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

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

Why employee ownership?

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

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

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

Employee ownership benefits all who are involved:

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

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

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

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

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

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

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

Resources and contacts for your business

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

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

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

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

You can watch the full event here:

5 COVID-19 resources for San Diego small businesses – April 2021

Note: San Diego County is currently in the state’s Orange Tier, which increases indoor restaurant capacity to 50 percent, increases indoor gym and brewery capacity to 25 percent, and removes retail capacity limits. California plans to eliminate the tier system on June 15 if current trends continue—more updates and resources to come.

With continued changes to COVID-19 relief programs, it can be challenging to sift through what’s available. Below, EDC has outlined new and ongoing business resources available in April 2021 as your small business or manufacturer navigates the impacts of COVID-19.

1. Shuttered Venue Operators Grant (SVOG)

Open NOW: Via SBA’s Office of Disaster Assistance, the SVOG will distribute $16 billion in grants first come, first served to venues closed due to COVID-19. Apply now.

  • Award: Grant of 45 percent of gross earned revenue up to $10 million, with $2 billion reserved for applicants with up to 50 full-time employees
  • Application period: Today (April 26) until funds are depleted
  • Who’s eligible? Live venue operators/promoters, theatrical producers, live performing arts organization operators, relevant museum operators, zoos, and aquariums, motion picture theater operators, talent representatives, and more
  • Applicants must not have applied for or received a PPP loan on or after December 27, 2020

2. California Small Business COVID-19 Relief Grant Program

On April 28, the State of California will open a final round for its California Small Business COVID-19 Relief Grant Program. Prepare to apply.

  • Award: Grant of $5,000 to $25,000 per business
  • Application period: April 28 to May 4
  • Who’s eligible? Small businesses or nonprofits with yearly gross revenue of $2.5 million or less
  • Awards are needs-based, not first-come, first-served
  • Those who submitted their application and all documentation in earlier rounds do not need to reapply

Watch San Diego and Imperial Small Business Development Center’s on-demand webinars or contact EDC to learn more.

3. Paycheck Protection Program (PPP)

PPP loans are designed as direct incentives for small businesses to keep workers on payroll. Both first and second-time borrowers may apply for a loan, with priority to companies that haven’t received a first loan and those in heavily impacted sectors.

For all PPP applications

  • Application period: Ongoing through May 31, 2021
  • PPP loans are nontaxable and will be forgivable if employee retention criteria is met
  • Companies may receive both a PPP loan and EIDL loan without compromising PPP forgiveness

First Draw PPP

  • Award: Loan size dependent on business, with a 1 percent interest rate
  • Who’s eligible? Small businesses that meet SBA’s size standards, businesses with fewer than 500 employees or meet SBA’s industry size standards, or businesses with a NAICS code beginning with 72 with more than one physical location and fewer than 500 employees per location

Second Draw PPP

  • Award: Loan of up to $2 million with a 1 percent interest rate
  • Who’s eligible? Businesses above that have previously received a First Draw PPP loan and will or have used the full amount only for authorized uses, have no more than 300 employees, and can demonstrate at least a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020

Get expert help applying at no cost: 
Contact our team via the San Diego Small Business Development Center.

4. Economic Injury Disaster Loan (EIDL)

EIDLs are available to businesses, private non-profits, homeowners, and renters who have been negatively impacted by COVID-19. Apply now.

  • Award: Loan up to $500,000 with 24 months of economic injury
  • Application period: Ongoing
  • Who’s eligible? Small business owners, qualified agricultural businesses, agricultural businesses with 500 or fewer employees, agricultural businesses engaged in food and fiber production, ranching, and raising of livestock, aquaculture, and more

5. Targeted EIDL Advance

Businesses and non-profit organizations that received a previous EIDL Advance in an amount less than $10,000 will have first priority to apply for the Targeted EIDL Advance. The SBA may reach out directly to you via email with instructions to determine eligibility and invite you to apply.

  • Award: Grant amount dependent on business
  • Application period: Ongoing
  • Who’s eligible? Non-farm businesses with 300 or fewer employees, that are located in federally identified low-income communities, and can demonstrate a reduction in revenue of more than 30 percent during an eight week period beginning on or after March 2, 2020
  • All communications from SBA will be sent from an official government email with an @sba.gov ending

EDC is here to help. Request our help finding resources, applying to relief programs, and more, at no charge.

Request EDC assistance

 

For more COVID-19 recovery resources and information, please visit this page, or see how we can help your company free of charge.

 

You might also like:

San Diego’s Data Bites: April 2021

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Data Bites (formerly the Economic Pulse) covers March 2021 and reflects the lingering effects of the coronavirus pandemic on the region’s labor market. Check out EDC’s Research Bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. San Diego establishments added 9,900 new payroll positions in March, but gains were uneven across industries.
  1. The unemployment rate edged lower to 6.9 percent from February’s 7.2 percent. However, this was due primarily to the loss of 10,300 workers from the labor force.
  1. Consumer spending has improved significantly as households spend stimulus checks and unwind the savings accrued over the past year or so; this could mean tens of thousands of jobs in Leisure and Hospitality and Retail in the coming two to three months.

First glance

The March jobs report for San Diego was a mixed bag. Employers added 9,900 new payroll positions, and the unemployment rate edged lower to 6.9 percent from 7.2 percent in February. However, job growth was uneven across industries, with gains in Leisure and Hospitality, Professional and Business Services, and Government partially offset by declines in Construction, Manufacturing, and Retail. Moreover, 10,300 workers left the job market in March—or roughly a third of the 29,800 people who either joined or rejoined the labor force in February. In fact, it was the loss of these workers that pushed the unemployment rate lower more than employment gains.

Industry view

Job gains were apparent in just nine of the 16 supersectors tracked by the EDD. This is somewhat surprising, given March’s blowout employment report for the U.S., which showed nearly a million new jobs were created.

Leisure and Hospitality establishments added 5,000 jobs in March, building on the 13,200 positions recovered in February. Also encouraging, more than half of these jobs came from restaurants. Meanwhile, Professional and Business Services logged an additional 3,300 positions thanks to a big push from the crucial Professional, Scientific, and Technical Services segment, which notched 2,900 more jobs in March than the month prior.

Builders let go of 1,500 workers in March, reversing most of the 2,100-worker gain from February. And, while losses in Construction aren’t completely unheard of in March, they’re certainly the exception rather than the rule. Builders have let go of workers in March in only seven of the past 31 years.

Manufacturing, Retail, Finance, and Real Estate companies let go of a combined 1,100 workers in March. These figures may reflect some statistical noise and potentially even some buyback after February’s strong report. Nonetheless, the loss of 400 Retail positions is a surprise, especially following the March U.S. retail sales report, which showed a huge rebound in consumer spending last month.

Relief for Hospitality and Retail is (finally) on the way

U.S. retail sales, which include sales at restaurants and bars, jumped by 9.8 percent in March, blowing past analysts’ expectations. The meteoric rise was in large part the result of stimulus payments that were distributed to millions of households last month as part of the Biden administration’s $1.9 trillion COVID-19 rescue package.

In addition to stimulus-related spending, consumers may have also begun unwinding some of their savings now that a sustained recovery appears to be in the offing. To be sure, households began hoarding cash at the onset of the downturn last year. The U.S. personal saving rate peaked at 33.7 percent last April, decimating the previous record of 17.3 percent that was set in May 1975, and remained perched at an elevated 13.6 percent in February 2021, which is nearly double the pre-pandemic average of 7.3 percent observed between 2010 and the end of 2019.

As long as the news around COVID cases continues to be positive and residents continue to be vaccinated at current rates, it’s not unreasonable to suspect that consumers will continue to spend freely into the summer and fall months.

This is particularly good news for San Diego’s restaurant and bar scene. Given the region’s status as a premier tourist destination, changes in national spending at eating and drinking establishments correlate strongly with job growth here at home. If sustained, March’s leap in U.S. retail sales could mean as many as 50,000 to 60,000 payroll positions at San Diego’s bars and restaurants, in addition to March’s jobs build as employers continue to meet rising demand.

Retailers can also expect a big boost. If historical relationships hold, 15,000 to 20,000 positions could appear in April and May if consumers continue to loosen their purse strings. The correlation between local Retail employment and national consumer spending is quite a bit looser than the relationship for eating and drinking places. However, as a point of comparison, local consumer spending data from Affinity also reveal a rebound, which reinforces the notion that job gains will continue for at least the next several months barring any unexpected hiccups.

Bottom line

Even though it wasn’t quite as strong as expected, March’s employment report is further evidence that the job market has finally turned the corner after a temporary slump in December and January. Nonetheless, it will still take some time before the damage wrought by the COVID downturn is undone. Payroll employment is still 7.2 percent below year-ago levels and 8.1 percent lower than the pre-pandemic level reached in February 2020. Moreover, the unemployment rate remains elevated, and 57,140 workers are still missing from the labor force.

All of this is to say, we should be cautiously optimistic. On balance, odds favor a strong rebound this year and into 2022, but there is still a lot of work to be done. Now, more than ever, it is necessary that we get this recovery right.

Training and upskilling will be vital for the thousands of workers whose jobs may never return. EDC’s Advancing San Diego program is facilitating this by connecting employers, educators, and students to the training and education they will need to thrive in the coming expansion. Just this week, Advancing San Diego announced its Preferred Providers of Manufacturing talent, and opened applications for small businesses seeking interns.

It will also be imperative that San Diego small businesses are connected to large buyers in order to keep remaining businesses in the region healthy and to help spur a new wave of entrepreneurship to meet the needs of San Diego’s largest institutions and employers. EDC’s Anchor Collaborative is working with large local businesses to help ensure big companies “shop local” for their procurement needs. Our research estimates that a one percent shift in procurement spending by large companies to local businesses could create thousands of new jobs in the region.

You might also like to read:

Advancing San Diego Intern Spotlight: John David Lopez & Candelario Caldera, Paragrine Systems

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

As students are closing out their Fall engineering internship experiences, EDC has rolled out this blog series to highlight the innovative local companies that comprise the second cohort of the program, and the interns they hosted.

In this feature, we sat down with John David Lopez and Candelario Caldera, interns at Paragrine Systems. As part of the second cohort of host companies, Paragrine Systems, builds air and ground mobility into single rugged and efficient vehicles. Both Lopez and Caldera are graduating students at UC San Diego studying mechanical engineering and electrical engineering respectively.

Read on for more from John and Candelario.

JDL: John David Lopez (pictured above)

CC: Candelario Caldera


Tell us about yourself.
 

JDL: My name is John David Lopez and I am currently a fifth year (third year transfer) Mechanical Engineering Major at UC San Diego. After graduating from Fallbrook High School, I began my college journey at Mira Costa College where I was then able to transfer to a four-year university in 2018. I am a San Diego native who loves the sun and plans to enjoy living here for as long as I can. When I am not studying, I am involved with Students for the Exploration and Development of Space (SEDS) at UC San Diego where I have gladly spent my weekends working on collegiate level rocketry. My other hobbies include weightlifting, classic muscle cars, and Legos. Recently, I have had the opportunity to intern at Paragrine Systems, which is an awesome aerospace/defense company that I am incredibly thankful to work for.

CC: I am a third year Electrical Engineering student from UC San Diego. Interning at Paragrine Systems has been amazing. Seeing all the work that goes into the project was overwhelming at first; but I have come to find out that each task plays a key role in getting the bigger pictured finished. Prior to joining the team, I was not sure what turning an idea into a product would be like. It’s been super fun!

How has your experience in the Advancing San Diego Internship Program been, and what projects/assignments have been the most meaningful?

JDL: I have thoroughly enjoyed and have been grateful for the opportunity the Advancing San Diego Internship Program has given me. Interning at Paragrine Systems has allowed me to gain real world experience working alongside professional engineers. My supervisor, Scott Duffy, has been able to mentor me on the engineering requirements and decisions that go into designing an Air & Ground Utility Vehicle (AGUV). My main tasks include packaging the avionics systems on the AGUV, creating a system model for the components to interface, and reverse engineering parts to be utilized in the final design. The most meaningful aspect of my internship experience has been learning to accomplish goals and solve problems in a professional engineering environment.

CC: My internship experience is amazing. Interning at Paragrine Systems has been the best thing to happen to me in term of my professional pathway and career development. I think it is crucial to shadow; it gives you an inside look on how the job is and performed before you even take on a job. This internship has reinforced my motivation for becoming an engineer and has made me excited for what is to come!

How has the COVID-19 pandemic affected your day-to-day, and what challenges have you faced as a student?

JDL: Adapting to COVID-19 has definitely been a challenge—something I know that many students face. The pandemic has offered me new, interesting opportunities, as well as restricting things I have taken for granted in the past. My school specifically has allowed for asynchronous learning, which gives me the ability to structure my day differently. As a previous commuter student, it has been very nice to not have to arrive at school at 6 a.m. to then leave at 8 p.m. However, something that I have taken for granted has been the compartmentalization the university environment provided. In addition, I have also had to overcome the sense of isolation working from home. Frequent trips to the public park and group calls with close friends has been incredibly helpful, but I am sure we all look forward to the day when the world is back to normal.

What advice would you give to high school students looking for a successful career in the local software industry? 

JDL: I would tell high school students to never stop trying, even when faced with adversity, and to never give in to imposter syndrome. Being a transfer commuter student from a low-income background has definitely created some mental and logistical challenges, but there is a light at the end of the tunnel as long as you persevere.

CC: Continue to be curious!

Learn more about Advancing San Diego and our internship program.

Company contact info and additional information:

You might also like to read:

San Diego’s Data Bites: March 2021 Pt. 2

SAME INTEL, NEW GREAT ‘TASTE’

In case you missed it, EDC has launched a fresh take on our long-standing Economic Pulse. Welcome to the second edition of San Diego’s Data Bites!

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Data Bites covers February 2021 and reflects the lingering effects of the coronavirus pandemic on the region’s labor market. Check out EDC’s Research Bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. San Diego employers added back 31,900 jobs in February, undoing the lion’s share of January’s loss of 37,900 payroll positions.
  1. The unemployment rate dropped to 7.2 percent from January’s 8.0 percent even as nearly 33,000 people joined or rejoined the labor force.
  1. February’s employment report is reason for cautious optimism that the economy has turned the corner, but there is still work to be done. Employment remains 8.7 percent below year-ago levels, the labor force is still 2.1 percent smaller than a year ago, and the outlook is wrought with uncertainty.

First glance

San Diego’s labor market bounced back in February, following two consecutive months of declines. San Diego employers added back 31,900 jobs, undoing the lion’s share of January’s loss of 37,900 payroll positions (revised from -38,600) and lowering the unemployment rate to 7.2 percent from January’s 8.0 percent (revised from 8.1 percent). Even better, the unemployment rate dropped as 32,900 people joined or rejoined the labor force—more on that below.

Industry view

Job gains were widespread across industries. Every sector except Wholesale Trade, Retail, and Healthcare and Social Assistance added jobs, and losses in those sectors were de minimis.

The volatile Leisure and Hospitality industry added 12,800 new jobs, following a loss of 11,500 in January. Business and Professional Services firms also added 6,800 jobs, while Construction and Other Services—which includes dry cleaners, laundromats, and other personal services—each gained 4,100 positions.

Gains in Business and Professional Services were led by Administrative and Support Services, which added 4,900 new positions. This subsegment also includes temporary staff, and growth in this field can sometimes be a positive bellwether for future gains as those temporary staff members are hired on permanently.

Nonetheless, it’s important to keep last month’s positive report in perspective. Employment in every industry, except Construction and Utilities, remains below year-ago levels. For example, despite last month’s push, Leisure and Hospitality employment still rests some 33.4 percent below its February 2020 level, and Other Services employment is still 22.9 percent lower than it was a year ago.

San Diego workers flock back to the workforce

Perhaps the most encouraging piece from February’s employment report is the surge in the labor force. Labor force participation among women and minorities has plummeted across the country since the pandemic ensued; and while EDD doesn’t report labor force statistics across demographic groups like the U.S. Bureau of Labor Statistics (BLS) does, it can be safely assumed that a similar dynamic has played out locally. As such, the return of these workers is a welcome sign, if sustained, because it will help to mitigate the cumulative effects of income losses among those most vulnerable groups.

Again, however, it is important to keep this all in perspective; San Diego’s labor force is still 2.1 percent smaller than it was in February 2020, and this has masked the true extent of the remaining weakness in the job market. This is because people who leave the labor force are no longer counted as unemployed by EDD and the BLS. If there were as many people in the labor force in February 2021 as there were a year earlier, the unemployment rate would still be perched at 9.4 percent, more than two percentage points higher than the officially reported 7.2 percent last month.

Wrapping it up

In sum, the February employment report suggests the regional economy may be turning the corner after a couple of disappointing employment reports in December and January. To be sure, COVID-19 cases have declined steadily in San Diego County in recent weeks, and the strong drive to get vaccine shots into people’s arms is most likely reassuring companies that the end of the pandemic is finally within striking distance. If so, then we can expect job gains to continue in coming months.

Nonetheless, the outlook is wrought with uncertainty. It remains unclear whether current vaccines will be effective in protecting against new variants of COVID-19. If not, then a future spike in coronavirus cases could force additional closures and restrictions, thereby hamstringing the recovery. In addition, the pandemic has led to wholesale shifts in how companies do business. Consequently, not every company will need to replace all of the workers that were let go, and thousands of the jobs lost over the past year may never return. Moreover, many businesses forced to shut down over the past year may not reopen, meaning that the weight of the jobs recovery will rest on fewer companies, which could push the timeline for a full recovery further into the future.

All of this is to say, we should be cautiously optimistic. On balance, the prognosis is good that San Diego will enjoy a relatively strong recovery this year and into 2022, but there is still much work to be done. Now, more than ever, it is necessary that we get this recovery right.

Training and upskilling will be vital for the thousands of workers whose jobs may never return. EDC’s Advancing San Diego program is working to do just that.

It will also be imperative that San Diego small businesses are connected to large buyers in order to keep remaining businesses in the region healthy and to help spur a new wave of entrepreneurship to meet the needs of San Diego’s largest institutions and employers. EDC’s Anchor Collaborative is working with large local businesses to help ensure big companies “shop local” for their procurement needs. Our research estimates that a one percent shift in procurement spending by large companies to local businesses could create thousands of new jobs in the region.

You might also like to read:

Advancing San Diego Company Spotlight: Paragrine Systems

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

As students are closing out their Fall engineering internship experiences, EDC has rolled out this blog series to highlight the innovative local companies that comprise the second cohort of the program, and the interns they hosted.

In this feature, we sat down with Austin Blue, CEO at Paragrine Systems. As part of the second cohort of host companies, Paragrine Systems builds air and ground mobility into single rugged and efficient vehicles.

Read on for more from Paragrine Systems CEO Austin Blue.

Tell us about your company?  

Paragrine Systems is a developer and manufacturer of powered-parafoil utility vehicle platforms for commercial, humanitarian aid/disaster relief, and military applications.

Why was your company founded, and what are your current points of focus?  

Paragrine was founded to explore and progress the great potential of powered parafoils to provide a new paradigm for low-cost aerial mobility across a broad range of applications on a global basis. Our current focus is on developing unique mobility solutions for Department of Defense applications, expanding on core technology foundations, and preparing for production at scale.

How was your experience building a small business/startup in San Diego?

San Diego has been a great place for entrepreneurship and building a business. We greatly appreciate and have benefited from the community and infrastructure provided by Advancing San Diego, our phenomenal local universities, a vibrant business community, Connect, and a great culture of innovation and technical advancement.

What does growth look like over the next few years?

We look forward to continuing to expand the envelope for what powered parafoils can accomplish doing work and meeting transportation and logistics needs in some of the world’s hardest to reach locations. Over the next several years we will progress from our R&D foundations into production at scale.

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

We have been working remotely and continuing to do our best to conduct business development by video conference to execute on our current contracts. In some ways it has been nice not to travel so much this past year and that has enabled us to stay focused. We have high hopes for the future and a great 2021 ahead.

Tell us a little bit about your interns and the value they bring.

Our interns have proven to be curious, capable, and engaged. We are grateful for their attention and contribution to our business and we hope that we have been able to help them learn more about what is involved in aerospace technology development from the ground on up. For all of us, it has been a much-appreciated opportunity during this challenging year to expand the team and learn new skills and work with new people. Our interns have been great and we have been grateful for the real value they have delivered.

In your opinion, what is special about San Diego’s science and technology community, and the talent that drives it?

San Diego has a wealth of diverse talents, interests, and leadership across so many industries and technologies. It is a leader in aerospace, bio-sciences, logistical innovation, energy sciences and much more. These are enhanced, nurtured and fed by great universities, a generous business community, a complimentary and beneficial connection to Mexico, and a strong connection to the Navy and Marines. There are so many favorable elements, in addition to the awesome climate, that all encourage and mutually reinforce each other to make this a great place to do business. We consider ourselves very fortunate to be able to live and work in this community.

 

Learn more about Advancing San Diego and our internship program.

Company contact info and additional information:

You might also like to read:

Advancing San Diego Intern Spotlight: Kimberly Fajardo & Justin Skaggs, Aeromutable Corporation

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

As students are closing out their Fall engineering internship experiences, EDC has rolled out this blog series to highlight the innovative local companies that comprise the second cohort of the program, and the interns they hosted.

In this feature, we sat down with Kimberly Fajardo and Justin Skaggs, interns at Aeromutable Corporation. As part of the second cohort of host companies, Aeromutable Corporation develops low-profile and unintrusive technology capable of dynamically modifying the aerodynamic behavior of ground vehicles. Both Fajardo and Skaggs are graduating students at UC San Diego studying aerospace engineering and chemical engineering respectively.

Read on for more from Kimberly and Justin.

KF: Kimberly Fajardo

JS: Justin Skaggs


Tell us about yourself.
 

KF: My name is Kimberly Fajardo and my hometown is McFarland, California. Right after graduating from McFarland High School, I started attending UC San Diego, where I have been able to learn about cool topics like fluid dynamics, aerodynamics, and propulsion. I am now in my final year of college and am looking forward to graduating in June 2021 with a major in aerospace engineering and a minor in mathematics. I chose engineering as my career path because I have always had an interest in STEM-related topics. In October 2020, I was offered an intern position at Aeromutable Corporation, and am currently working with them in improving the aerodynamics on semi-trucks and reducing their fuel consumption, which is awesome!

JS: I am currently attending UC San Diego and am a transfer student from Southwestern College. I was able to apply for the internship through an email I received through my school. I have been participating in research laboratories throughout my time at the university, and it was a great change of pace to get involved with an internship. It is a nice opportunity to be able to work for the internship along with schoolwork, since it keeps me busy and teaches me a lot about how to work in the professional world.

How has your experience in the Advancing San Diego Internship Program been, and what projects/assignments have been the most meaningful?

KF: Having the opportunity to be a part of the Advancing San Diego Internship Program with Aeromutable Corporation and directly with the CEOs, Sandy and David, has been such a unique experience. I have gained valuable skills that help make me a better professional. One of the projects that has been the most meaningful to me has been designing three different manifolds for the pneumatic system Aeromutable is working on. My designs began on paper and I eventually was able to create the 3D designs on SolidWorks, get them approved, and submitted for manufacturing. It was a challenging process, but mostly a rewarding experience to be able to make a design happen.

JS: It has been an amazing experience to work with Aeromutable. I have learned a variety of skills involving engineering around constraints, researching for possible solutions, and troubleshooting when a process is not working as expected. Reporting progress and results is also an essential skill and organizing your work so another person can pick up where you left off is important. The most important work I have done is working with a RaspberryPi, and it has taught me a lot about sensors and interfacing sensors with the digital world. I have gotten a lot of experience with coding and can certainly add this to my toolbox of skills.

How has the COVID-19 pandemic affected your day-to-day, and what challenges have you faced as a student?

JS: Working from home comes with a specialized group of obstacles. The access to tools and a workspace is limited, creating a time lag between some of the tasks I want to accomplish. The ability to catch up with coworkers in an instant is a benefit however, since meetings and updates can be done from home on the computer.

What advice would you give to high school students looking for a successful career in the local software industry? 

KF: Advice I would give to high school students looking for a career in any field would be to not be afraid of putting themselves out there and to start gaining experience early on in their career.

JS: Try every opportunity you have and keep doing what puts a smile on your face. It’s an amazing feeling to be excited to work, and there are a lot of jobs out there that can provide that happiness!

Learn more about Advancing San Diego and our internship program.

Company contact info and additional information:

You might also like to read:

Advancing San Diego Company Spotlight: Aeromutable Corporation

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

As students are closing out their Fall engineering internship experiences, EDC has rolled out this blog series to highlight the innovative local companies that comprise the second cohort of the program, and the interns they hosted.

In this feature, we sat down with Sandra Manosalvas-Kjono, co-founder and COO at Aeromutable Corporation. As part of the second cohort of host companies, Aeromutable Corporation develops low-profile and unintrusive technology capable of dynamically modifying the aerodynamic behavior of ground vehicles.

Read on for more from Aeromutable Corporation co-founder Sandra Manosalvas-Kjono.

Tell us about your company?  

Aeromutable is bringing aerospace technology into the trucking industry. Our first product being developed in San Diego is an active fuel savings device that dynamically optimizes heavy vehicle performance based on its surroundings and provides three times the fuel savings of its nearest competitors, increasing the trucking industry’s profitability while significantly reducing its carbon footprint.

Why was your company founded, and what are your current points of focus?  

Through their doctoral work at Stanford University, the co-founders of Aeromutable studied the effect of aerodynamic drag on heavy vehicle fuel consumption and identified the impact real time sensing devices have in the optimization of its performance. Aeromutable was founded to fulfill the mission of developing and commercializing technology that has the potential to significantly reduce greenhouse gas emissions while improving the bottom line of the trucking industry. With the support of various institutions, which include the Stanford TomKat Center for Sustainable Energy and the U.S. Department of Energy through the Chain Reaction Innovations program, Aeromutable is working towards fulfilling its mission.

What does growth look like over the next few years?

Aeromutable is currently working to bring its first full-size prototype on-road for testing. In the subsequent 12 months, we will continue developing our MVP and will produce a fleet-ready device that we will employ on routes with a pilot partner trucking company. Our pilot program and close collaboration will provide the operational testing with our fleet partners and invaluable insights that will allow us to bring our technology to market.

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

COVID-19 hit the manufacturing communities particularly hard given that they require in-person work that sometimes requires close contact situations. When COVID-19 hit, Aeromutable was transitioning from benchtop prototype testing to manufacturing our first full-sized prototype, which required specialized manufacturing and shop access. We were essentially perfectly aligned to go into manufacturing mode when manufacturing practically came to a halt. So, while our product has not pivoted, our manufacturing and partnership opportunity certainly has. This has been just one of the many challenges of being a startup during COVID.

Tell us a little bit about your interns and the value they bring.

The interns provided to us through Advancing San Diego have been a great addition to the Aeromutable team. They have contributed to the development of multiple subsystems that will be a part of our prototype. They are applying the knowledge they have obtained from their engineering education at UC San Diego in real world problems. Through their internship, they are being exposed to a fast-paced environment of development where multiple engineering, logistical, economical, and practical constraints need to be considered. Their contributions have allowed Aeromutable to increase our pace on the development of our on-road and on-track prototype.

In your opinion, what is special about San Diego’s science and technology community, and the talent that drives it?

San Diego is uniquely situated near many top universities and multiple private and government research institutions, which helps create an environment of diverse and innovative engineers while maintaining a feeling of community that is hard to find. Furthermore, San Diego is perfectly located to provide access to some of the most important trucking routes, as well as being within close reach of larger, neighboring technology hubs like Los Angeles and a short plane ride to the Bay Area to further increase our opportunities for collaboration and growth.

 

Learn more about Advancing San Diego and our internship program.

Company contact info and additional information:

You might also like to read:

San Diego’s Data Bites: March 2021

Same intel, new great ‘taste’

EDC is excited to unveil a fresh take on our long-standing Economic Pulse. Welcome to San Diego’s Data Bites!

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Economic Pulse—now ‘Data Bites’—covers January 2021 and reflects the effects of the coronavirus pandemic on the labor market as well as benchmark revisions to 2020 employment data. Check out EDC’s Research Bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. San Diego employers eliminated 38,600 payroll jobs at the start of the year. Job losses in January are typical as temporary holiday staff is let go, but December’s report showed no surge in holiday hiring in 2020.
  1. Job losses nudged the unemployment rate higher to 8.1 percent from December’s 8.0 percent even as nearly 18,000 workers fled the labor force.
  1. Annual benchmark revisions to 2020 employment data revealed that the economy suffered steeper job losses last Spring and ended 2020 with roughly 30,000 fewer jobs than were initially reported.

San Diego’s labor market kicked off 2021 on a sour note. Local employers eliminated 38,600 payroll jobs in January, nudging the unemployment rate higher to 8.1 percent from 8.0 percent in December even as nearly 18,000 workers fled the labor force.

Job losses are typical in January as businesses roll off temporary holiday help. However, what makes this report unique is that January’s job losses followed a decline of 6,200 positions in December (revised from an initially reported -5,300 jobs), which is extremely atypical for the holiday season. In fact, December’s decline marks only the sixth time in 72 years where employers have let more workers go than they hired.

January’s dismal jobs report likely reflects the struggles of local businesses amid the ongoing COVID-19 pandemic rather than seasonal factors. Burning Glass estimates that San Diego consumer spending is still trending about 10 percent lower than it was before the pandemic, and data from Womply show that roughly 30 percent to 40 percent—or between 30,000 and 40,000—local businesses have been forced to close over the past year.

Industry view

Employment declines were widespread across industries. With the exception of Manufacturing and Utilities—which added a meager 100 jobs apiece—every industry either lost jobs or stayed flat. Hardest hit was Leisure and Hospitality, which gave up 12,200 positions and continues to be the most negatively impacted by the pandemic. Retail, which shed 6,300 jobs, was a distant second, erasing nearly all of the gains made since Spring 2020. The decline in Retail, although disheartening, was somewhat expected, however, since national retail sales and local consumer spending have both remained weak in recent months.

The nearly ubiquitous loss of employment across industries is another indication that labor market weakness in January stems from COVID-related measures rather than seasonality. In a typical year, January job losses would be focused around Leisure, Hospitality, and Retail as holiday staff is let go. However, in more normal times, most other industries have remained stable instead of laying off workers like they did this year.

2020 was even worse than we thought

Also included in January’s jobs report were benchmark revisions to the 2020 employment figures. Typically, in periods of contraction, employment revisions are negative, and that is exactly what EDD reported.

Benchmark revisions revealed that San Diego hemorrhaged 248,000 jobs between February and April 2020, which is 25,000 more job losses than initially reported. Leisure, Hospitality, and Retail accounted for around 16,000 of those additional losses. By the end of the year, revisions showed 30,100 fewer nonfarm payroll jobs in the region compared to the initial estimates.

The additional loss of jobs also meant that the unemployment rate was revised higher. Initial estimates showed the rate peaking at 15.2 percent in April 2020; revised data revealed that joblessness peaked at a significantly higher 15.9 percent, which is more in line with EDC’s estimates at the time.

You can use the below graphic to explore how revisions impacted total employment in the region, as well as each of the industries tracked by EDD on a monthly basis.

The road ahead

San Diego’s job market is entering 2021 on a weaker footing than initially thought. More jobs need to be recouped, and there are fewer businesses to help carry that weight. Together, this implies that the recovery will take longer than anticipated even after San Diegans have been vaccinated against the novel Coronavirus.

Still, there are actions we can take to help speed things along and emerge even stronger than before. Now, more than ever, it is necessary that we get this recovery right.

Training and upskilling will be vital for the thousands of workers whose jobs may never return. EDC’s Advancing San Diego program is working to do just that.

It will also be imperative that San Diego small businesses are connected to large buyers in order to keep remaining businesses in the region healthy and to help spur a new wave of entrepreneurship to meet the needs of San Diego’s largest institutions and employers. EDC’s Anchor Collaborative is working with large local businesses to help ensure big companies “shop local” for their procurement needs. Our research estimates that a one percent shift in procurement spending by large companies to local businesses could create thousands of new jobs in the region.

You might also like to read:

Advancing San Diego Intern Spotlight: Noah Chavez, ALD Technical Solutions

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

As students are closing out their Fall engineering internship experiences, EDC is reintroducing this blog series to highlight the innovative local companies that comprise the second cohort of the program, and the interns they hosted.

In this feature, we sat down with ALD Technical Solutions intern and UCSD student, Noah Chavez. A part of the second cohort of host companies, ALD Technical Solutions is a cost-effective innovative solution provider that repairs, retrofits, and upgrades offshore and onshore infrastructures using high quality and high performance composite materials. ALD specializes in developing and supplying high performance, high temperature, high chemical resistance, and underwater composite systems. Additionally, the company provides material selection, engineering design, project planning, contractor/ installer training and approval, written specifications, on-site quality control, quality assurance, and technical oversight. You can learn more about the company via its Advancing San Diego Company Spotlight: ALD Technical Solutions.

Read on for more from Noah.

Tell us about yourself. 

I am a San Diego native and currently a senior at UC San Diego, majoring in Structural Engineering and anticipating graduating this summer. I also plan to begin my graduate degree in the fall at UC San Diego. ALD Technical Solutions has provided me with the opportunity to witness first-hand how theoretical topics can be applied to improve our surroundings. Thanks to the hard work of all the members at ALD Technical Solutions, we have been able to make a direct impact on our surroundings. I personally believe that the community surrounding us should be viewed as home, and this internship opportunity has allowed me to apply my knowledge in areas that will help me give back to the city I call home.

How has your experience in the Advancing San Diego Internship Program been, and what projects/assignments have been the most meaningful?

My internship has been valuable because of the positive impacts it has on our community. The overall well-being of our planet has long been neglected until recently. With new focus being put on our impact on the environment, ALD has found ways to not only improve our community, but to do so in an eco-friendly manner.

Some projects/assignments that have been most meaningful for me are retrofitting old and damaged structures, allowing for materials to be conserved, and retrofitting ACSR lines, which allows for the infrastructure in-place already to handle the demand green-energy-output puts on the power lines. These projects have been most meaningful to me because not only does it ensure the safety of my fellow neighbors, but it also puts our environment first.

How has the COVID-19 pandemic affected your day-to-day, and what challenges have you faced as a student?

COVID-19 has limited the amount of accessibility I have to work on specific opportunities due to the fact that face-to-face meetings are necessary in our area of work. The limited opportunities provided makes it difficult to gain the required experience; however, Advancing San Diego has given me the opportunity to gain the proper experience, all from the comfort of my home.

What advice would you give to high school students looking for a successful career in the local software industry? 

It is easy to feel discouraged and as if your work is not paying off. I would always hate when my parents would tell me this, but my life experiences have only validated the truth behind the message: “Be patient, your time will come. “Just be patient, and slowly you will see the pieces fall into place.

 

Learn more about Advancing San Diego and our internship program.

Company contact info and additional information:

You might also like to read: