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Economic Development 101

February 10, 2014

Ten years from now, San Diego could be the home of the Summer Olympics.

As the world watched the opening ceremony for the SOCHI Olympic Games on Friday, San Diegans gathered aboard the Midway for a celebration of their own. Guests were treated to a preview of what the Olympics could mean for San Diego and our nation. This video highlights our region’s attributes and venues demonstrating our capacity to fully comply with USOC and IOC guidelines as a host city. 

"We're already such an amazing destination city.  We've hosted multiple bowl games. We've hosted a Super Bowl. We invented sports like the Triathlon and the Iron Man, and all these other things we actually already have venues that the public has already built," said Vincent Mudd. In addition to serving as EDC's incoming chair, Mudd also heads up the San Diego Exploratory Committee. Learn more...
 

 

December 2, 2013

California Economic Summit

Imagine 500 people agreeing on anything.  Now imagine that they come from all over California, from the remote Redwood Coast through the Central Valley down to San Diego.  Different interests, different needs, vastly different experiences.
But as the 2nd Annual California Economic Summit concluded in Los Angeles on November 8th, swift agreement was reached by all on what many called the big question of our time:  how do we overcome the divide between the two Californias?  It pervaded all discussions during the two-day session hosted by California Forward and the California Stewardship Network – a 10-member network that includes San Diego Regional EDC.
 
We are living in two very different worlds in the same state,” said Gavin Newsom, California’s Lieutenant Governor. He labeled it the "Gatsby Curve," demarking the more well-to-do coastal regions and those who continue to struggle in the inland valleys.
 
The Summit briefing book provided the evidence, using census and labor statistics compiled by Collaborative Economics.  While Orange County and Silicon Valley enjoy unemployment rates at 6.7 percent or less, the San Joaquin Valley’s jobless rate hovers at 12.7 percent and Imperial County’s is 26 percent, far exceeding the statewide average of 9.3 percent. One out of every 15 residents in the Central Valley have a Bachelor’s degree or better but here in San Diego the figure is one in two.  Average wages in Silicon Valley are $98,079 per year yet the average for those living at the Redwood Coast is just $34,826.
 
Those who assembled in Los Angeles knew that the answer that would unlock prosperity for all Californians won’t come from a person on a white horse, but up from the regions – regions rising together. They also knew that while a strong economy is critical to closing this gap, economic growth alone is not sufficient. Opportunity that extends to all Californians requires a focus on the triple bottom line:  advancing economic growth, environmental quality, and social equity simultaneously. 
 
Summit-goers spoke intensely about education as the predicate for everything else we do. Of infrastructure to link us, careful rulemaking to guide us, capital to fuel us.  More than just talk, attendees from business, government, and nonprofit organizations signed on the dotted line, committing to specific actions they would take to improve things for the better.  Hundreds of commitments were captured. 
 
This is as it should be. We need to have a statewide movement that connects and unites us all for a full recovery to take hold.  This is what it will take to move the world's 8th largest economy.
 
The California Economic Summit provided the data, inspiration, and a diverse network of leaders who came committed to action. There’s no time to delay.  No person on a white horse to save us.  As the Lieutenant Governor explained, "we are the leaders we have been waiting for.”  
 

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November 11, 2013

Illustration of GroundMetrics oil producing technology

 

GroundMetrics CEO George Eiskamp recently demonstrated a talent important to any entrepreneur building a company – extemporaneous speaking. Asked to give a quick update on his company at the closing lunch of the World’s Best Technology conference (WBT), Eiskamp whisked the audience through his firm’s financing wins and in the process showed that it takes a proverbial village to get a company up and running.

Founded in 2010, GroundMetrics is developing a new class of sensor system for advanced ground-based electromagnetic survey and monitoring services for resource exploration, production and environmental integrity.

Eiskamp’s early funding set records with San Diego’s Tech Coast Angels. His first round of financing in 2012 was the largest investment ever raised from a single chapter ($1.2 million). A Small Business Innovation Research grant (SBIR) from the U.S. Department of Energy soon followed and in October of 2012 GroundMetrics was selected to present at WBT.

Eiskamp’s story was welcome news for the WBT class of 2013. Since participating in the program last year, where the company won a Gold award as one of the most promising technologies showcased at the event, GroundMetrics took second place in the San Diego Venture Group’s PitchFest, closed a second round of financing – again led by San Diego Tech Coast Angels – and secured an additional SBIR grant from the Department of Energy as well as a $1.8M grant not earmarked for small companies.  The company also added the world’s 6th largest and 20th largest oil companies to its customer base in addition to repeat business from the world’s largest oil company.

San Diego Regional EDC’s Matt Sanford (who met Eiskamp at WBT 2012) introduced him to Tom Van Betten and Kaley Severn at Cassidy Turley San Diego, who helped him locate office space in Kearny Mesa and referred him to James Morrell at Veteran Solutions to renovate the space. In a follow up email, Eiskamp was very positive about his experience. “I’d highly recommend them to other early stage companies, which are the real economic drivers in any community and especially tech clusters like San Diego.”

GroundMetrics is currently in due diligence for a Series B round of funding with two organizations he met via WBT in 2012. It was a meeting with one of those groups at the site of WBT 2013 that led to the last minute request for what turned out to be an inspiring story for companies currently in the hunt for funding.


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October 31, 2013

NACIC 2013 panel image

Earlier this week the San Diego Regional Chamber of Commerce and The Mexico Business Center hosted the North American Competitiveness and Innovation Conference (NACIC). The conference focused on cross border trade and business opportunities between the U.S., Mexico and Canada. 
 
One of the most popular panels focused on developing workforce talent and was moderated by EDC’s CEO Mark Cafferty. The panelists were Bill Bold, sr. vice president of QUALCOMM, Lauren Friese, CEO and founder of TalentEgg from Ontario, Canada and Rafael Sostmann, professor of practice for education innovation and special advisor to the president of Arizona State University.
 
Mark opened the session by explaining that San Diego Regional EDC’s attraction efforts focus on corporate executives and talent, specifically young people just graduating from universities. He said competitiveness for North America is about talent and asked the panel: “How we develop the workforce of the future?”
 
Rafael, an engineer by training, is also the former president of Mexico’s largest private, nonprofit educational system, Tecnológico de Monterrey. He suggested that industry linkages with universities are critical. At ASU, student startups are supported through on campus incubators and on campus industrial parks leased to businesses.
 
Lauren explained that she started her company, an online tool that connects young talent with job opportunities, after she finished graduate school in London. She discovered that linkages between students and industries were much stronger in the United Kingdom than in Canada. Inspired by the tools she saw working in the UK, she replicated the networking platform through TalentEgg. She suggested that too often employers only want to hire young people with “the right” degree, when there are plenty of people who can be trained for just about any career. 
 
Bill spoke about the investments and partnerships QUALCOMM has with students and universities to grow its future workforce. As a world leader in mobile communications and computing technologies, QUALCOMM licenses its innovations to smart phone manufacturers. QUALCOMM is also the world’s largest producer or semiconductors. Of its 31,000 employees worldwide, 81 percent have a degree in a STEM field. The mobile giant is dependent on international markets; While 92 percent of the company's revenues are earned outside the U.S 67 percent of its workforce is in San Diego because they care about hiring locally. Bill said Qualcomm is intense about recruiting – pursuing only the top one percent of graduates from the top five percent of universities – likening it to college football recruiting. Last year Qualcomm had 1,100 paid interns, of whom 300 got offered full time jobs, and 250 accepted. The company recently invested $20 million in a new engineering center at Berkeley to build a cutting-edge program blending art, architecture and engineering. 
 
Responding to a question from the audience about the best ways to prepare young people for careers, the panel pointed to the German apprentice-style model. Germany’s vocational education system pairs classroom studies with on-the-job learning. Students apply for a specific apprenticeship at a company. For two to three years they spend a few days a week at a work site, getting paid a stipend from their employer, and one to two days a week in a classroom learning theory. They graduate with a certificate that signifies they know all the basics to begin working professionally in their fields. Not only are the certificates standardized throughout Germany,  but they are also well-respected and often a necessary requirement for jobs. Companies like Siemens have brought the work experience aspects of the program to the U.S. offering students here similar opportunities. 
 
If San Diego wants to maintain its share of talent, it would be in our best interest to explore similar programs. 
 
October 28, 2013
On the heels of the government shutdown, Congress’ perceived inability to work together and collaborate has become a serious issue. But if we look more closely at the San Diego’s delegation’s recent activities, we might have a different story to tell.
 
This past week, San Diego’s congressional delegation unanimously backed efforts to secure an unmanned systems test site in Southern California. Citing the region’s diverse terrain and existing aerospace stronghold, Reps. Susan A. Davis (D ), Duncan Hunter (R), Darrell Issa (R) , Scott Peters (D), and Juan Vargas (D) signed on to a support letter with the understanding that the site will help create jobs and further drive the Golden State’s economy. 
 
"Our entire delegation came together to support our defense and aerospace industries because they provide good jobs to thousands of San Diegans and groundbreaking technologies," Rep. Peters said. "This is how it's supposed to work: the private and public sectors, and leaders from both political parties coming together to support our economy and our national security." 
 
A recent study by the Association of Unmanned Vehicle Systems International found that California was poised to gain 18,161 jobs from unmanned systems - more than any other U.S. state. The industry would pump approximately $90 billion into the economy in the next decade, generating an estimated $70 million in tax revenue. 
 
“There’s no region more suitable than Southern California to be used as a UAS/UAV test site. In particular, San Diego, with its strong ties to the defense and aerospace community, is a premier location with its diverse training areas and support infrastructure already in place,” said Rep. Hunter. 
 
In the letter of support the delegation notes that San Diego already has an edge on the industry, with two of the nation’s leading UAS manufacturers based here. The region’s six universities are already taking steps to guarantee that the workforce is prepared with the technical skills to help the industry thrive. 
 
The FAA modernization and reform act of 2012 mandated the FAA to create six test sites across the country with a goal of working to integrate this technology safely into our airspace. The proposed testing site would start at the U.S./Mexico border and run to Bridgeport in Mono County to the North and to the Arizona/Nevada border to the East. As regulations do not allow testing within a 30-mile radius of installations including Lindbergh Field and McClellan-Palomar Airport, San Diego’s most densely populated areas would be excluded from the testing range. 
 
“As San Diegans, we are fortunate to have leadership that’s willing to reach across the aisle for the good of the economy and the people,” said Mark Cafferty, president and CEO of San Diego Regional Economic Development Corporation. “Our delegation recognizes that this is about more than just defense. With uses including wildfire fighting, food production and disaster surveying, unmanned systems is on course to have a strong impact on our region’s ability to be a global innovation hub.”
 
Although there are many things we may never agree on, it’s nice to know that San Diego’s congressional delegation are united when it comes to the importance of job creation in our region.
 
 
TAGS
October 21, 2013

Illustrating some of the dynamic uses for unmanned system.

Illustrating some of the dynamic uses for unmanned system. Clockwise from top left: Drone used for newspaper delivery (The Atlantic), prepping a wildfire- fighting drone for launch (The New York Times), simulation of a lifeguard/lifesaving drone (AUVSI), agricultural drone used for weed control (3dRobotics/ Diydrones.com) 

If you stopped 100 people on the street and asked them to name a technology in the past 20 years that has changed the world, it’s safe to assume that the internet would be a top choice. Yet if you ask people about the origins of the internet, many would have to pause for a second to think. In the 1950s, the internet was developed as a tool for military communication. It wasn’t until the mid-90s that the internet was adopted and commercialized for broader use. 
 
San Diego is used to seeing military innovations adopted for commercial use. In fact, many of the region’s largest and most well-known companies – including Qualcomm – were born out of military innovation. 
 
Now, a new technology is being developed for commercial use and San Diego, with its strong military history, trained talent, and diverse terrain, has a decent chance of playing a big role in something that has already began to revolutionize the world. 
 
Unmanned Systems – or drones as they’re often called – have uses ranging from agricultural production to disaster monitoring and wildfire fighting.  
 
A jobs generator 
 
Recognizing the importance of unmanned systems, the FAA has issued a call to establish six test sites across the country, with a goal of working to integrate this technology safely into our airspace.  A recent study from the Association of Unmanned Vehicle Systems International found that California was poised to gain 18,161 jobs if they created a test site- more than any other U.S. state. This does not even take into account the impact of non-aerial unmanned systems for marine and farming use, which will help create even more jobs. The industry would pump approximately $90 billion into the economy in the next decade, generating an estimated $70 million in tax revenue. 
 
In partnership with San Diego Military Advisory Council, EDC and other San Diego partners joined the CAL UAS portal. The proposed testing site would start at the U.S./Mexico border and run from Bridgeport to the North and to the Arizona/Nevada border to the East. The regulations do not allow testing within a 30-mile radius of installations including Lindbergh Field and McClellan-Palomar Airport, meaning most of San Diego’s metro airspace will not be included in testing ranges.
 
San Diego is at a significant advantage. Not only do we have one of the most diverse testing sites in the U.S., but we also have a strong private sector that would help support a testing site. Companies such as 3Drobotics, Northrop Grumman, General Atomics and 5d robotics provide a well-qualified talent pool to help the sector thrive. 
 
Maybe 10 years from now, if we ask people about a technology that has profoundly impacted society, unmanned systems will float to the top of the list. Our hope is that when it does, San Diego is thought of as a leader in this field.
 

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October 15, 2013

Economic snapshot graph

EDC’s economic snapshot shows that San Diego’s economy is gaining steam. From April 2013 to July 2013, the San Diego region added 13,000 private sector jobs. Although the metro’s unemployment rate still stands slightly above the national average, San Diego experienced one of the largest year-over-year declines in the U.S. from July 2012 to July 2013. Only four major U.S. metros – Seattle, Tampa, Detroit and Riverside - experienced a greater decline over that period.

Here’s how the numbers in the snapshot broke down:

  •  Private businesses added approximately 13,000 jobs in the quarter. Hospitality and tourism added the highest number of jobs this quarter, with 7,600. Construction industry added 4,100 jobs in the quarter, which is likely due to many major construction projects ramping up in the summer season. With the recently-approved expansion of the San Diego Convention Center (not included in these numbers), the region will add nearly 7,000 hospitality and tourism jobs and 3,000 construction jobs in a future quarter.
  •  This quarter, the snapshot took a closer look at the Sports and Active Lifestyle industry, based on a report that was recently released. With companies including Taylormade, Sector 9 and other well-known products, San Diego is a designated leader in this important sector. The report found that the industry’s economic impact is equivalent to hosting four Super Bowls annually.
  • San Diego’s foreclosure rate remained lower than the U.S. average in July2013, with only 2.31 out of every 10,000 homes foreclosed during that month
  • All major metros nationwide experienced positive growth in home prices over the quarter and the year, a symptom of the resurging US real estate market. From Q1 2013 to Q22013, home prices grew about 13.7 percent  in the San Diego region.

The quarterly snapshot reports on key economic metrics that are important to understanding the regional economy and San Diego's standing relative to other major metropolitan areas in the U.S. The snapshot only reported on data through Q2 2013. Amidst the current government shutdown, we can only hope that there’s data next quarter to produce a new snapshot.

You can find the complete snapshot here.


The economic snapshot was made possible by Chase Chase Logo
 
October 4, 2013

IMG_0781_cropped

 

Every San Diego company has a unique story to tell. That became very apparent as the region came together to celebrate MFG Day at San Diego City College on Friday. Four panelists representing a diversity of San Diego companies talked about the challenges and opportunities facing the region’s manufacturing sector, which employs more than 90,000 individuals.

Take D&K Engineering, a high-tech manufacturer.  When the entrepreneurs who created EcoATM were looking to make their idea a reality, they went to the Rancho Bernardo firm to create an e-recycling kiosk. As a result, D&K Engineering had to scale up its production and hire more employees. And they chose to do it in San Diego. “Access to talent and the border opportunities are one of the main reasons I chose to start D&K in San Diego. Besides, who wouldn’t want to live here?” said Alex Kunczynski, one of the company’s founders.

The border also adds a significant competitive advantage for local manufacturers. As Interim Mayor Todd Gloria said in his opening remarks, “this is a big deal.” San Diego and Tijuana are currently working together like never before. When asked about why Taylor Guitars chose to open up a manufacturing facility across the border in Tecate, VP of Manufacturing Chris Wellons said “We have a saying at Taylor Guitars. We say ‘We’ll we be happy we did this in 10 years.’” And happy they are. Manufacturing in Mexico, as opposed to China or somewhere else overseas, has given Taylor more control over its finished product. It’s also become more cost competitive.

Wellons alluded to the entrepreneurial spirit of another panelist. Stephan Aarstol started Tower Paddle Boards - a sports and active lifestyle company - in 2010. With a little help from ABC’s “Shark Tank,”he transformed his sales from $3,000 in 2010 to $3 million in 2013.  Although he only has four employees in San Diego, he plans on growing in the coming years, and he’s looking to do it in the region. To him, he’s not just selling a paddleboard but also exporting California culture to consumers all over the globe.

As Chris Wellons of Taylor Guitars echoed, keeping manufacturing jobs close to home really comes down to innovating the process. Taylor Guitars has more than 700 employees, with many of them working out of its El Cajon headquarters. Although customers can still rely on the same quality that made Taylor a household name when it was founded in 1974, the manufacturing process has evolved. Taylor used to carve each of its guitar necks out of an individual piece of mahogany, meaning 60 – 70 percent of the materials were wasted. In 1999, Taylor decided that process needed to change. The result was one of the greatest guitar innovations in the past 100 years.  Instead of using a one-piece neck, Taylor switched to a three-piece neck, which resulted in a 66 percent yield in materials and created a more sustainable product. This, Wellons said, was possible because of the ability to execute a vision, which he thinks is a strength of San Diego.

So what can San Diego do to continue incubating manufacturing?

The answer may be easier said than done. San Diego is fortunate enough to have a highly-educated workforce. The metro currently ranks fourth in the U.S. for Ph.D. attainment rates.  Although Ph.D.-trained workers are essential for many San Diego sectors, as the panelists noted, it’s not necessarily these types of jobs they have trouble filling, but the machinist jobs where workers require hands-on manufacturing skills.

Wellons learned these skills in his high school shop class, and so did many other highly-skilled manufacturers. Admittedly, we focus a lot of time on retaining and incubating high-tech talent, but as Interim Mayor Gloria pointed out “These jobs are important too. They provide a comfortable middle-class life.” San Diego City College provided the perfect backdrop to get this conversation going. As San Diego Community College District Trustee Peter Zschiesche noted, 98 percent of San Diego City College grads remain in San Diego. 

With the guidance of San Diego Community College District and organizations like San Diego Workforce Partnership, San Diego – and it’s nearly 2,800 manufacturers – are looking to put these grads to work.

Of course, this all starts with the conversation we had this morning. A conversation that I’d bet we’ll be happy we had in 10 years.

Please check out MFGday.com for a list of local companies that held tours today,

Media Coverage: 

KPBS, Taylor Guitars still strumming along as example of San Diego manufacturing success

U-T, S.D. county product makers open doors to public

 

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September 23, 2013

The expansion of the San Diego Convention Center has been front and center across the region, with everybody from sports fans to politicians expressing their views on the project.  With years of legwork done on the expansion’s behalf, the planned contiguous expansion promises to be a waterfront asset with public space as its focal point. When complete, the expanded San Diego Convention Center will create $700 million in economic impact and $13 million in additional hotel tax revenue.

Of course, keeping the Chargers in San Diego is a priority, but this is not seen as an either-or situation. San Diego can have a world-class convention center and a world-class football stadium. It would be a service to our economy and community to have both. The majority of San Diegans have worked hard to get to a place where we’re on the same page about the fate of the contiguous expansion. We need to move forward now. We need to show potential conference visitors and the rest of the world what we already know: San Diego is a great place to live and work.

For starters, we can take a look at the medical conventions hosted at the San Diego Convention Center. With six medical conventions slated for Fall 2013, the industry brings a reported $293.3 million in economic impact. Hands down, Comic-Con has the largest economic impact of any conference in San Diego. As Convention Center expansion proponents note, it is essential not only for economic impact, but also for maintaining the region’s cultural foothold. However, the Society for Neuroscience will bring 32,000 attendees and generate more than $131.9 million in economic impact. That’s nearly 75 percent of Comic-Con’s impact, with only a quarter of the number of attendees. Compounded with the region’s strong life sciences research – thanks to Sanford Burnham and others - and strong healthcare facilities, it would be hard to argue that these are not the exact type of people we want to attract to the region. Conferences are one way to get them here and we cannot delay the process any longer.

Every year, there is a plethora of conferences that San Diego cannot host simply because we do not have the capacity.  Our convention center business is already booming, but as conference organizers continuously expand, we cannot rest on our laurels any longer that our nice weather will bring people here. Yes, it helps but we need the capacity. The airport’s new Green Build just added 10 additional gates and numerous commercial opportunities. The expanded San Diego Central Library is slated to open next week. Now the convention center needs to follow suit.

Build it and they – the talent, the conferences, the investors -will come.

Now we’ll let the infographic do the rest of the talking

 

 
July 29, 2013

Aerospace is part of a large and thriving Aerospace, Navigation & Maritime Technologies (ANMT) cluster in San Diego. Among the 25 most populous U.S. metropolitan areas, San Diego ranks second in the concentration of ANMT employment behind longtime aerospace leader Seattle.

 The cluster accounts for more than 20 percent of San Diego’s innovation economy, more than any other cluster except Information and Communication Technologies. San Diego’s growing unmanned aerial systems (UAS) sector presents a unique opportunity for companies in the Aerospace industry, with cutting-edge applications being developed in San Diego and throughout California. Currently, 60 percent of U.S. technology development in unmanned systems is performed in San Diego County, according to National University System Institute for Policy Research. With the rise in commercial and consumer uses, this industry sector is well positioned to carry the aerospace industry forward and continue to attract top engineering talent to the region.

  Since the aerospace industry shares many components with other industries in the ANMT cluster, it is difficult to break down aerospace companies and employment from the rest of the cluster. Some of the key aerospace-specific components of the cluster include: Search, Detection, Navigation and Guidance; Aeronautical and Nautical System and Instrument Manufacturing; Aircraft Manufacturing including Aircraft Engine and Engine Parts Manufacturing; and Guided Missile and Space Vehicle Manufacturing. San Diego Regional EDC analyzes key economic metrics that are important to understanding the regional economy and San Diego's standing relative to other major metropolitan areas in the U.S. For more information about San Diego’s aerospace industry and the full run down on how San Diego is faring compared to other major metropolitan regions, see the July 2013 Economic Snapshot.

 

 

 

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