Bay Area Council Blog: Economy Archive

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Mayor Ed Lee Updates the Council Board on SF Economy

Fresh from his election victory, San Francisco Mayor Ed Lee spoke enthusiastically at the Council’s Board of Directors meeting on Thursday about his economic agenda for San Francisco. Lee said he is focused on creating a more favorable climate for businesses in San Francisco and attracting more employers to the City by the Bay. He said the recent deal to bring Twitter to the City’s mid-Market area has spawned renewed interest and investment in the long-dormant area, with inquiries from dozens of companies. Easing the burden of the City’s payroll tax is among the issues Lee said he expects to make progress on in the coming months, along with seeking changes to other tax-related policies that he said currently create a financial disincentive for locating in the City. Lee also talked about the need for greater cooperation among cities regionally to draw new companies and investment to the Bay Area. Many thanks to the California Academy of Sciences for hosting our meeting.

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Council Helps Secure $5 Million Regional Planning Grant

In a big win for the Bay Area, the U.S. Department of Housing and Urban Development on Thursday awarded a $5 million grant to a group of public agencies and private organizations that includes the Council to coordinate regional planning on economic development, job creation and affordable housing. The Council played a prominent role in working with the Metropolitan Transportation Commission, the Association of Bay Area Governments and a number of prominent social equity, environmental justice and community and economic development groups to prepare the grant application and advocate for bringing the funding here. The grant was among the issues on which the Council focused heavily during its recent advocacy visit to Washington, D.C.

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Council Signs Agreement Expanding Economic Cooperation in China

The Bay Area Council this week embarked on five-day trade mission to China that opened with the signing of a new economic cooperation agreement with Shanghai’s burgeoning Yangpu District and the opening of a high tech business park that will serve as a landing pad for companies looking to expand trade in the world’s fastest growing economy.

“This new agreement and the opening of the San Francisco-Silicon Valley-Shanghai Digitization Park represent an important expansion of the Council’s relationship with Shanghai and the Yangpu District and another substantive step forward in the Council’s ability to provide Bay Area companies with increased access to the exploding Chinese marketplace,” said Jim Wunderman, President and CEO of the Bay Area Council. “The Council has invested considerable effort in forging the relationships and developing the physical infrastructure that can smooth the way for companies to enter China and increase exports of California products and services.”

The significance of the Council’s relationship with Yangpu was highlighted by a meeting Wunderman and Council Chair Janet Lamkin held with Shanghai Mayor Han Zheng to discuss the future of this growing district. Yangpu is at the forefront of China’s efforts to expand its innovation economy and is considered a national pilot project for combining the various components – universities, research institutes, venture capital, physical infrastructure – necessary to cultivate new technologies and startups.

The opening of the high tech park in Yangpu was held on the first day of a five-day trade mission the Council is leading that features stops in Shanghai and Beijing and meetings with high-level business leaders and government ministers about economic opportunities related to port facilities, healthcare, innovation and financial services, among others.

The agreement with the Yangpu District government calls for the Council to assist small, medium and large companies in opening or expanding operations in Yangpu, identifying companies interested in occupying a new “accelerator” building within the high tech park designed specifically for companies entering the Chinese market and promoting Yangpu among companies in the Bay Area. It builds on an earlier memorandum of understanding between the Council and Yangpu that established the broad outlines for the relationship.

The Council delegation, which includes Oakland Port Commissioner Alan Yee, toured an innovative deepwater port facility in Shanghai on Tuesday that is the largest in China and among the largest in the world and, along with healthcare officials from Cisco, met with top officials from the Shanghai Healthcare Authority to discuss emerging opportunities in the Chinese healthcare sector.

The trade mission marks the seventh trip the Council has facilitated between the Bay Area and China since 2006, when the Council first began exploring opportunities for establishing closer ties with California’s third largest and fastest-growing trading partner. The Council opened an office in Shanghai in 2010.

“Foreign trade represents one of California’s biggest continuing economic opportunities and is a major driver of job creation,” Wunderman said. “In addition to increasing California exports to China and creating new business opportunities for Bay Area companies, the Council is also working to increase investment by Chinese companies in our region.”

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LA Times Praises Council for Leadership on Controlling Healthcare Costs

The Bay Area Council’s campaign to control skyrocketing healthcare costs earned an enthusiastic endorsement this week from the Los Angeles Times, which in an editorial on Thursday said that “rather than sitting back and waiting for the federal law to be fully implemented or repealed, the Council urges California employers to use their healthcare dollars to start fixing the system. It’s a message from the Bay Area that should be heeded throughout the state.” Read the full LA Times editorial.

The plaudits came in response to the release this week by the Council and its Economic Institute of a report — Roadmap for a High-Value Health System — outlining a series of concrete strategies for controlling healthcare costs that are harming the state’s global economic competitiveness. Council President Jim Wunderman on Monday was joined by California Health and Human Services Secretary Diana Dooley, U.S. Health and Human Services Regional Director Herb Shultz and Kaiser Permanente Northern California Region President Greg Adams for an early preview of the report that was hosted by Edelman Public Relations and Brown & Toland. To get involved with the Council on controlling healthcare costs, contact Senior Policy Advisor Micah Weinberg at mweinberg@bayareacouncil.org or by calling (916) 949-6240.

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Council Unveils Roadmap for Creating a High-Value Healthcare System

The Bay Area Council today released its “Roadmap to a High-Value Health System,” which outlines a series of concrete strategies for leveraging California’s power as an innovator to control rising healthcare costs for business and individuals.  The Roadmap will serve as the foundation for the Council’s ongoing engagement with healthcare reform implementation, value-based healthcare purchasing by Bay Area businesses, and health system transformation.

“Reigning in rapidly rising healthcare costs is critical for maintaining the competitive edge of Bay Area and California businesses in our global economy,” said Jim Wunderman, President and CEO of the Bay Area Council. “We have the intellectual and innovation power to level the playing field on healthcare costs and free businesses to compete more aggressively on the merits of their products and services. That’s how the Bay Area and California are going to maintain that competitive edge and this Roadmap shows us how we can get there.”

Sean Randolph, President of the Bay Area Council Economic Institute, explains that, “Our goal is to produce thorough fact-based analyses that will improve public understanding of issues that are critical to the economy and that will identify strategies to meet key economic goals.  The quality and affordability of health care is an issue that directly impacts business, citizens and governments at every level.”

“The roadmap is aimed at the state’s business leaders who have an essential role in shaping the vision of a high-value health system, mapping it out, and creating systems for measuring progress toward our goals,” said Greg Adams, President, Northern California, Kaiser Foundation Health Plan & Hospitals and chair of the Council’s Healthcare Committee. “This report lays out the specific actions by healthcare providers, insurers, businesses, governments, and individuals that will improve affordability and access to high quality care in California.”

Press release

Full Roadmap report

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Council’s Free Trade Advocacy Reaps Reward

Sure we are just one region in a big country, but the Bay Area Council justifiably celebrated its contributions pushing the rock up the hill to secure the free trade agreements with South Korea, Panama and Colombia that Congress approved Wednesday.  We have been the State Department, White House and South Korea, Panama and Colombia consulate’s go-to group in Northern California for the agreements over the past several years.  We have also pushed the agreements on every trip we have taken to D.C. in recent years.  That was partially why Demetrios Marantis, the U.S. Deputy Trade Representative, had such a big smile when we visited him in the White House last week.  The President had just sent the agreements to Congress.  South Korea is California’s fifth largest export market and the new pact will expand opportunities for California tech and agricultural products and financial and healthcare services, among others. The agreements came just ahead of data from the U.S. Commerce Department showing California has enjoyed two straight years of trade growth, including double-digit increases since last year.

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Business Confidence Plummets

The Bay Area Council today released its latest Business Confidence Survey, with Bay Area CEOs and executives expressing strong disappointment with the pace of recovery over the past six months and offering an equally unsettled outlook for significant improvement in the coming six months.

The business confidence index – the number that distills the survey findings – registered at 51 out of 100, down 11 points from the spring 2011 survey and the biggest quarterly drop since 2002. A reading over 50 signals positive economic times, while below 50 is negative.  The previous Survey showed the index reading at 62.  One year ago, the reading registered 56. The index reached its all-time low of 31 in January 2009.

“Bay Area business leaders continue to be more optimistic about our regional economy than the national economy, but the volatility of the broader economy and the faltering recovery are taking a heavy toll on our confidence locally,” said Jim Wunderman, President and CEO of the Bay Area Council. “We’ve got our work cut out for us to stay focused on what we can do as a region to restore consumer confidence, improve the climate for business and create jobs.”

The responses of the almost 450 CEOs and top executives in the nine Bay Area counties surveyed show that overall, 31% think Bay Area economic conditions are moderately or substantially better than six months ago, while 44% say conditions are the same and 24% think they’re worse.

Business leaders have similarly cooled in their outlook for improvement locally, with just 35% saying they expect Bay Area economic conditions to get better over the next six months. Many of those whose attitudes have shifted now believe economic conditions will generally remain the same or worsen slightly over the coming months.

The Survey indicates that the decrease in business confidence translates to stagnation in growing jobs – 60% of executives surveyed predict their workforce will stay the same over the next six months, a 7 point increase from the last quarter. The share of businesses that plan to increase jobs dropped 8 points from earlier this year to 21%, while those planning to decrease jobs rose 4 points to 17%. Rising healthcare costs appeared to weigh on job creation, with 92% of executives saying they expect those costs to increase by at least a little and 48% saying rising healthcare costs would hurt their ability to hire.

“Controlling health care cost is one of the Council’s top priorities as we work with state legislators and others to influence how national healthcare reform gets implemented here in California,” Wunderman said.  “But that’s just one part of the equation. As a region and as a state, we must increase our investments in infrastructure projects, expand trade and exports and make sensible changes to regulations that remove obstacles to economic growth.”

Across industries views about the regional economy aren’t much better, with leisure and hospitality businesses expressing the highest level of confidence. By county, business leaders in San Francisco, San Mateo and Santa Clara are the most upbeat about economic conditions, with 25% in San Francisco expecting to add jobs and 27% in both San Mateo and Santa Clara counties looking to increase their workforces. In the government sector, 46% of public officials said they expect to shed jobs.

“The drop in business confidence in the Bay Area is consistent with what we’re seeing nationwide, although our region’s comparative economic advantages offer a ray of sunshine,” said Lenny Mendonca, a member of the Council’s Executive Committee and a director at McKinsey & Company. “It’s those comparative advantages – access to capital, a well-educated workforce, proximity to global markets and strong entrepreneurial spirit – that we must continue to cultivate.”

Documents

Business Confidence Survey

Survey Results Overall

Results by Industry

Results by County

Results by Employer Size

Survey Charts and Graphs

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Council’s Clout on Display in D.C.

“Californians have never been dissuaded by naysayers. From the Golden Gate Bridge to the Internet, California’s investments in infrastructure have made it a great place to start a business or hire new employees. We can’t let congested highways and overcrowded airports slow down California’s economy. High-speed rail will play a critical role in moving California’s expanding population and economy over the next 50 years.” Those were the words that Transportation Secretary Ray LaHood offered to a Bay Area Council delegation to Washington D.C. this week. High speed rail, cyber security, free trade agreements, World Expo 2020, housing policy and job creation were among the issues that a group of our members communicated with passion and clarity of purpose to legislative leaders and top White House cabinet members and advisors.

At breakfast, Senator Feinstein, Chair of the Select Committee on Intelligence, directed her staff to collaborate with the Council’s Cyber Security Committee concerning threat sharing, a rapidly escalating problem for our members. Senators Reid, Lieberman, Collins, Rockefeller, Hutchinson, and Feinstein’s cyber security staff leads (plus the Republican cyber leaders on the House side) all sat down with the Bay Area Council members on the trip to hash out details of impending legislation on cyber issues. The conversations and advising will continue, as all congressional leaders seemed to agree with lunch guest Sameer Bhalotra, White House Senior Director for Cyber Security, that legislation will move at the start of 2012, and with a good probability of passage.

On high speed rail, our two Senators, our Bay Area leaders in the House and administration officials all said that federal money would be on hold for the near future, but that getting local community agreement on the project was the key to success. They all praised the work of Caltrain, the Metropolitan Transportation Commission and the Bay Area Council in creating a solid compromise that could allow money to flow to our region. Secretary LaHood urged the Council to continue to be forceful and direct when advocating for HSR.

Our members sincerely appreciated the candid discussion organized by Minority Leader Nancy Pelosi with fellow Bay Area Representatives George Miller, Barbara Lee, Anna Eshoo, Lynn Woolsey, Mike Thompson, Zoe Lofgren and Mike Honda. All in the room lauded Congresswoman Anna Eshoo for her leadership and resourcefulness in keeping the promise of high speed rail alive on the Peninsula.

Continuing the “top-shelf” trip, the White House arranged for Carl Shapiro, Chair of the President’s Council of Economic Advisors to brief our members. He relayed that the economy used to be “Washington-proof,” but no longer is. Fortunately, the mood was lifted by a buoyant Ambassador Demetrios Marantis, the Deputy U.S. Trade Representative who told our group that the President had just sent the Colombia, Panama, Korea free trade agreements to Congress for approval, agreements for which the Bay Area Council has advocated for years.

The trip ended with lunch with Raphael Bostic, HUD Secretary for Policy Development and Research. Bostic echoed an earlier meeting with Carol Galante, the head of the Federal Housing Administration, confirming the administration’s alignment with the Council on regional housing planning, new urbanism and the need for a re-start to the housing industry.

The access and impact of trips like these make fulfilling the Council’s mission much easier and are a testament to our members’ combined clout.

Jim Wunderman

Council Hosts US Ambassadors Visiting to Promote Latin America Trade

The Bay Area Council played host this week to top U.S. Embassy officials from Brazil, Chile and Peru who were completing a five-day national tour to promote business and export opportunities in Latin America as part of President Obama’s National Export Initiative. Council President Jim Wunderman welcomed more than 60 Council members and California Lt. Governor Gavin Newsom as U.S. Ambassador to Chile Alejandro Wolff, Ambassador to Peru Rose Likins and U.S. Charge d’Affaires to Brazil Todd Chapman described the wide range of export and business opportunities available and the services the embassies and U.S. Commercial Service provide to help businesses enter and expand in these dynamic and fast-growing markets. To contact these Embassy officials, contact Genevieve Herreria at gherreria@bayareacouncil.org.

Council meets with U.S. Deputy Secretary of Transportation John Porcari

Council Getting Busy on High Speed Rail

The Bay Area Council has been busy these past two weeks firming up support for high speed rail, as a deadline looms for the release of a much-anticipated business plan and legislators in D.C. played politics with transportation funding.

On the D.C. front, funding for high speed rail got caught up in partisan budget wrangling, with the House of Representatives this past week eliminating $8 billion of funding that President Obama had requested for the 2012 fiscal year. After a similar move in the Senate, Senator Dianne Feinstein helped accomplish a modest reversal, winning approval for a placeholder $100 million appropriation. High speed rail will be among the topics the Council discusses with Feinstein during our upcoming trip to the Capital. Despite the shuffling in D.C. over the 2012 budget, California’s $3.3 billion from the American Recovery and Reinvestment Act (ARRA) and other earlier appropriations remains secure, and funding for the initial construction project in the Central Valley is not in jeopardy.

Closer to home, Obama’s top two transportation officials, during visits to the Bay Area this week, reiterated in meetings with the Council the President’s strong commitment to high speed rail. Council CEO Jim Wunderman spoke privately with Transportation Secretary Ray LaHood, who was in town last week for the Asia Pacific Economic Cooperation conference, and made it clear to Wunderman that securing funding for high speed rail continues to be among the President’s top priorities.

And, at a meeting hosted this week by the Bay Area Council at the request of San Francisco Mayor Ed Lee, Deputy Secretary of Transportation John Porcari said that despite hitting a “few bumps in the road” high speed rail has a “strong future.” Porcari was here to outline the President’s American Jobs Act, but much of the discussion among about 20 elected, community and business leaders at the Council’s offices focused on transportation funding and high speed rail. Porcari noted that the nation’s interstate highway system when it was first proposed also attracted noisy naysayers, who later changed their tune once they realized the importance of the network to economic growth.

High speed rail makes particular sense for California, Porcari said, where it can provide an alternative to in-state air travel and preserve limited airport capacity for transcontinental and intercontinental travel and cargo. High speed rail will figure prominently during our D.C. trip from Oct. 4-6, with meetings being scheduled with both LaHood and Porcari. To participate in this trip, contact Council Senior Advisor George Broder at gbroder@bayareacouncil.org.

Also on the home front, the Council has met in recent weeks with Governor Brown’s new appointees to the High Speed Rail Authority, Dan Richards and Senior Jobs Advisor Michael Rossi, about the upcoming release of the business plan, building support statewide and securing federal funding.