Bay Area Council Blog: Science and Innovation Archive

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TESLA GIGA PLANT IS WORTH THE FIGHT

The Bay Area Council has been advocating over the past several months for California to step up its game in competing for Tesla’s proposed Gigafactory, and recently led a group of state legislators on a tour of the electric car maker’s Fremont manufacturing plant. In the following opinion piece published in the San Francisco Chronicle on Aug. 18, Council President and CEO Jim Wunderman explains why California must win this competition.

All major indicators show that California has emerged from the worst recession in living memory, when home values plunged, unemployment rocketed, and, on a couple of very embarrassing occasions, the State of California was forced to pay its bills with IOUs.  Driven by a boom in technology, primarily in the Bay Area and international trade in Los Angeles, all seems well again in the Golden State.  But it’s not.  The recovery is uneven, with painful pockets of very high unemployment and a shocking dwindling of middle class jobs.  According to 2014 Bureau of Labor statistics, seven of the top ten unemployment black spots in the nation are here in booming California.  Communities up and down the Central Valley like Merced, Stockton and Fresno still struggle with double digit unemployment.

So the very highly skilled and highly paying jobs are back, but the well-paying middle class jobs in manufacturing, agriculture and construction, that don’t require advanced degrees, are scarce.  Something must be done to help these communities, but what?

You may have heard of the car maker Tesla. Tesla is a California company, born in our unique innovation economy and is a standout California success story. The company is in advanced planning to build a “Giga factory” somewhere in the western United States. This huge plant will manufacture the next generation of batteries that will power, not just the cars of the future, but our homes and office buildings too. This once-in-a-generation venture will require a $4 billion investment by Tesla and will initially create 6,500 full time jobs followed by tens of thousands more in support and service industries, such as construction and retail.

Tesla’s mission is to “accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” To complete that noble goal, Tesla must get this plant up as quickly and for the least cost possible, and indeed, the plan is to be open and operational, making batteries and printing pay checks, in just over two years!

As you can imagine there is intense competition in the U.S. to attract Tesla’s attention.  Other states are offering huge financial incentives, land, and a fast tracked permitting process.  We too must use every tool available to us to compete for these jobs. California’s entrepreneurs and engineers created Tesla and we are the number one market for Tesla cars.  California is a world leader in renewable energy, energy efficiency, and ground breaking climate change legislation and it is clear that Tesla shares our values.  There is no reason other than a lack of will or imagination for this factory to locate anywhere but California.

There are several proposed sites in the central valley that reportedly meet Tesla’s needs from a logistics perspective.  Should Tesla select one of those, it is projected that a cluster of battery technology companies will soon follow, accompanied by a chain of logistics and supply companies along the I-5 corridor from Redding to San Diego creating tens of thousands of good paying middle class manufacturing jobs.  This factory will be a win for the whole state. It will kick start a new growth industry for the State and make us the world’s leader in battery technology and manufacturing.

With balanced and on-time budgets, a new water bond, and a strengthened commitment to clean energy, California is proving to the world that we are back, stronger than ever and ready for the future.  Losing the Tesla Giga plant would be a huge blow to our image, and a huge loss for our economy, particularly the middle class and the Central Valley.  Nevada, Arizona and Texas will push hard and a final decision is expected from Tesla in the very near future.  We urge Tesla to build this plant in their home state and we urge the Legislature and the Governor to step out of their comfort zones to make this happen in California.  This one’s worth the fight.

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CSU CHANCELLOR TALKS WITH BUSINESS LEADERS ABOUT CLOSING THE SKILLS GAP

At a packed forum hosted by the Bay Area Council and the San Francisco Chamber of Commerce, California State University Chancellor Timothy White on June 2 addressed top business leaders about the challenges facing the system, his priorities for addressing them and the need for close partnership with the business community. White talked about access to CSU, transfer and graduation rates, and alignment of education curriculum with job requirements. On the last point, White recognized the work the Bay Area Council is doing to address a yawning gap between the talent that employers desperately need to compete in a high-skills marketplace and the educational programs and degrees CSU provides. To engage in the Council’s skills gap work, contact policy Vice President Linda Galliher.

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BALANCING ACT: BIG DATA, PRIVACY AND SECURITY

As the Bay Area Council prepares for its May 19 advocacy trip to D.C. that will focus in large part on cyber security and related issues, the Obama Administration yesterday released a report of a special Big Data and Privacy Working Group convened by the President in January to examine the implications of proliferating Internet traffic and use of information.

The report – Big Data: Seizing Opportunities, Preserving Values — attempts to bring together perspectives from privacy advocates, technologists, consumers and many other stakeholder groups. Among many issues touched upon, the Working Group aimed to maintain a clear view of the private enterprise building around uses of Big Data, from improving understanding of healthcare treatment decisions to applications in public sector infrastructure and the smart grid.

The report comes against a backdrop of competing visions of national data breach legislation, including a draft bill announced this week by Sen. Dianne Feinstein and Sen. Saxby Chambliss to clarify the rules of the road for information sharing, especially with regard to industry concerns over liability. Many business groups, including the Bay Area Council, would agree that a national data breach standard would simplify a complex regulatory matrix.

The Council’s planned meetings in D.C. include visits with the Obama Administration and several authors of related bills in Congress (and their staff), where Council members will have an opportunity to express their views, concerns and goals for certainty in the potential new rules surrounding data security.

To engage in the Council’s cybersecurity initiative, contact Senior Advisor Matt Gardner. To participate in the Council’s D.C. advocacy trip from May 19-21, contact Policy Associate Brianne Riley.

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New Study Maps Dominant EU-Bay Area Economic, Investment Ties

Don’t forget Europe. When it comes to the Bay Area’s and Silicon Valley’s economic ties to the world, Asia and fast-growing China get much of the attention. But, a new comprehensive report the Bay Area Council Economic Institute released today (April 14) finds that where investment and economic integration are concerned, particularly in technology and innovation, Europe is the dominant player.

“Europe is by far the largest overseas investor in the Bay Area, and is the primary destination for Bay Area companies investing abroad,” says Sean Randolph, President of the Bay Area Council Economic Institute who co-authored the report with Vice President Tracey Grose. “The scale of this cross-investment overshadows the scale of cross-investment with China, and reflects a high-level integration of advanced economies.”

The study — Europe and the Bay Area: Investing in Each Other — assesses the diverse ways European talent, investments, and collaboration are significantly shaping the Bay Area’s technology and innovation economy. While technology remains the driving connector behind increasing business and economic integration with Europe, it spans a wide range of industries—including biotech, pharmaceuticals, IT, electronics, engineering, defense, financial services and retail.

The findings come as U.S. and European Union trade negotiators launched a fourth round of talks last month in Brussels on the Trans-Atlantic Trade and Investment Partnership (TTIP), which would expand markets and economic opportunities by lowering trade and regulatory barriers.

As connections between Europe and the Bay Area continue to increase, and with them, professional and creative networks, new points of innovation are appearing. The result, as report co-author Tracey Grose describes, “is the emergence of a post-national innovation system, where the frame of reference is not bounded by national or even regional borders but by the diversity and geographic reach of a company or an individual’s network.”

Among the key findings in the report:
•    European firms account for one third of all foreign companies operating in the Bay Area, making Europe the largest global direct investor in the region.
•    Europe invested $4.05 billion in private equity (including some venture capital) in the Bay Area in 2012, almost as much as the rest of the world combined.
•    Bay Area private equity (including some venture capital) investment to Europe reached $3.3 billion, exceeding total investment in the rest of the world.
•    56 percent of outbound investment by Bay Area companies goes to Europe.
•    The Bay Area has a growing presence of both major European companies and startups that are seeking to tap into its technology and innovation pipeline.

“I welcome the findings of the Bay Area Council Economic Institute’s study that clearly reaffirm the deep and broad business ties between the Bay Area and Europe, and the United Kingdom in particular,” said Priya Guha, UK Consul General to San Francisco. “The United Kingdom has the largest business presence in the Bay Area among European countries, and Bay Area companies have more affiliates in the UK than elsewhere in Europe.  A successful Transatlantic Trade and Investment Partnership (TTIP) negotiation will further strengthen these ties by adding over $100 billion each to the US and EU economies, 75,000 new jobs in California and a 26 percent increase in Californian exports to the EU. And a good deal of this economic benefit can be expected to go to the vibrant Bay Area economy.”

Measured by collaborative patenting, Europe is by far the Bay Area’s most significant innovation partner. Patent registrations that include a Bay Area inventor and at least one foreign co-inventor increased 307 percent between 2000 and 2012. In total, the number has grown from 643 to 2,612. This foreign co-patenting represents a growing share of Bay Area patents, expanding from 5.7 percent in 2000 to 11.3 percent in 2012.

The region’s close economic ties to Europe have also been good for San Francisco International Airport, which saw passenger traffic in 2013 grow 8.3 percent. Air cargo trade with Europe increased 4.3 percent by weight in 2013, while air cargo declined during the same period with other key trading regions, including Canada, Asia and South America.

The report was funded by a research grant from the European Commission along with support from Bank of the West, DLA Piper, San Francisco International Airport, Barbro Osher Pro Suecia Foundation, IDA Ireland, Enterprise Ireland, the Consulate General of Sweden, HSBC, United Airlines, Lufthansa, Wells Fargo and Europort.

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EXECUTIVE COMMITTEE SETS 2014 POLICY AGENDA

Sustaining the Bay Area’s economic growth, broadening it and positioning the region and the state for future prosperity were central to the policy agenda the Bay Area Council Executive Committee adopted this week under the leadership of new Chair David Cush, CEO of Virgin America. The agenda reflects several issues on which the Council has long provided leadership, but whose urgency has intensified as the regional economy continues on a fast upward trajectory. The Council’s policy priorities include:

Build more housing. The Bay Area has come up short over the past several decades in creating sufficient housing across a range of incomes to keep pace with demand. The shortage has become painfully apparent over the past 24 months with surging economic and job growth and spiking demand. Attracting the best talent to our region requires having sufficient housing. Under the leadership of Mike Ghielmetti, CEO of Signature Development Group, and Mike Covarrubias, CEO of TMG Partners, the Council’s Housing and Sustainable Development committee will focus on how we can create more housing and address some of the immediate issues related to the current shortage. To engage in our housing policy work, contact Policy Manager Catherine Lyons.

Improve transportation system. With economic growth has come increased demand on the region’s transportation system, including growing traffic congestion. From our bridges, roads and highways, to BART and other mass transit systems, we must find creative and actionable ways to increase the capacity of our transportation network to allow our economy to grow. John Eddy of Arup and Caroline Rodman of T.Y. Lin will lead this important effort. To engage in our transportation policy work, contact Vice President Michael Cunningham.

21st Century Infrastructure. California’s stature and prosperity are founded on decades of visionary investments in the state’s infrastructure—highways, college and university campuses, aqueducts and reservoirs—without which, California as we know it would not exist. But the new economic, environmental and technological realities of this century require a new understanding of essential infrastructure, one that includes and prioritizes the 21st Century Infrastructure of energy and communications networks. To engage in our 21st Century Infrastructure work, which is being led by PG&E CEO Anthony Earley and AT&T California President Ken McNeely, contact Policy Manager Adrian Covert.

Early childhood education. The Bay Area Council is a statewide leader in advocating for investment in early childhood education. Research is absolutely clear that there is no better investment for preparing our future workforce than investing in preparing children to enter kindergarten. Under the leadership of George Halvorson, former Chairman of Kaiser Permanente and Chair of the California First 5 Commission, the Council is readying a major statewide initiative aimed at raising awareness about the importance of early childhood education and increasing access in under-served communities. To engage in our early childhood education work, contact Policy Vice President Matt Regan.

China trade and investment. China is expected soon to move from third to second as California’s largest trading partner. The Bay Area Council is partnering with Governor Jerry Brown and the Governor’s Office of Business and Economic Development to operate the California-China Office of Trade and Investment, and we are looking forward to dramatically expanding that work in 2014. To engage with the CA-China Trade Office, contact state Director Genevieve Herreria. To engage in the Council’s global initiatives, contact Vice President Bing Wei.

Healthcare. The Bay Area Council has led the business community in preparing for the rollout of healthcare reform and ensuring that the new system prioritizes controlling costs and improving care. The Council will step up its work in this critical area of our economy in 2014 as many of these changes go into effect. To engage in our healthcare policy work, contact Senior Policy Advisor Micah Weinberg.

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GOV. BROWN ENGAGES WITH BAY AREA COUNCIL LEADERSHIP ON 2013 AGENDA

Clearly energized from his Proposition 30 victory, and preparing next year’s budget and his State of the State speech, Governor Jerry Brown sat down with the Bay Area Council Board of Directors Thursday for an informal, candid and productive discussion on a wide range of issues that was scheduled to last an hour but stretched for more than 90 minutes before he joked he better let his CEO audience return to work. In his inimitable style, the Governor humorously reflected on the “temptations” that the Legislature may now feel with its supermajority, shared some of the interesting political jockeying that produced Proposition 30 (giving partial credit to some unlikely and perhaps unwitting sources), and expressed views on both Democrats and Republicans in Sacramento that reinforced his well-known independent streak.  He went through much of what appeared to be his 2013 agenda.  He was very interested in the Bay Area Council’s approach to reforming CEQA.

The Governor engaged with the Board in a frank discussion about the state’s massive infrastructure needs, including water, telecommunications, energy and transportation and he noted the challenges of balancing new spending against the state’s considerable debt burden.  We discussed his thoughts about taxation and Prop 13.  He expressed concern about climate change and California’s readiness to address the massive economic and human impacts of both severe weather (a la superstorm Sandy) and sea-level rise on low-lying regions like the Bay Area.  And he discussed his strong interest in improving California’s  educational performance through such vehicles as student funding formulas, new common core standards and online technologies.

Thank you to Governor Brown for his time, Kaiser Permanente and CEO George Halvorson for generously hosting the meeting.

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EXECUTIVE COMMITTEE ADOPTS 2013 BAY AREA COUNCIL POLICY PLATFORM

With victories and major progress in 2012 on all of the Bay Area Council’s top policy priorities, the Executive Committee this week adopted its 2013 agenda. Thank you to all our members for their valuable and thoughtful input over the past two months in identifying our policy priorities, including:

21st Century Infrastructure. Economic growth and prosperity can’t be sustained without a modern infrastructure, not something California would immediately be accused of having. We will work to identify investment in transportation, energy, water, broadband, airports and other parts California’s vital infrastructure. We’ll also continue our important work on CEQA, which affects all infrastructure.

Public Pensions. We got the ball rolling this year with reform legislation that will end some abuses and lower costs for new public employees, while requiring that all employees contribute toward their retirement benefits in the future.  But there remains massive unfunded liability across many parts of the system, and the work continues, which if unchecked will threaten to continue bankrupting cities and consume ever-growing share of taxpayer dollars.  The work continues.

Healthcare. The state is less than one year away from launching its health benefit exchange. The Bay Area Council will be on the front lines of this process, leading the business community and giving our members a strong voice in how reform rolls out.

China/Trade. We’re focused on opening California’s trade office in China in the coming months and building on our own successes in forging direct economic partnerships with some of China’s leading tech districts.

Higher education. With massive cuts to all levels of higher education over the past decade, California is at serious risk of diminishing one of our greatest competitive advantages and a major source of our high-skilled workers.  We’ll begin with a Bay Area Council Economic Institute white paper examining the state’s higher education Master Plan.

President and CEO Jim Wunderman praised Chair Janet Lamkin’s leadership in bringing sharp focus to the Bay Area Council’s 2012 policy priorities that he credited for our success in:

–Securing early investment to modernize and electrify the Caltrain corridor;
–Winning reforms to the public pension system that will make them more sustainable going forward;
–Helping shape the framework for healthcare reform that keeps the focus controlling costs and improving quality;
–Passing legislation to reopen California’s trade offices and being named to open the first office in China; and,
–Keeping pressure on the Legislature to reform CEQA.

Michael Covarrubias beseeched members to become engaged with Bay Area Council policy staff and committees, observing that it is only through the collective leadership and involvement of our members that we are able to produce the kinds of results we did in 2012.

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New Study: For Every New High-Tech Job, Four More Created

When it comes to creating jobs in California across a wide range of income levels and employment sectors, a new report by the Bay Area Council Economic Institute and commissioned by Engine Advocacy concludes it pays to play to your strengths. For much of the Bay Area and other regions in the state, high-tech jobs are where the action is. The report – Technology Works: High-Tech Employment and Wages in the United States – shows that high-tech jobs have been more resilient over the past 10 years to economic downturns than other private sector industries, pay more, create more indirect jobs by far than any other industry and hold the most promise for continued growth. We were pleased to hand Governor Brown a copy of the report yesterday fresh off the presses.

Among the key findings:
– Employment growth in tech jobs — defined as those most closely related to science, technology, engineering and math (STEM) — outpaced gains in all other occupations by a ratio of 27 to 1 from 2001 to 2011.
– For each job created in the high-tech sector, approximately 4.3 jobs are created (multiplier effect) in other local goods and services sectors across all income groups, including lawyers, dentists, schoolteachers, cooks and retail clerks, among many others.
– The jobs multiplier effect in the high-tech sector is significantly higher than for almost any other sector. By comparison, traditional manufacturing has a multiplier effect of 1.4 jobs.
Demand for high tech occupations will be considerably stronger than demand for other workers at least through 2020.

Using federal labor statistics, the report also shows that while California continues to dominate in high-tech jobs the Golden State is not the only game in town. There was sobering news for Silicon Valley, which didn’t crack the top 25 among high-tech regions with the biggest percentage job gains. High-tech jobs are increasingly popping up in states and regions that historically have not been associated with high tech, including in the Rust Belt and South. This has important implications at a federal level for how jobs and economic policy is shaped. But the study’s findings don’t suggest that California should necessarily engage in hand-to-hand combat with other states for these jobs. According to another recent study by the Economic Institute, how the vast majority of jobs get created or destroyed in the Bay Area has little to do with companies moving in or out of the region and more to with the survival rate of start-ups across all sectors. The availability of high-skilled workers, inadequate housing supply that drives up costs and burdensome regulation have a bigger role in deciding the survival of new firms and job growth than what other states might be doing to lure away companies.

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BAY AREA COUNCIL ADVOCACY PROPELS IMPORTANT EDUCATION LEGISLATION

The Bay Area Council’s advocacy of legislation to improve the college readiness of California high school students got results this week when Governor Jerry Brown signed SB 1458 into law. The law, drafted by Senate President Darrell Steinberg, strengthens the measures used in the Academic Performance Index — California’s primary public school accountability tool. The new measures will include graduation rates and student readiness for college and career, among other things. In our letter to the Governor asking for his signature, the Bay Area Council wrote: “The eventual broader measures in pursuit of college and career readiness will better incentivize educators toward identified impactful behaviors.  Researchers project that by 2025, 40% of jobs will require a college degree. Without an increased commitment to college readiness and access, Californians with college degrees will amount to just 35% of the 2025 workforce, well short of what is needed.  Without these improvements to college and career pathways for students, the recovery and growth of the California economy will be hindered by a lack of highly educated workers.” To participate in the Bay Area Council’s education policy work, contact Linda Galliher.

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Gov. Jon Huntsman Jr. Headlines Bay Area Council U.S.-China Collaboration Symposium on Smart Cities

Some of the world’s leading companies and foremost experts in designing and building the “smart cities’ of the future will be gathering for the Bay Area Council’s inaugural U.S.-China Collaboration Symposium on September 28 hosted by Marvell Technology in Santa Clara and featuring Governor and former U.S. Ambassador to China Jon Huntsman Jr. The all-day symposium will bring together industry leaders in infrastructure, technology, energy, healthcare, urban planning, and sustainable development along with top government officials from the U.S. and China to discuss the need and tremendous opportunities for building smart cities. Among the companies participating in panel discussions throughout the day are the Energy Foundation, GE, Seimens One, Chevron Energy Solutions, VMware, HP, Cisco, HSBC and AECOM. Joining them are government leaders from the Bay Area, including Oakland Mayor Jean Quan, Palo Alto Mayor Yiaway Yeh and Santa Clara Mayor Jamie Matthews, along with top officials from some of China’s premier high-tech regions. Tickets and sponsorship opportunities are still available.

See the full program of speakers.

See sponsorship and ticket opportunities.