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Location California: Diversifying Economy Shows Promise
California is experiencing an economic resurgence, riding on growth in key sectors including energy, clean technology, ICT, electronics, and the booming import/export trade.
Mark Crawford (April 2012)
 
California's economy is showing signs that is starting to roll:

  • California recorded its all-time best export trade year in 2011 with $159.3 billion in exports, surpassing the old record set in 2000 by about 2 percent.

  • California ranked first in the country for most net jobs in 2011, adding about 265,000 jobs.

  • In 2011 the Bloomberg Economic Evaluation of States Index placed California in the top three states for economic growth and recovery.

  • Two-way international trade through California's three Customs districts increased about 12 percent in 2011.

  • In February 2012 Standard & Poor's (S&P) upgraded California's credit ratings outlook from stable to positive.

These are some of the promising signs that California's economy, the biggest in the U.S. and ninth-largest in the world, is on the mend. According to the 2012-2013 Economic Forecast by Los Angeles County Economic Development Corporation (LAEDC), nearly all of the state's industries registered significant gains in 2011, with information and communications technology (ICT), education, and administrative and support services being the hottest sectors. In 2012 California is expected to see economic growth of 1.5 percent and the creation of 200,000 more jobs.

California's economy is as diverse as its landscapes: rugged northern California with its blend of natural resources, timber products, and manufacturing; lush central California valleys teeming with crops that support one of the world's largest food industries; and a California coastline bustling with harbors and modern, high-tech trade centers like San Francisco, Los Angeles, and San Diego. Following are economic snapshots of California's regions and the abundances that are uniquely their own.

Upstate California
Northern California's strengths are linked to its geography. Forests have long provided timber for the wood-products industries. Rich farmland brings in $3 billion annually in crop production, especially olives, prunes, rice, nuts, fruit, dairy, and a rapidly growing organic food sector.

With over 650 growers in the region, food packaging is also an important industry. State-of-the-art facilities process and pack millions of tons of tomatoes and other vegetables every year. Chico, Redding, and other communities are also recruiting other industries, including ICT and clean-technology companies.

Sacramento Region

The six-county Sacramento Region is one of the fastest-growing metropolitan areas in California and known for its ICT, clean tech, education, and health sectors. Sacramento ranked ninth on Forbes 2011 list of top U.S. cities for manufacturing. Local companies continue to invest in alternative energy and smart technologies.

Over the past year new manufacturing projects have included Japanese food processor Nippon Shokken's 140,000-square-foot facility and Siemens rail-car manufacturing plant. Mori Seiki, a machine tool manufacturer, recently announced plans for an 180,000-square-foot facility in Davis - the largest industrial project the Sacramento Area Commerce and Trade Organization (SACTO) has attracted in two years.

San Francisco Bay Area

Everybody knows San Francisco is a financial and high-tech hub for telecom, alternative energy, life sciences, biotechnology, software, and electronics. The area's reputation as a mecca of innovation for countless technologies continues to attract new business investment.

According to real estate firm Jones Lang LaSalle, San Francisco registered 1.8 million square feet of net absorption in 2011 - the highest positive net since 1988. This is easily demonstrated by Salesforce.com's recent expansion downtown, the biggest long-term lease in the city in more than a decade. On the high-tech side, SunEdison, a leading global solar company, announced the move of its headquarters from Maryland to Belmont, just outside San Francisco.

"Locating our headquarters in California, with its longstanding commitment to renewable energy, positions us to better support our customers," says Carlos Domenech, president of SunEdison. "Being close to Silicon Valley also gives us wider access to talent and companies that are motivated to solve the supply and demand challenges that electric power faces."

Silicon Valley
Silicon Valley continues to be a hotbed for technology and innovation. This four-county area is an internationally recognized center for ICT research and development. For example, Dell's new Silicon Valley Research and Development Center will occupy approximately 240,000 square feet of space in two buildings and employ about 700 people. In January 2012, Ford Motor Company will build its first dedicated research lab in Silicon Valley.

"Silicon Valley represents a deep and dynamic technology neighborhood and is far from Dearborn," says Venkatesh Prasad, senior technical leader for open innovation with Ford Research and Innovation. "With so many opportunities and so much potential, our new lab will allow us to scout new technologies and partners in their own environment."

Central California
(Central Sierra/Central Valley/Central Coast)

California's midsection is diverse, ranging from western mountain ranges through fertile farmland to the Pacific coast. Key industries are agriculture, agribusiness, light manufacturing, renewable energy, and logistics. As the most productive agricultural area in the world, crop production in the Central Valley is valued at about $20 billion annually. As a result, many food processors and agricultural technology firms have located here.

The booming food industry, combined with other manufacturers moving to Central California from the coast because of lower operating costs, makes the region ideal for warehousing and distribution. The Tejon Industrial Complex in Tejon Ranch continues to grow - a new expansion is adding 3.5 million square feet to a complex that already houses IKEA and Daisytek distribution facilities.

Los Angeles Region

With nearly $500 billion in annual output, Los Angeles County ranks among the world's largest economies and is well known for its film, entertainment, international trade, and technology industries. Its major research universities have created a reputation for global leadership in innovation - a quality attractive to leading companies like CODA Automotive, which in September 2011 opened its new 100,000-square-foot global headquarters in Los Angeles. CODA is a rapidly expanding electric vehicle and green technology company that increased its work force in California by 270 percent in 2011.

"We chose Los Angeles not only because it is one of the most significant early markets for the deployment of electric vehicles, but [also] because elected officials and business leaders have demonstrated their commitment to fostering a successful local clean-tech industry," says CEO Phil Murtaugh. "We look forward to creating more jobs as we expand and bring to market our all-electric sedan and energy storage products."

Inland Empire
This region, anchored by the cities of Riverside and San Bernardino, is located east of Orange County, Los Angeles, and Palm Springs. Key industries are transportation and distribution and heavy construction services. The region's distribution centers support trade coming from the ports of Long Beach and Los Angeles.

The Inland Empire is starting to diversify by bringing in "green" industries such as clean tech and recycling. For example, carbonLITE is building a 220,000-square-foot plant in Riverside - the largest bottle-to-bottle recycling plant in the world. The Coachella Valley iHub in Riverside also recently added four clean-tech companies to its roster, raising the region's profile as a center for renewable energy and green business.

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