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The Big Picture San Diego Blog


Economic Drivers

February 17, 2017
Like CES for maritime… San Diego welcomed the world's leading marine science and ocean technology exhibition and conference this week. Oceanology International (OI) – launched in London in 1969 – kicked off its first North American conference at the San Diego Convention Center, bringing together more than 1,500 attendees and 150 maritime technology companies from more than 13 countries. Led by The Maritime Alliance and with the support of EDC, OI will be a biennial event in San Diego, switching to London in off-years.
 
The tradeshow connected companies and consumers from across the world, and served to help improve strategies for developing, protecting and operating in the world’s oceans.
 
Why San Diego?
With 70 miles of coastline, a concentrated military presence and innovation-driven technology companies, San Diego has emerged as a hub for maritime technology. Driving this point home, local companies large and small set up shop at Oceanology International North America – from Ocean Aero with its unmanned surface and underwater vehicles to SonTek with its underwater sensors, or Planck Aerosystems that can land an aerial drone autonomously on a moving vessel. Attendees got first-hand access to current and impending innovation in maritime and bluetech.
 
February 14, 2017
This weekend, years of hard work came to life for BAE Systems and partners across the state as the Barrio Logan-based shipyard cut the ribbon on its new dry dock, the Pride of California.
 
At 950 feet long and capable of lifting nearly 55,000 tons, the dry dock is the largest in California and the third largest in the nation. Used for ship repair and construction, the dry dock is flooded to allow watercraft to float in and then drained so watercraft can be set on a dry platform for work.
 
EDC board member and BAE Vice President Bob Koerber joined Congressman Scott Peters, Congressman Duncan Hunter, Port Chairman Robert “Dukie” Valderrama and an audience of more than 150 senior military personnel for the event inside the dry dock’s 100-foot walls. The dry dock was shipped across the Pacific Ocean on a 7,000 mile, 60-day journey. It represents approximately $100 million in infrastructure investment from BAE to increase the shipyard's capacity to meet the growing needs of the U.S. Navy.  
 
BAE currently employs 2,000 workers in San Diego, with the dry dock anticipated to add more jobs over the next several years. BAE is a critical pillar of San Diego’s working waterfront, where the shipbuilding and ship repair industry employs approximately 12,000 San Diegans and has an economic impact of $1.75 billion annually throughout the county.
 
With the rebalance to the Pacific, the U.S. Navy’s presence in San Diego will continue to grow dramatically over the next several years. The challenges associated with this growth include the ability for local industry to service, build, upgrade and repair the equipment for the influx of U.S. Navy vessels. With President Trump calling for the Navy to increase its current fleet to 350 ships, San Diego will be on the receiving end of increased spending.
 
January 30, 2017

By Nikia Clarke, executive director of WTC San Diego and Peter Cowhey, interim executive vice chancellor for Academic Affairs at UC San Diego
 
During his first week in office President Trump made many bold moves, including an executive order to withdraw from the Trans-Pacific Partnership (TPP), a call to renegotiate NAFTA, and a threat to impose a 20 percent border tax on Mexican imports to the United States following a very public spat with Mexican President Enrique Peña Nieto. 
 
Trade matters for economies, big and small. For a border city on the edge of the Pacific, decisions on trade policy in Washington have outsized impacts on jobs, growth and opportunities for San Diegans. 
 
Take TPP — an international trade deal originally negotiated between the U.S. and 11 other countries, covering 40 percent of global GDP
 
Right now, the status quo makes it more expensive for U.S. companies to export to other countries than it is for foreign companies to sell goods and services here. TPP sought to level the playing field, especially for the small and midsize companies that make up more than 95 percent of San Diego’s business ecosystem. 
 
It also was the first trade deal to write the rule book for the economy of the future. It protected the intellectual property of American innovators, which matters when you live in the third most patent-intensive region in the world.
 
Scientific research and development, the heartbeat of our world-renowned life sciences ecosystem and an industry dependent on patents, is five times more concentrated here than in the U.S. as a whole. 
 
TPP eased restrictions on the movement of data and services across borders, which is important when you have a globally competitive cybersecurity cluster and revolutionary big data and genomics industries.
 
In San Diego, innovation is our livelihood, and TPP would have been a game changer for all those San Diego companies that export their knowledge across the globe. Killing TPP effectively cedes leadership on trade rules and norms to China, an outcome that is unlikely to be advantageous for U.S. companies and consumers.
 
And don’t forget that 97 percent of our goods exports — primarily high-value manufactured goods worth over $22 billion — are already sold in TPP markets, employing over 120,000 San Diegans. Most of those goods are exported to Mexico, sometimes crossing the border several times before they are fully assembled. This means that 40 percent of the content of imports from Mexico — the ones subject to a potential 20 percent tax — is American-made.
 
As we pivot from what could have been with TPP and look to NAFTA renegotiation, to building a wall, to a looming trade conflict with China, we should remember that trade has always been an American reality. 
 
Here in San Diego, we marvel at the transformation over the past 50 years from a sleepy Navy town to a global city that develops life-changing technologies. We didn’t get here by building walls, and we won’t get ahead that way either. 
 
 
This op-ed originally ran in the San Diego Union-Tribune: "Trump's trade moves impact San Diego economy"

For more more on TPP and San Diego, see WTCSD's economic impact report.

January 20, 2017

Understanding our economy begins with strong data – it’s a phrase people hear us say a lot at San Diego Regional EDC, and for good reason. 
 
Unemployment data, while important, only gives us a piece of the puzzle and many people are still curious as to how it all relates to them...as a business…as a job seeker…and as a San Diego resident.
 
As we kick off 2017, we want to provide comprehensive research that tells a story about our economy. San Diego's Economic Pulse, our new research product launching today, is our way of doing that. In addition to  tracking unemployment, we will also be keeping tabs on new business establishments, job postings and looking at who’s hiring in San Diego.
 
This research wouldn’t be possible without the generous support of EDC board officer Phil Blair and Manpower San Diego.
 
Throughout the year, you will continue to see changes in the way we present our research and talk about data. We would love to hear your thoughts. Join the conversation at @SDregionalEDC or send an email to research@sandiegobusiness.org.
 
January 6, 2017

Now that the holidays are behind us, let’s take a look at some of the data. Early indicators point to another strong holiday shopping season in 2016, beating already lofty forecasts for retail sales1. San Diego’s employment grew by 12,100 in November, as retailers staffed up to meet the surge of shoppers2. But a lot of that hiring is seasonal, and these seasonal boosts are trending down. In fact, growth in retail trade employment has slowed dramatically over the past two years to a mere 0.1 percent.

 

Local employment in retail trade remains 2.8 percent below the pre-recession peak; 11 percent of regional unemployment comes from the industry3. This is because shoppers are increasingly turning to online retailers rather than brick and mortar stores – a trend that has continued to grow since the advent of e-commerce giants like Amazon.com (see chart below).

Traditional retailers are struggling to compete. Last week both Macy’s and Sears announced hundreds of store closures, which will bring thousands of layoffs across the U.S. In San Diego, Macy’s apparel store in Mission Valley will be shutting its doors, leaving 140 people without jobs4.

Changes in technology have had a profound impact on the economy and the composition of jobs. And while the tech boom has brought about gains in productivity, e-commerce and automation are displacing retail workers. These are jobs that are mostly held by women, and where more than half are held by people under the age of 355.

EDC will keep a close eye as these trends develop. Look out for our next monthly employment report on January 20.
 

Sources:

1.      National Retail Federation: https://nrf.com/news/retail-sales-see-solid-gains-first-half-of-holiday-season

2.      San Diego December 2016 LMI Release: http://www.labormarketinfo.ca.gov/file/lfmonth/sand$pds.pdf

3.      EMSI; CA LMI; BLS; Infogroup

4.      Macy’s Press Release: http://www.wsj.com/articles/PR-CO-20170104-910412

5.      EMSI; CA LMI; BLS; Infogroup

December 31, 2016

Last week, we spotlighted EDC's work in 2016. This week, we're proud to showcase San Diego's 2016 successes - the 'Good News' that drives job growth, innovation and more. From increased international connectivity to an influx of innovative startups and even the MLB All-Star Game, this year was chock-full of positive headlines from Oceanside to Tijuana. As we look ahead to 2017, we're grateful for the commitment of our partners and companies that truly make San Diego an exceptional place to call home. 

  MLB All-Star Game a hit in San Diego
Hosted at Petco Park - named the best ballpark in baseball by USA Today - the MLB All-Star Game was a home run for San Diego this year. As part of bringing the Midsummer Classic to San Diego, Major League Baseball contributed more than $1.5 million to community projects in Tijuana, Escondido and Southeast San Diego. Read more.
 
  San Diego doubles intercontinental routes 
Linking San Diego to some of Europe’s most important economic and cultural hubs, San Diego County Regional Airport Authority - ranked among the best airports in the U.S. - added two new nonstop flights to its international roster: Condor’s service to Frankfurt and Edelweiss’ service to Zurich. San Diego now has nonstop service to six countries. Read more.
 
  San Diego lauded as startup hub 
San Diego is no Silicon Valley, and we think that’s a good thing. This year brought with it a wide array of up-and-coming companies expanding to the region, and the world took notice. With a startup-friendly ecosystem, collaborative public-private culture, stellar quality of life and a top-tier university system, San Diego welcomed startups WrikeBizness Apps and Experian to the neighborhood. Collectively, the companies are projected to add more than 300 jobs to the region.
 
  Qualcomm acquires semiconductor company for record $47B
Qualcomm acquired NXP Semiconductors in a massive deal valued at $47 billion, the largest semiconductor acquisition in history. More than doubling Qualcomm's employment base, the deal will create a combined company with annual revenue north of $30 billion, amplifying Qualcomm's ability to engage with smart technology and vehicles. Read more.
 
  BAE welcomes largest dry dock in CA
Expanding the shipyard’s ability to repair Navy vessels homeported in San Diego, BAE Systems welcomed its new dry dock to Barrio Logan. Once assembled, the dry dock will span 950 feet and be capable of floating a ship that displaces 55,000 tons, making it the largest dry dock in California. Read more.
 
  San Ysidro opens new cross-border entrance
Last year, the Cross Border Xpress. This year, PedWest. Despite political rhetoric around walls and barriers, the mega-region continues to build on its connectivity. As part of the $741 million reconfiguration of the San Ysidro Port of Entry, border crossers walking into San Ysidro from Tijuana welcomed the new PedWest entrance this year. The entrance is a critical piece of infrastructure for the more than 20,000 pedestrians who cross from Tijuana to San Diego each day. Read more.
 
  Thermo Fisher Scientific expands into Tijuana
Life sciences giant Thermo Fisher Scientific opened a Software Center of Excellence just an hour south of its Carlsbad location in Tijuana, instead of sourcing its software talent from Eastern Europe or Asia. The new office plans to grow to 100 employs in the near future. Read more
 
  San Diego tackles detriments of aging
As the global population ages, scientists have focused their attention on mitigating the consequences of old age. If 2016 is any indication, it turns out the source of the Fountain of Youth might be in San Diego. This year, Salk Institute scientists released research that demonstrated biological hallmarks of aging can be reversed through cellular reprogramming; President Obama's BRAIN Initiative awarded $2.27 million to neuroscientists at UC San Diego to support Alzheimer's research, among others; and Gary and Mary West opened the region's first Senior Emergency Care Unit in UC San Diego's Thorton Hospital, as well as the Senior Dental Center in downtown.
 
  BD maintains 3,000 local jobs
Following a merger with CareFusion, BD - the world’s largest medication management company - reminded us that an acquisition of a San Diego company isn't always a bad thing. Keeping more than 3,000 jobs in the region, BD is growing its local footprint. The company has a presence in more than 80 countries, yet currently has more employees in San Diego than any other city in the world. Read more.
 
  Nobel laureate named president of Salk
The Salk Institute for Biological Studies named Elizabeth Blackburn, a Nobel laureate and UC San Francisco professor of biochemistry and biophysics, as its first female president. In her role, Blackburn leads the local institute as it pushes the frontiers of discovery in fields such as cancer, neuroscience, aging and plant biology. Since 1901, just 48 women have been awarded a Nobel Prize. Read more.
 
  Stone Brewing distributes first Berlin-brewed beers
Nearly seven years in the making, North County-based craft brewery made a milestone leap into Europe’s renowned beer culture with the opening of Stone Brewing World Bistro & Gardens - Berlin. Now fully operational, the location is distributing its beers to 17 countries throughout Europe. Stone is the first U.S. craft brewery to independently build, own and operate a brewery in Europe. As if that wasn't enough for 2016, Stone launched a brewery-focused investment group True Craft and started planning construction on a new local hotel.

 

October 17, 2016


By Nikia Clarke, director, World Trade Center San Diego

WTC San Diego was on the road again last week, joining Biocom, UC San Diego and four San Diego life sciences companies for BioJapan in Yokohama. Yokohama is San Diego’s sister city; a lovely port city of 3.7 million people—and Japan’s second largest metro—that often gets lost in the shadow of nearby Tokyo (sound familiar?). Yokohama was an auto manufacturing and export capital, and in the words of city officials, “home to the very first Japanese auto company: Ford motors.” As much of that manufacturing moved to lower cost destinations in Asia, Yokohama has had to pivot towards more knowledge-intensive industries like ICT and life sciences. I toured several research spaces and innovation houses in which the city government has invested to support these new industries.

Yokohama and San Diego will celebrate the 60th anniversary of the sister city relationship in 2017, with a visit from Mayor Hayashi. I carried with me this time a letter from San Diego Mayor Kevin Faulconer, celebrating this relationship as both sides look to build upon long diplomatic relations with more robust business and commercial exchange. 

A quickly-growing gateway into the Asian life sciences industry, BioJapan 2016 hosted 800 companies, 15,000 visitors and was sponsored by big San Diego employers like Takeda, Ajinomoto, Kyowa Kirin, Chugai and J&J Innovation, among others.

Japan is the second largest pharmaceuticals market globally after the U.S., and is also San Diego’s second largest source of foreign investment. 'Asian multinationals have been shifting significantly from legacy industries into new growth verticals: Ajinomoto moving from food additives to pharmaceuticals; Samsung exploring biologics, precision instruments and wireless health; and FujiFilm expanding from cameras to vaccine manufacturing.

However, as Takeda CEO Christophe Weber shared in his keynote, the majority of big discoveries in this space are being generated by startups and SMEs, which is why aligning corporate capital and strategy with venture-fueled innovation is essential for the future of the global life sciences industry. This is where the opportunity for San Diego lies.

San Diego does innovation very well, which is why BioJapan is a great opportunity for partnering and sales opportunities for local companies targeting Japan. Companies like Organovo, a San Diego company that “bioprints” human tissue, traveled to Yokohama for partnering meetings. Founded in 2007, Organovo now employs more than 100 people and is trading on the Nasdaq.

Even as new trends and technologies change the industry in both Japan and San Diego, it is clear that the importance of relationship building remains paramount. Biocom has made a long-term investment in the region, and has cultivated a widespread respect for the California life sciences ecosystem. Biocom now has 40 member companies in Japan, and on this trip signed an MOU with the Kobe biocluster and opened a Biocom Japan office; its only presence outside the U.S.

UC San Diego has similarly focused on Japan, opening its own office in the prestigious Nihonbashi life sciences building in central Tokyo earlier this year, and building robust industry and university research and training collaborations across Japan, in everything from medicine to robotics to entrepreneurship.

As Biocom continues to build bridges between global life sciences clusters, and UC San Diego reinforces them with world-class research alliances, WTC San Diego’s objective is to build the sustainable infrastructure to move companies across those bridges, through export programs like MetroConnect, and the creation of innovation investment networks.

In 2016 we have participated in a Technology Symposium, spoken to 400 investors in three cities about opportunities in San Diego, and partnered with JETRO to connect MetroConnect companies to business opportunities in Japan.

As always, increased collaboration globally—especially in our most competitive and high-growth sectors—amplifies our outcomes for the region as a whole, creating jobs, opportunities and connectivity. Luckily, collaboration is something San Diego does well

October 3, 2016

San Diego’s thriving tourism and life sciences companies are often in the limelight. However, there’s one industry that had an economic impact of over $14 billion in 2012 alone and has significant regional impact: maritime. Maritime technology, or bluetech as its otherwise known, is an increasingly important part of San Diego’s business ecosystem and includes sub-verticals such as desalination tech, fish hatchery solutions and robotics.

San Diego-based Ocean Aero is one such company in this rapidly growing space. Ocean Aero – inventor and producer of the Submaran™ S10, an impressive autonomous underwater vehicle that can move both above and below the ocean’s surface – is a cutting edge example of the innovation emerging from the sector. Eric Patten, Ocean Aero’s president and CEO, believes San Diego’s unique blend of intellectual capital make it ideally suited for producing something like the Submaran: “San Diego is a maritime town and therefore has a lot of the talent and expertise required in building a unique hybrid ocean observation vehicle.”

It seems only a natural fit that Patten dove into the maritime industry, after serving as a U.S. Navy Captain for more than 25 years. Patten brought with him a passion for the ocean when he joined the company in early 2013 shortly after its founding in December 2012, hoping to develop the next generation of underwater autonomous vehicle (UAVs). Patten has not only put Ocean Aero at the forefront of UAVs, but has also, alongside his talented team, developed a complementary digital platform that can serve up unique analytics and insights across a variety of applications.    

Ocean Aero has already experienced some noteworthy success in its relatively short lifetime, as the company signed a multi-million dollar two-year contract with the Department of Defense in 2015. Building on top of this momentum, Ocean Aero was then selected as a winner in the Aerospace, Security, & Cyber Technologies Category at CONNECT’s 28th Annual Most Innovative New Product Awards. Patten now plans on expanding globally with a focus on markets such as Japan and the United Kingdom.

“We are specifically targeting the scientific, commercial, academic and government markets. These are very broad markets but they are global markets – which is why an international presence is absolutely important to us,” said Patten.

 

The success of small- and medium-sized businesses is critical to the region’s future, and increasing their global reach is crucial to that success. Through the MetroConnect Program, companies such as Ocean Aero are to be awarded a $10,000 grant provided by JPMorgan Chase to assist with their international efforts, as well as additional support services including: a dedicated trade and investment manager at WTC San Diego to support company participants in deploying overseas strategies during the grant period; access to workshops that address export compliance, financing and fundraising and global marketing; reduced airfare on Japan Airlines direct flights from San Diego to Tokyo; free access to SYSTRAN software for website translation and customer service needs; and consideration to compete for an additional $35,000 during the MetroConnect Grand Prize Pitchfest in November 2016.

September 30, 2016

As part of the 2016 MetroConnect Program, WTC San Diego hosted two workshops to help the current cohort of 15 companies learn the ins and outs of going global.

The first workshop was hosted by East County-based Taylor Guitars. Leadership from the company spent time discussing topics related to exporting: how to choose export markets, compliance, export basics, how to get paid and more. Here are a few things we heard and learned along the way:

It’s not all about widgets! Technically, there are actually two types of exports:

  • Physical Export – goods physically go out of country
  • Deemed Export – release of controlled technology to foreign persons in the U.S. are "deemed" to be an export to the person’s country or countries of nationality

Your responsibilities as an exporter can seem daunting. Two core things to keep in mind:

  • Know your foreign buyers – end users/uses; screening lists (parties of concern); Foreign Corrupt Practices Act
  • Know your products – restrictions for transport; country restrictions by tariff or sanction; permit or licensing requirements; controlled or prohibited items

The second workshop was hosted by Qualcomm Ventures (QCV). Representatives from QCV discussed ways participants can seek funding to expand their international presence and capabilities. In addition, individuals from the Export-Import Bank and Silicon Valley Bank were in attendance to discuss other creative ways to finance export opportunities.

Key insights from the Qualcomm Ventures workshop:

  • Whether you’re asking for a loan or pitching for venture capital, be confident, skip the nebulous marketing-speak and “don’t be weird." Metrics matter when banks and funds make choices on who to finance, but personality can (and often is) a factor.
  • Small businesses that are having difficulty finding sales insurance through a traditional channel should consider the EXIM Bank. EXIM’s specialized credit and loan programs help ensure that SME’s looking to go global have access to the resources they need in order to confidently kickstart their export activities.

Another major takeaway from these efforts was just how incredibly supportive the local business community is. Taylor Guitars and Qualcomm Ventures have given a significant amount of time and energy to these MetroConnect activities, and we are thankful for their stellar efforts.

September 30, 2016

Understanding any economy starts with strong data. At EDC, we pour significant resources into research, so we can better understand San Diego's economic strengths, and even more importantly, our weaknesses.

Finding the right data to quantify our economy and understand where San Diego’s stack up with other regions is where it becomes more difficult. Many regions – including San Diego – call themselves innovative, but measuring it becomes more complicated.

In 2012, EDC joined the Global Cities Initiative (GCI), a joint project between Brookings and JPMorgan Chase, which helps metropolitan leaders grow their regional economies by strengthening international connections and competitiveness. Conducting independent research has been a cornerstone of the GCI since its launch.

This week, EDC/World Trade Center San Diego staff traveled to Washington, D.C. to take part in the Brookings Global Cities Summit – a culmination of five years of research and exchanges to help metros grow their economy.

Based on five years of research, Redefining Global Cities," the latest Brookings report, found that there were seven types of global cities. 

There are the Global Giants – regions like London, New York and Paris; these cities are financial hubs and serve as the control center for the world’s largest economies. Then there are the American Middleweights (Cincinnati, Indianapolis, Phoenix, Saint Louis, etc.) and the International Middleweights (Frankfurt, Munich, Rome, Barcelona, Toronto, etc.): connected and important mid-sized cities where post-recession growth has lagged. And then there are the Knowledge Capitals – 19 mid-sized cities throughout the U.S. and Europe that are home to talented workforces and elite research universities.

San Diego is in good company as a Knowledge Capital with Boston, Chicago, San Francisco, Stockholm, Zurich and others.

Turns out, when it comes to patent intensity, San Diego is second out of 123 global cities. When we say that San Diego is innovative, it’s not just boosterism – we have the data to back it up.

As a Knowledge Capital, San Diego may attract a highly-educated workforce and high-levels of entrepreneurship, but one area where it lags is foreign direct investment. Nearly 98 percent of our economic growth is going to come from growing small and medium-sized enterprises and startups already present in the region. San Diego’s participation in the Global Cities Initiative is not just an opportunity to connect with likeminded cities; it’s an opportunity to connect with and better understand our customers. After all, our SMEs will not reach peak growth rates without expanding their businesses and finding customers outside the region. As a response to this insight, we founded the MetroConnect Initiative, a comprehensive export assistance program now in its second year.  

As a region, we’re proud to be known as a Knowledge Capital, but our work is still cut out for us. By connecting with other GCI cities, we can expedite our economic growth through careful understanding and analysis of best practices. And through insightful data and programs like MetroConnect, we’re hopeful that we’re well on our way.