The Role of Government in Support of Technological Development

Transcription

1 The Role of Government in Support of Technological Development Ru Weerakoon, Director, Industrial Development City of San Jose Redevelopment Agency First International Technological Innovation Seminar El Salvador August 23,

2 San Jose, CA El Salvador 2

3 Silicon Valley: the Valley of the Heart s Delight Slide Courtesy of Joint Venture Silicon Valley Network 3

4 San Jose Fact Sheet Founded in 1777 as Pueblo de San Jose, the first California civilian settlement Incorporated in 1850 as City of San Jose square miles Largest City in the nine-county Bay Area 3rd largest City in California 10th largest City in U.S. Population - 953,079 People 4

5 San Jose Quick Facts Diverse Community Educational Attainment Hispanic, 31.7% Other, 3.2% Asian, 29.4% White, 33.7% African American, 2.0% Graduate or Professional Degree Bachelor's Degree Associate Degree Some College, No Degree High School Diploma (or Equiv.) Less than High School 20% 19% 0% 5% 10% 15% 20% 25% 30% 18% 16% 15% 17% 15% Income Distribution and Wages 14% 12% 11% 10% 9% 8% 7% 7% 6% 4% 2% 0% Under $15,000 $15,000-$34,999 $35,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000-$149,999 $150,000-$199,999 $200, Source: US Census, American Community Survey, 2004

6 San Jose Quick Facts $180,000 $160,000 $140,000 $120,000 $162,939 $150,520 $119,490 Average Wages by Industry Cluster $100,000 $85,348 $83,034 $80,000 $71,971 $69,107 $60,000 $40,000 $20,000 $0 Software Computer and Communications Semiconductors Biomedical Creative and Innovation Services Corporate Offices Electronic Components 5.1% 5.0% 5.0% 5.0% Unemployment Rates 5.0% 4.9% 4.9% 4.8% 4.8% 4.8% 4.7% San Jose MSA California United States 6 Source: CA Employment Development Department, Joint Venture Silicon Valley; 2005,Labor Market Information Division; March 2006

7 San Jose Quick Facts San Jose MSA Industry Employment Profile 24.5%, Goods 874,400 Total Jobs 99% Nonfarm 656,400 jobs in Service Industry 75.1%, Service Other 4% Government 15% Trade, Transportation and utilities 20% 213,800 jobs in Goods Producing Construction 21% Leisure and Hospitality 11% Information 6% Financial Activities 6% Education and Health Services 15% Professional and Business Services 23% Manufacturing 79% 7 Source: CA Employment Development Department, Labor Market Information Division; March 2006

8 San Jose Quick Facts: Major Private/Public Employers 1 Cisco Systems 16,500 2 County of Santa Clara 14,860 3 City Of San Jose 6,670 4 IBM 5,800 5 San Jose State University 3,100 6 Hitachi 2,880 7 Xilinx 2,300 8 ebay 2,200 9 Sanmina-SCI 2, Adobe Systems 2, KLA-Tencor 1, Good Samaritan Hospital 1, San Jose Unified School District 1, Cadence Design Systems 1, Novellus 1, Altera 1, Flextronics International 1, Maxtor 1, Micrel Semiconductor Atmel 630 8

9 Housing Housing Units by Type Total Units San Jose City 301,848 SCC 612,129 New Housing Units by Type Single Family 831 Multi Family 1,951 Average Rental Rates, December 2005 Studio $ Bedroom $1,116 2 Bedroom $1,480 3 Bedroom $1,817 9

10 San Jose Quick Facts Quality of Life Cultural and Recreational Resources Family Resources Nightlife/Performing Arts Resources Professional Sports Resources Transportation Air: Annual Passengers 10.9 million Bus: Annual Ridership 30.0 million Lightrail: Annual Ridership 7.0 million Commuter Rail: Annual Ridership 4.7 million Auto: % of Workers Driving Alone 80% Crime Rate Per 1000 population. San Jose has the lowest crime rate of any US city with over 500,000 population San Jose Boston Denver Phoenix Seattle Portland Dallas 10

11 San Jose: Evolution of Capital of Silicon Valley Value Added Internet Personal Computer Integrated Circuit Defense Time Slide Courtesy of Joint Venture Silicon Valley Network 11

12 At the end of a wave the economy slows Employment in Santa Clara County End of Vietnam War Commercialization of the Integrated Circuit Semiconductor competition intensifies Second Wave: Integrated Circuit Cold War: defense cuts Third Wave: Personal Computer Internet Commercialization Fourth Wave: Internet Today First Wave: Defense Slide Courtesy of Joint Venture Silicon Valley Network 12

13 A Habitat for Innovation Environment that rewards risk and accepts failure Results-oriented; its about outcomes Smartest and most creative workforce Sound public policies that ensure fast time to market Industry Clusters: Large concentration of driving industry technology giants, thousands of start-ups and emerging companies, and specialized suppliers and professional service firms Unparalleled infrastructure including venture capital, legal, financial and accounting firms, banking institutions Intellectual capital for innovation including universities and national research institutions Collaboration between government, private industry, development community and academia High quality of life. 13

14 San Jose s Economic Structure Growing Economy Economic Opportunity and Prosperity Revenue Growth To Fund City Services 14

15 Outward-Oriented Industries Drive Rest of the Economy 15

16 San Jose s Industry Structure 16

17 San Jose s Industry Structure 17

18 Majority Work for Mid-Sized Firms 18

19 Young Firms Accounted for Most Job Growth in 1990s Source: Public Policy Institute of California 19

20 25 Firms Have 1,000+ Employees in San Jose 20

21 21

22 San Jose: #1 Community for Innovators in the US Venture Capitalists #1 Investment National Leader in Patents Productivity Double the Nation Exceptionally Well-Educated #1 in Technology Expertise Most Diversified Tech Economy Entrepreneurial Energy Highest Disposable Income in the Nation 22

23 San Jose Offers Unparalleled Benefits Business and Financial Assistance and Incentives Land Use Policies and Building Standards Timely and Predictable Permit Process that ensures fast time to market Site Identification & Development Assistance Investments in Infrastructure, Neighborhoods, Housing and Quality of Life amenities Incubator Programs and Entrepreneur Assistance Training & Workforce Development Small Business Opportunity Programs Small Business Ambassador Program International Trade Energy & Environmental Programs Partnerships with Business & Trade Organization Local Preference Programs Redevelopment Programs 23

24 Redevelopment In San Jose Investment: $2.9 billion Neighborhood Revitalization $317 million Increase Quality & stock of Affordable & Market Rate Housing $832 million Develop Public Facilities & Spaces $1.2 billion Initiate & Facilitate Private Development $497 million 24

25 Housing Façade Improvement Arena Infrastructure Culture Repertory Theater Tech Museum BioCenter Corporate Community Housing Convention Center Adobe 25

26 Industrial Development Work Program Industrial Project Areas: 5 Total Acres: 7881 Acres Total Companies: 2,200 Total Employees: 80, Total Revenues: $131 million Total Investment : $303 million Work Program Retention, Attraction, and Outreach Program Public Infrastructure Design and Construction New Land Use and Transportation Initiatives City Incubator Program and Small Business Support 26

27 City s Incubator Program Turning Innovation to Industry 1 st ENVIRONMENTAL INCUBATOR in the United States 1 st INTERNATIONAL INCUBATOR in the World 1 st SOFTWARE INCUBATOR in California The ONLY BIOSCIENCE INCUBATOR with wet labs in California Redevelopment Investment: $20 million since 1994 Sales tax generated: $14 million Ratio of investment to sales tax: 1:1.2 Launched 240 companies Generated 4,000 jobs Raised $550 million in equity funding 27

28 San Jose Incubator Programs San Jose BioCenter Attracts biotechnology and Bio-Convergence emerging technology firms 36,500 sf, Opened 2004, 17 resident clients Environmental Business Incubator Attracts start-ups developing environmental products 15,000 sf, Opened 1994, 70 Graduates, 70% retention Software Business Cluster Attracts early stage software companies 9,000 sf, Opened 1994, 110 Graduates, 70% retention US Market Access Center Attracts international firms to locate and expand in SJ 15,000 sf, Opened 1995, 68 Graduates, 60% retention 28

29 Incubator Services World-class business development and support service to on-site clients and affiliate members Highly talented management teams that nurture local and international engineers, programmers, and scientists State-of-the-art R&D, office and lab space Best-in-class business and financial services Resources, contacts and networking opportunities Industry workshops and training programs Business reviews Investor connections Access to university faculty experts and student interns Access to industry experts and service providers in accounting, finance, banking, business development, insurance, legal, marketing and regulatory development 29

30 New Businesses Drive Growth 87% of the region s job growth in the 1990s came from firms that did not exist before 1990 Of the 40 largest tech companies in Silicon Valley today, more than half did not exist in 1982 Only 4 of the 40 largest tech companies in Silicon Valley today were on the Top 40 list in

31 Business Climate Indicators, Feb

32 San Jose The World s Most Competitive Knowledge Economy 2005 Rank Region San Jose, US Boston, US San Francisco, US Hartford, US Seattle, US Grand Rapids, US San Diego, US Stockholm, Sweden Rochester, US Los Angeles, US Index Source: Robert Huggins Associates 32

33 High Concentrations of Creative Workers 33

34 Intellectual Capital University of California, At San Francisco *(40.3%) University of California, At Berkeley *(86.6%) Stanford University, Palo Alto *(95.3%) San Jose State University *(38.1%) 34 *Source: six year graduation overall rates

35 Jul San Jose Area Unemployment Levels At 5.0% 8% San Jose City San Jose MSA 7% 6% 5% 4% 3% 2% 1% 0% May-06 Mar-06 Jan-06 Nov-05 Sep-05 Jul-05 May-05 Mar-05 Jan-05 Nov-04 Sep-04 Jul-04 Source: Employment Development Department

36 21 SJ Companies Get Venture Funding In Q2 2 nd Quarter 2006 San Jose 21 (11%) Silicon Valley st Quarter 2006 Unavailable th Quarter rd Quarter nd Quarter st Quarter (4%) 15 (3%) 17 (10%) 15 (7%) Source: Mercury News, SiliconValley.com 36

37 San Jose Venture Companies Q2 Company Name Sector BA Systems Networking/Telecommunications Capella Photonics Networking/Telecommunications Discera Networking/Telecommunications FusionOne Networking/Telecommunications Maxxan Systems Networking/Telecommunications Scintera Networks Networking/Telecommunications Wichorus Networking/Telecommunications Altierre Software ArchPro Design Automation Software Availigent Software NeoAccel Perenety Teja Technologies Alta Analog Gaia Interactive BlueArc Software Software Software Semiconductor Consumer Business Services Fat Spaniel Technologies Business Services Intacct Maskless Lithography NanoNexus NeoPhotonics Business Services Industrial/Energy Industrial/Energy Industrial/Energy Source: Mercury News, SiliconValley.com 37

38 San Jose: Most Inventive City Rank Town/City San Jose, CA Sunnyvale, CA Austin, TX Palo Alto, CA Fremont, CA San Diego, CA Cupertino, CA Boise, ID Mountain View, CA Santa Clara, CA # of Patents 3,867 1,881 1,705 1,601 1,440 1,382 1,360 1,213 1,128 1,096 Source: Wall Street Journal, ipiq Utility Patents,

39 San Jose Ranks 5 th In Largest Number of Asian Owned Firms # of Firms Receipts $billions 1. New York, NY 112, Los Angeles, CA 47, Honolulu, HI 22, San Francisco, CA 19, San Jose, CA 16, Source: U.S. Census Bureau: Asian-Owned Firms: 2002 Asian Owned Firms,

40 2006 Venture Capital Outpaces Last Year $2.5 $2.0 $1.8 $ $2.1 $2.2 $1.5 $1.0 $0.5 $0.0 Qrt 1 Qrt 2 Venture Capital Investment Source: PricewaterhouseCoopers/Venture Economics/National Venture Capital Association MoneyTree Survey, 2 nd Quarter

41 San Jose s Vacancy Rates Remain Sluggish 25.0% Q2-05 Q % 22.4% 20.0% 19.4% SV Avg. 15.0% 13.8% 13.9% 10.0% 12.1% SV Avg. 5.0% 4.8% 4.5% 6.6% SV Avg. 0.0% Manufacturing Office R & D Source: NAIBT Commercial Vacancy Rates, San Jose and Silicon Valley

42 Strong Increase in June Occupancy Rate 80% 70% % 70% 60% 50% 56% 58% 57% 53% 50% 50% 50% 47% 49% 47% 54% 58% 51% 51% 50% 59% 59% 49% 52% 60% 41% 40% 37% 30% 20% 10% 0% July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Hotel Occupancy, San Jose 2005 vs Source: San Jose Convention & Visitors Bureau, Fiscal Year

43 YTD Passenger Traffic Up 2% 1,200,000 1,000, ,025,549 1,024, , , , , , , , , , , , , , ,000 0 July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Passenger Traffic, Mineta San Jose International Airport 2005 vs Source: Mineta San Jose International Airport, Calendar Year 43

44 As Cluster Employment Shrinks, Silicon Valley Wages Grow 44

45 As Cluster Employment Shrinks, Silicon Valley Wages Grow 45

46 Average Pay Per Employee Continues to Climb 46

47 San Jose Challenges Creative Destruction Structural Shifts Support Industries Global Business Operations Value Proposition Technical Talent Job Growth Regional Collaboration Intense competition and rise of competitor regions Off-shoring & outsourcing Technologies invested are eliminating class of jobs Companies focusing on core competencies 47

48 San Jose s New Reality From Industrial Economy to Idea Economy IT still in progress Convergence in bio, nano, information technologies with more than 100 convergence firms in the SJMA Need to continue to diversify base economy and retain jobs of all income ranges Implement and revise ED and political strategies as necessary, with relief from excessive regulations Keep costs low and grow revenue and jobs Invest in infrastructure, human capital, workforce training and housing Augment and strengthen partnerships between government, business, higher education, labor and community based organizations 48

49 San Jose: Factors for Success ENTREPRENEURSHIP: Turn ideas into revenue PRODUCTIVITY: Provide return on location INNOVATION: Stay one step ahead COMMUNITY: Ensure quality and adaptability SV s edge: Innovation + Entrepreneurship = Growth and Wealth Creation (new technologies) (new companies) 49

50 Contact Information Ru Weerakoon Director, Industrial Development San Jose Redevelopment Agency