When it comes to vitality and innovation, size has its benefits. The state of California is at or near the top of a wide range of economic and demographic statistics, so dominant that it is in many ways more than just a state. Its size, along with an inventive, can-do attitude on the part of its people and its leaders, set a tone of problem-solving and forward-thinking.
"The governor refers to California as a nation-state because of the sheer geographic size, the population, the seventh-largest economy in the world," says Brian McGowan, deputy secretary for economic development and commerce. "We really are like a country, made up of lots of regions" - each with its own economic makeup, cost structures and competitive advantages.
Acting On Its Own
The past few years have provided a number of examples of how the ability to act as a "nation-state" has put California in charge of its own destiny, and put it in a position to lead the way for others. Consider the state's infrastructure initiative. Fixing infrastructure has been at the forefront of national public discussion since the interstate highway bridge collapse in Minnesota last year, but the state was already making big infrastructure plans before that. "We're not waiting for the federal government to do it for us," says McGowan.
About $20 billion is to be spent on transportation infrastructure, upgrading public infrastructure and reducing congestion. Projects that impact the movement of goods are to be addressed as well, says McGowan, followed by affordable-housing projects. "We're taking the challenge head-on and will continue to be a global leader," he says.
For another example, consider how the state approached the sometimes controversial issue of stem cell research. For several years, the nation has debated the merits and ethics of expanding medical research in areas where stem cell-linked advances might be possible. Other countries, meanwhile, have moved ahead with their research programs. California decided to act more like a country than a state.
Voters in 2004 passed a $3 billion R&D initiative aimed at making California a global leader in stem cell research. The approval paved the way for creation of the California Institute for Regenerative Medicine, or CIRM, which is charged with distributing the funds. Through February, CIRM had approved 156 research grants totaling almost $260 million, making it the world's largest source of funding for human embryonic stem cell research. In May, CIRM's Major Facilities Grants program expects to approve another $262 million in funding for projects likely to generate nearly a half-billion dollars in matching funding commitments.
The stem cell initiative seems to be having its intended effect - allowing California to chart its own course much like an independent country would. "The research facilities established by the CIRM Major Facility Grants will provide a safe haven from federal government restrictions for stem cell scientists to conduct research," predicts Alan Trounson, president of the CIRM. "That will lead to therapies and cures for millions of patients who suffer from chronic disease and injury."
CIRM also has provided grants to M.D. and Ph.D. scientists, hoping to persuade them to base their work in California. "A key objective of these grants is to build a strong, statewide foundation of extraordinary young scientists and clinicians whose faculty commitment is to stem cell research," says Robert Klein, chairperson of the governing board of the CIRM. "This is an opportunity to build the intellectual infrastructure that will carry this critical new field of research forward in California's leading universities, medical schools, and research institutes."
Stem cell research is just one area of medical R&D fueling California's life sciences sector. McGowan points out that just about everybody wants a piece of this lucrative pie, but California is fortunate to have three distinct regions that are busy with life sciences activity: the areas surrounding San Francisco, San Diego, and Los Angeles/Orange County.
Take climate change as another example. California has long been at the forefront when it comes to putting lower-emitting vehicles on the roads. Now, the state is busy meeting and signing climate-protecting agreements with international representatives from such places as Mexico, South America, the United Kingdom, and Canada, as well as other U.S. states. "We recognize it as something that needs to be done and something we can't wait to do," says McGowan. One recent example is the memorandum of understanding signed by Governor Arnold Schwarzenegger and Mexican President Felipe Calderón, vowing cooperation in environmental protection, conservation of natural resources, and the fight against climate change.
Another example is the recently announced solar installation project on ProLogis rooftops in Fontana. It will be the largest such installation in the country, able to power 162,000 typical California homes with green energy. As Schwarzenegger noted in making the announcement in March, "If commercial buildings statewide partnered with utilities to put this solar technology on their rooftops, it would set off a huge wave of renewable energy growth." That's the strategy behind the state's "Million Solar Roofs Plan" unveiled in 2006, an incentive program aimed at encouraging placement of solar panels on at least a million rooftops, which would create some 3,000 megawatts of green energy and cut greenhouse gases by 3 million tons, which would be like taking a million cars off the road.
Still another recent example is the state's response to economic troubles in housing and credit. State leaders have met directly with lending-industry representatives to come up with ways to mitigate the ill effects of the subprime crisis on California neighborhoods and citizens. "There are some innovative approaches," says McGowan.
Even more examples of California taking its future into its own hands:
• The state is boosting educational programs in an effort to bring 20,000 new engineers into the work force.
California has embarked on its own plan for bringing health coverage to
the uninsured and underinsured, ultimately hoping to benefit business'
bottom lines and the state's quality of life.
• California is
investing in job creation through programs aimed at newly discharged
veterans, as well as nurse training. The state also recently announced
$10.5 million to boost training and job services for residential
construction workers and others whose jobs have been affected by the
slump in the housing market.
Victories and Successes
have always written off manufacturing as a thing of the past," says
McGowan. Yet the California manufacturing sector continues to record
successes and expansions, he says. Here are some examples from recent
• USG Corp. picked Stockton for a new environmentally
advanced manufacturing plant that will use recycled materials to create
drywall. The company was looking at sites in Oregon and Nevada, but
chose the Stockton location, citing the state's healthy business
climate and the site's proximity to Bay Area ports. The $220 million
project is to open in 2010 and create up to 170 well-paying jobs along
the world's largest drywall manufacturing line.
Manufacturing California is investing $62 million into a plant that
will produce door frames for Toyota's Matrix and Pontiac's Vibe, both
built in Fremont. The three-phase project in Stockton could employ as
many as 1,200 people by 2013.
• The Cargill Beef packing plant in Fresno announced plans to add about 200 jobs as part of a $105 million investment.
United States Steel, SeAH Steel, and POSCO Steel picked the California
community of Pittsburg for a joint-venture manufacturing plant called
United Spiral Pipe. The $93 million plant is to produce large-diameter
steel pipes and employ as many as 175.
It's no surprise that
R&D is big business in California. Among the big news in recent
months, Genentech announced plans to create some 160 jobs by building a
research laboratory in Dixon. The 140,000-square-foot building will
house biotechnology technicians and research scientists.
also continuing to grow our leadership in clean air technology, green
technology and nanotechnology," says McGowan. Aerospace, too - among
other things, the state has a significant role in the creation of the
next generation space vehicle and new Mars rover, he says. Though the
state's not as known for space launches or Mission Control, the fact is
that, according to McGowan, "NASA spends more in California than in any
Innovative business developments take many forms
in California, some with spectacular potential. For example, the
University of California-Irvine's California Institute for
Telecommunications and Information Technology is helping Unimodal
Systems develop control software for its proposed SkyTran personalized
rapid transit system. The system would move commuters in two-person,
"Jetsons"-like pods traveling at 100 miles per hour on elevated
magnetic field tracks. Not far away is Blizzard Entertainment, the
software designer behind the wildly popular "World of Warcraft" game,
which helped propel the California electronic gaming sector into a
California's greatest economic asset? State officials often place
higher education at the top of the list, including the 10 prestigious
locations of the University of California and the 23-campus California
State University system. Some 250 colleges and universities across the
state currently enroll about 2.5 million people, representing some of
the nation's best and brightest students. Many come to California to
learn and are so impressed with the quality of life that they never
leave. That helps to explain the fact that the state has the nation's
highest concentration of scientists, engineers, mathematicians, and
"We have a million high-tech workers, more
than any other state," says McGowan. In fact, that's one-sixth of the
entire nation's high-tech payroll, all in one place. More than
two-fifths of the nation's biotech workers can be found in California,
along with a third of the biotech company headquarters. The state tops
the employment list in such areas as computer systems design,
telecommunications, R&D laboratories, and engineering services.
to the list of assets is the availability of funding for both R&D
and entrepreneurial ventures. California receives more venture capital
than any other state, helping boost the innovation sector. The biggest
recipients include the software, biotechnology, telecommunications,
medical device, and semiconductor industries.
alive and well, too, despite the common reports of the sector's demise.
Since 1977, California has been the nation's top manufacturing state.
Of course, a lot of that is high-tech manufacturing, which accounts for
nearly half of the state's value-added manufacturing workers.
offers a different twist on the location advantage. True, a major chunk
of the nation's population lives outside that magical "within a day's
drive" circle that some locations herald. But, the state has a huge
population of its own - home to one of every eight Americans and
growing quickly - which makes it a prime location for serving lots of
customers. That's the reason why grocery giant Kroger signed a $207
million, 30-year lease for a 552,000-square-foot distribution center
southeast of Los Angeles.
And the fact that California is on the
West Coast, with nearly a dozen cargo seaports, means excellent access
to Pacific Rim markets and status as a logistics gateway for Asian
companies targeting American markets. No wonder thriving logistics hubs
have developed in the San Joaquin Valley and Inland Empire regions,
among others, and no wonder California is the top American destination
for foreign direct investment.
California is home to more than
100 Nobel laureates, lured by the combination of an innovation-based
economy and an enviable lifestyle. And what's not to like about life in
a state that has a moderate climate, beaches, mountains, deserts and
everything in between? There are a thousand golf courses, more than 40
snow resorts, nearly two dozen pro sports teams, and countless
world-famous wineries and vineyards.
"Talented people want to
live where it's cool," says McGowan. "California has a lifestyle that's
the envy of the world, and it attracts talented people from around the
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