined San Diego's labor force, while the region experience a 3,800 person drop in civilian unemployment. Where last month's unemployment rate free fall was somewhat alarming, this month's decline appears to be a good sign for the economy. The region's unemployment rate is now below the national rate and remains well below the California rate.

The region added 5,100 jobs from April to May, 4,800 of which were in the private sector, which is another healthy sign for steady economic growth. Potentially more noteworthy, the region's economy added 29,300 jobs from May 2013 to May 2014, a 2.2 percent increase. The region's private sector grew by 2.5 percent from May 2013 to May 2014, a number roughly in the middle of expectations of the region's leading economists. As of May 2014, the region had 1,342,700 non-farm jobs, more than 82 percent of which were in the private sector.

[Construction Chart]

San Diego's goods producing industries continued their steady employment growth. Construction was up more than 1.5 percent from April to May, adding 1,000 jobs to the region. From May 2013 to May 2014, the construction industry has added 5,100 jobs, an 8.5 percent increase. Manufacturing growth has been a bit slower, but still steadily increasing, which is a great sign for the industry. From April to May, the manufacturing industry added 100 jobs. The industry added 1,700 jobs from May 2013 to May 2014.

As the region ramps up for summer tourism and convention season, the leisure and hospitality industry led most of the growth from April to May, adding 3,900 jobs to the economy, as expected. The industry was also up 3.7 percent from May 2013. Most of this month's growth came from the region's food services and drinking places. Health care and social assistance was the only other significant job creating industry from April to May, adding 1,000 jobs over the month period. 

[PST Chart]

The professional, scientific and technical services sector dropped by 700 jobs from April to May, but these monthly ebbs and flows are common in the industry, and we expect the industry to grow in the near future. From May 2013 to May 2014, the sector added 5,800 jobs, a 4.7 percent increase, which is among the highest growth sectors in San Diego over that period. Other significant growth sectors over the annual period include scientific research and development services sector and the region's retail and wholesale trade sectors. The former added 1,400 jobs while the latter combined to add 3,500 jobs.

While this month's job growth was led by only a few sectors, it's important to note that most key industries have grown steadily from the previous year. Additionally, the sectors that drove the employment growth this month are either from our traded economies, like tourism, or are leading indicators for strong economic growth, like construction and manufacturing. It is also positive to see the region's unemployment rate continue to fall while adding people to the labor force.

Note: Our Economic Indicators Dashboard will show how our unemployment rate compares to other US metros and the US total rate when that information is released in the coming weeks.

June 19, 2014

Today, the Brookings Institution released its first-ever metro-level analysis of foreign direct investment’s role in the San Diego metropolitan area’s economy as part of its Global Cities Initiative, a joint project of the Brookings Institution and JPMorgan Chase. The report analyzes the types of foreign-owned businesses located in the San Diego metropolitan area, outlines the region’s sources of foreign investment and shows that 48,370 jobs are supported by FDI locally.

The research finds that San Diego has seen a steady climb in its FDI ranking, which is based on the top 100 most populous metropolitan areas in the US. In 1991, San Diego ranked 31 on the list with 25,600 jobs in foreign-owned establishments (FOE). In 2011, the region ranked 24th with 48,730 jobs, signifying more than a 90 percent increase in the number of jobs in FOEs in a 20 year period. Other key finds specific to the San Diego region are bulleted out below:

  • Industries with the highest concentration of jobs in FOEs include precision instruments (unmanned systems, medical devices), grocery stores and semiconductors
  • The largest share of jobs by FOE were created from mergers and acquisitions (36 percent)
  • FOEs have become more goods-intensive. The most recent data shows that 2011 was the first time more jobs in FOEs were concentrated in goods as opposed to services
  • Tokyo (13 percent) followed by London (12.1 percent) are the top sources of FDI by city

Since April 2014, San Diego has been part of a Global Cities Initiative pilot program to create and implement metropolitan plans to secure and sustain FDI. The FDI in U.S. Metro Areas report will help the region’s Global Cities Initiative team – comprised of leadership from the City of San Diego, San Diego Regional EDC, BIOCOM and Qualcomm – design its plan to maximize the amount, quality and economic benefits of FDI in the region and integrate FDI into an overall smart economic global trade and investment strategy.  San Diego is one of two cities - and the only in California - that Brookings selected to publish and develop its FDI plan.

“San Diego is global city,” said Mark Cafferty, president and CEO of San Diego Regional EDC. “It’s no coincidence that our top two FDI-generating cities– Tokyo and London – are also the two direct international flights out of San Diego. This report gives the San Diego region a key resource to take full advantage of this important economic development tool.”

 

While the United States remains the world’s top destination for foreign investment, its position has been steadily eroding. Between 1999 and 2012, the U.S. share of global FDI inflows dropped from a high of 26 percent to just 12 percent. However, metropolitan areas are the country’s strongest magnets for global investment and so understanding the San Diego metro area’s FDI starting point will help the region fully leverage FDI to advance its economic development.

Brookings Panel in Seattle

According to the Brookings report, the benefits of FDI extend well beyond the millions of jobs supported. For example, U.S. affiliates of foreign companies pay well above average wages. These companies strengthen U.S. trade, producing more than one-fifth of all U.S. goods exports. Additionally, nineteen percent of all corporate R&D expenditures in the United States come from foreign-owned companies. Finally, 48 percent of total FDI flows in 2012 went to manufacturing industries, shoring up the nation’s eroding production base.

While metro areas have traditionally focused on attracting greenfield investment, this new data shows that most FDI enters regions through mergers and acquisitions. In the average year, mergers and acquisitions account for 87 percent of all FDI inflows into the United States. These investments have significant economic potential—for example, cash infusions can help local businesses expand, and new access to global distribution networks can boost exports.

“This new data allows U.S. metro areas, for the first time, better grasp FDI sources and trends, and its impact on local economies,” said Brad McDearman, Brookings fellow and director of metro trade and investment. “As part of the Global Cities Initiative, San Diego is now at the forefront of U.S. metro areas seeking to position themselves as more globally fluent and competitive regions by developing a metropolitan global trade and investment plan.”

Next week, leaders from San Diego will travel to Louisville, Ky. to take part in a Global Cities Initiative panel. 

June 19, 2014

BST Nano Carbon's Rancho Bernardo HQ

 

More than 1,000 jobs are coming to San Diego and Imperial Counties thanks to California Competes, a new discretionary economic incentive that are part of the Governor’s Office of Business and Economic Development’s efforts to encourage job creation and economic development throughout the state.

“The California Competes tax credit encourages businesses, large and small, to expand in California and create good paying jobs in a variety of industries,” said GO-Biz Director Kish Rajan.

San Diego and Imperial County companies also received more than 65 percent - $4.83 million  of the $7.37 million allocated for small businesses - under the program meaning that the region raked in more small business credits than any other area in the state combined.

other area in the state combined.

In total, one Imperial County and four San Diego companies were approved for the economic incentives, which are collectively valued at $7.43 million. According to documents filed by the respective companies, the incentives are expected to create 1,144 jobs. San Diego’s diverse industries, including military, maritime, biotech and advanced manufacturing, are well-represented in the credit recipients.

“The companies selected for California Competes are indicative of the diverse industries that make up San Diego’s economy,” said Mark Cafferty, president & CEO of San Diego Regional EDC. “We frequently hear that businesses choose San Diego because of its talented workforce and its dynamic innovation ecosystem. We believe that GO-BIZ’s California Competes program will give more companies a reason to grow and expand within our region.”

A chart below lists recipient details:

Company

Location

Jobs

Tax Credit

Petco

San Diego

263

$2,600,000

BST Nano Carbon

San Diego

632

$1,450,000

Sparsha

Oceanside

21

$250,000

American Marine Abatement Services

National City

6

$30,000

CE&P Imperial Valley

Brawley (IV)

222

$3,100,000

 

Total:

1,144

$7,430,000

In an effort to bolster economic development efforts throughout the San Diego/Imperial Regional, San Diego Regional EDC (EDC) outreached to companies and shepherded many through the application process. In 2013, EDC collaborated with GO-BIZ to host two free workshops to educate businesses about the process.

BST Nano Carbon, an advanced manufacturer based in Rancho Bernardo, was one company EDC helped with the application process. The innovator, who works with companies across industries ranging from sporting goods to medical devices and military, will use the funds to create 632 high-paying jobs in San Diego and Temecula.

 “BST Nano Carbon is proud to call San Diego home. Not only do our employees enjoy living here, but strategically, the San Diego area provides access to a skilled workforce and the diverse range of leading companies that represent the industries we serve,” said Randy M. Beck, CEO at BST Nano Carbon. “GO-BIZ has given us another reason we’re proud to be a California-based nano materials manufacturing company. With their assistance, we plan to bring more than 600 jobs to the San Diego area over the next five years.”

Statewide, 31 companies will be receiving the first allocation of California Competes tax credits totaling $30 million. The funds will increase to $150 million during the 2014/2015 fiscal year.

The California Competes tax credit is part of the Governor’s Economic Development Initiative (GEDI) which Governor Brown signed legislation to enact last year (AB 93 and SB 90). The initiative also includes a hiring credit for areas of high unemployment and poverty which went into effect on January 1st, 2014 and a sales and use tax exemption for the purchase of manufacturing, biotech and R&D equipment which is available to companies starting July 1st, 2014.

Companies interested in learning more about the credits are welcome to contact San Diego Regional EDC for assistance. EDC does not charge for these services. 

June 13, 2014

San Diego’s story is one of innovation and collaboration. Not only is San Diego home to the world’s smartest company and the premier telecommunications giant, but it is also at the forefront of diverse industries ranging from cybersecurity to genomics, sports and active lifestyle and cleantech. The region’s startup community is thriving and it is full of talented people solving some of the world’s toughest problems.

But don’t just take it from us. According to Bruce Katz of the Brooking’s Institution, San Diego embodies the metropolitan revolution. Katz, Mark Cafferty of San Diego Regional EDC and San Diego-based Genomics Pioneer J. Craig Venter are shown in a video below talking about how San Diego can be a model of growth for global regions.

 

 

As the world’s population pivots to cities, metropolitans have become with large-scale innovation, quality jobs and global economic opportunities. The top 100 U.S. metro areas occupy 12 percent of the nation’s landmass, yet they generate 68 percent of jobs, 75 percent of national GDP, and are home to 65 percent of the population. Part of San Diego’s success lies in its ability to work together to move the innovation ecosystem forward.

“We have to collaborate to compete,” said Mark Cafferty, president and CEO of San Diego Regional EDC. “We have companies - that many would perceive as competitors - working together to secure San Diego’s cyber infrastructure. We have public/private collaborations working to increase the region’s global footprint. We have everyone from entrepreneurs to Fortune 500 companies talking to one another about elevating the region on a global scale.”

The fact that San Diego is number one or two in biotechnology has created a huge industry here,” said Genomics Pioneer Craig Venter. “The universities provide a huge talent pool and so we found hiring new highly-trained people very easy.”

San Diego’s participation in the series is part of a deliberate approach to better tell the region’s dynamic story and cement its global identity.

As Bruce Katz says, “You don’t attract investment from around the world unless you’re really good at what you do….and that’s the San Diego story.”

We couldn't have said it better ourselves.

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