An interview with...
organization recently published a report on the economic future of the
Sacramento Valleys. What kind of prospects did you find for the Sacramento
region when you wrote this report?
Well, first of all
we found that the region itself has grown fairly significantly in the
order of 20% from 1990 to 2000. It was a growth that involved a number
of innovative economic opportunities across the valley -- from agriculture
to electronics to software to medical devices, scientific and health
products. The real opportunity for the region is to shape its economic
growth. The region will grow in the future. All signs point to that;
all the external forces point to that. The question is what kind of
growth, and to what end?
your report you looked at four distinct regions. Could you sort of outline
those for me?
As we look at the
regions and we look at the data, it seems that there were four regional
economies that were fairly distinct. There were many similarities within
those regions, without a doubt, but there seemed to be four distinctive
economies. From the Sacramento metropolitan area; to the North Valley,
which is Shasta County and centered in Redding; to the mid-valley, which
includes Butte County and Chico with Chico being the core of that; and
the agricultural heartland, which is a number of counties and parts
of counties in the core of the Valley. That really has a similar economic
identity. We saw that as a way to organize data, and to look at the
opportunities across those regions.
do you meld that diversity into a viable economy?
Well, each of these
regions is a viable economy, and it's really a focus on, what we can
do in the future? Where can we go with what we see as some of the exciting
new opportunities that have developed in the past decade? Do we enhance
those opportunities? Do we continue to grow in those high-value areas?
Or do we ignore them and run the risk of having them go elsewhere? I
think that is really the focus of this report: one of opportunities
and how to take advantage of them.
talk a bit about what it takes to succeed in an economy like the Sacramento
I think not only
the Sacramento Valley, but all economies and regions need to think about
what kind of opportunities they have before them. One of the things
we lay out and talk about in the report is needing to think about how
to broaden the economy, so you look at other sectors. If you're too
narrowly dependant on either one or two sectors that puts you at risk.
But that's not enough; you can have a fairly diverse economy that is
a low quality economy. And so you need to think about increasing the
quality -- the quality of the jobs, the quality of the companies --
and continue to move up the quality chain in your economy. Even that
is not enough because a lot of people are focusing on those variables
as well. A third thing you need to be thinking about is how to deepen
the distinctiveness of your economy. All of these economies that we
looked at, these regional economies within the Valley had distinctive
areas where they had developed a top capability. We have to look at
those and deepen our ability to compete. Because when you're competing
in a world marketplace, you need to be able to be distinctive in a profound
way. So broadening the diversity, deepening the distinctiveness, increasing
the quality, those are the objectives in economic development in this
day and age. How to do that? Leadership must play a very strong role
in putting those pieces together. I don't mean just the elected leadership
-- the business leadership, a really wide, diverse group of leaders
from business, the community and education, and the public sector is
really required to focus the region on these types of opportunities.
Many of the opportunities will come to this region naturally. You don't
necessarily need to work hard for the opportunities to sell yourself
as the low cost producer, to offer cheap land. This is a low cost area,
so there will be opportunities that gravitate. What do you do when you're
trying to enact a proactive strategy? You shoot high, and you shoot
in a direction where you can really improve the economy, the diversity,
the distinctiveness, in the way that will provide opportunities for
people to improve their standard of living.
that in mind, this has got to be one of the most diverse areas in terms
of population. Given the various ethnic groups, and the expected influx
of immigrants both internationally and regionally, from California and
out of state, what does that do to an economy in terms of the future
of education and jobs?
I think the prospect
of future growth in this region presents a challenge, and that is to
ensure that there are quality jobs waiting for people who come to this
region -- but not leave behind the people who live there now. To develop
a strategy that will provide opportunities for the people living here,
their offspring, as well as people from the outside. People from the
outside will have new ideas, they'll have new skills. If this works
out right it will provide innovation and excitement to the region. But
it can't be seen as a zero sum game where the people coming in are taking
away jobs from the people that live here. There must be a way to find
a strategy that will bring in additional talent but also prepare people
locally for opportunities.
for me if you could the differences between the Sacramento Valley and
the San Joaquin Valley in terms of economy.
I think both have
different specialties. There are certainly similarities because of the
agricultural base. They're economies that have developed differently.
Let's take the North Valley economy -- Shasta, Redding, the growth of
healthcare, and scientific and health products, which is very different
than Fresno, which although it has a very strong agricultural base,
it has developed a precision irrigation technology cluster and in a
way that is great. If you look at them top to bottom, Sacramento Valley
and San Joaquin Valley, there's an enormous amount of economic diversity
-- which is a good thing. There is also an enormous amount of distinctive
specializations up and down the Valley; that is a good thing. The challenge
is to continue to grow and to keep developing high quality opportunities
in the economy. So you have these exciting possibilities -- what are
you going to do with them?
heard that there's a lack of capital, finding people to invest in these
new economies. What are your thoughts on that?
Well, a couple of
things. First of all, good ideas often find capital, and to be well
networked into sources of capital wherever they are globally is good
thing. So the more communities are integrated into the global economy
versus isolated from it, the greater the possibility for access to capital.
That's the positive side of it. In addition, what we have found in a
lot of regions is that there's a lot of capital presiding in the regions
that could be personal wealth, or other sources of capital, that could
be brought into exciting economic opportunities but often is not. So
a case has to be made to those who are funding locally, and I think
one of the breakthroughs interestingly has been in the Sacramento metropolitan
area. They have made a lot of progress in finding investors -- a very
different situation than 10 years ago. There are a number of investors
that are looking for homegrown opportunities in technology and software
and other types of businesses in the Sacramento metropolitan area; didn't
necessarily have to go to Silicon Valley to find the venture capital.
But "angel investors" can be found in any community. The question
is: are there ways to get the people with the ideas together with the
people with the money?
out for me your view of building up Highway 99 to accommodate growth
for the cities up and down the strip?
We have here in
Highway 99 a major thoroughfare that should be the main street of the
San Joaquin Valley, but instead we treat it like a back alley of the
San Joaquin Valley. When they brought in potential clients and employees
for the Valley, and they would drive them down 99, the image they got
of the Valley was of a backward place, one that didn't care about how
it looked. It didn't really project the innovative, exciting, historic
place to live, and there was a lot of frustration. That has translated
into an emerging focus on improving not only the look of Highway 99
but also the economy that goes along 99. An innovative economy, an image
that really puts the best foot forward of the region that says that
this really is an exciting place. We have exciting economic opportunities
here. We are a part of this new economic environment, and we're open
for business. And "Oh, by the way," this is a region with
a lot of history and culture and we're proud of it and we're going to
showcase it. Highway 99 is a vehicle for that. It happens to run through
all the major communities. That's the history of the region. For efficiency
purposes Highway 5 was built, but Highway 99 remains as that historic
cultural icon, and now looking into the future it maybe becomes the
image of the next economy, the next valley to come.
know it goes deeper than that; in some respects, it's aesthetics.
it's the image you want to project and I think the core of the objection
of these business people is that this is not reflective of who we are
today. It is an outmoded image. It is not about PR; this is not about
being something you're not. It's about us becoming something different.
Our economy -- look at the numbers, and there are some exciting economic
opportunities developing in the San Joaquin Valley, and our major thoroughfare
doesn't show that image at all. So it becomes a metaphor for the whole
Central Valley to say, "We need to be projecting more of what we
are becoming, rather than some sort of image that we're either not anymore,
or are moving away from." That's at the core of it. That's why
there has been so much passion about the redevelopment, the reunification,
the focus on Highway 99 as a symbol of what this valley has become.
And also to be honest with you, a very good sign that leaders in the
Valley don't want to accept a static image of what they are, but rather
a dynamic image that can continue to change and also reflect a cultural,
historical image that's important to people in the region -- and is
an important calling card to people about quality of life for people
that may come in the future.
you think it's a matter of having an image thrust upon the Valley? Everybody
sees it as the breadbasket, the produce basket of the world. It's almost
as if they have to live up to that, and it doesn't give people an opportunity
to think of the region any other way.
I think that's true.
Without a doubt, they are the world's top agricultural region and if
that is to be maintained, it requires investment and certain way of
life -- economic as well as social. What we found was that there were
a number of activities, perhaps partially driven by the agricultural
success of the Valley -- but it goes beyond that. A good example is
the number of companies working in precision water flow technology.
This obviously comes out of the strong need for water flow technology
in agriculture; for irrigation, and water conservation. But obviously
there are many other applications for water conservation technology.
There are a number of parts of the world going through droughts right
now that require this type of technology and this kind of expertise.
The mistake is to look at the capabilities of the Valley narrowly, rather
than saying, "There are other ways of applying what we're good
at -- what we've become the best in the world at -- to other needs across
the global economy." And that's part of the opportunity -- or taking
advantage of new opportunities like e-commerce -- to be a staging area
for major urban areas in California for e-commerce deliveries. So now
you're talking about a logistics capability versus simply a warehouse
and distribution capability, or as opposed to a call center capability.
You're talking about the 1-800 capital of the United States perhaps
for customer service, with sophisticated customer service as being the
focal point. So there are these kinds of opportunities that have been
produced in the Valley that may have broader applications or more sophisticated
applications than otherwise we thought. It really requires taking a
closer look and seeing what kinds of opportunities you have.
of the figures I've read indicate that, even though the incomes of people
are increasing, there's still a divergent poverty pocket which is a
problem -- specifically in the San Joaquin Valley. How do we remedy
that? Is it a matter of education or job training?
I think that to
participate in economic opportunity, the reality is new skills and knowledge
are required, and the ability to acquire that on an ongoing basis, in
a career progression. I think that's the reality of the situation. Certainly
there are other barriers to participating in economic opportunity. But
if we bridge those kinds of gaps, we need to make sure all people have
a chance to participate in these growing areas. Now, we would not even
talk about this if this weren't a region that did not have barriers
of economic opportunities. If this wasn't a region that was creating
these opportunities, it would be a much more difficult situation. But
it is beginning to create those opportunities. What we're not doing
is doing a very good job in preparing people to participate in those
opportunities. It's not easy to do, and they're just emerging opportunities.
A lot of times it's very difficult especially for educational institutions
to know exactly how to make the new investments, and when to jump into
the new training programs and all that. We need to be working more closely
together -- education, industry, elected officials, etc. -- to be able
to sense earlier when these opportunities are happening; to be able
to move people into some of these economic opportunities with skills,
education, and support, and really fundamentally get them onto a path
to a higher standard of living. And that's the challenge. Can it get
done? Can it get done across all those regions? I think the jury is
out on that, but I think that's the pathway of opportunity for people
in the Valley.
anticipation of the new University of California campus, you see all
kinds of growth and development in the downtown area. Do you think an
institution like UC is enough to sustain a new growth for an area?
I don't think that
any single institution or firm is going to carry the load here. What
can happen is that new institutions like UC Merced can be a tremendous
catalyst. But a lot other things have to happen. A lot of working relationships
with industry, depending on what the institution is going to be. It
can't be just about the city of Merced; it has to be a regional catalyst.
All those kinds of things; I know in the planning they are trying to
address all those possibilities, that kind of an institution can be
a broader catalyst. What I think this kind of institution does represent,
and what a number of the opportunities laid out here represent, is the
following: that in the future, both the San Joaquin Valley and Sacramento
Valley will draw more of its wealth from its human resources as opposed
to its natural resources. Natural resources will continue to be a very
important part of the economic well-being of this region. But increasingly,
and we see it in the data, these regions are diversifying, they are
becoming distinctive. These economies are becoming of higher quality
and that depends on the quality of the human resources. And that will
become more and more necessary for success in the future.
your report you published a chart on the progress of change; could you
go over that for us?
I think that in
the Sacramento Valley, there's a change underway in those areas I've
talked about: distinctiveness, diversity, quality, and leadership. The
Valley has moved away from a situation in terms of distinctiveness,
where there's really been an emphasis on its role as a low cost location.
And that made sense in an earlier era. Now it's transforming into a
"lower cost" area that's able to support high quality specializations.
So the area is still a cost advantage, but really the emphasis is on
the high quality specialties. In terms of diversity, we had a lot of
dependence on natural resources and government in this region. That's
changed, there's more of a diverse portfolio of companies based not
only on natural resources, but human resources. In terms of quality,
the region is dependant on its quality of natural environment. Now,
not only with a quality natural environment, but we've got a growing
number economic choices and lifestyles. People don't come to the region
simply for the quality environment. They will -- and it's clearly an
important asset. But they come because they can do interesting work,
and they can live different kinds of lifestyles. So there has been a
draw there, and that's been important shift. I think the final shift
is in terms of leadership. I think initially a leadership arose to diversify
and reach out and attract companies, and diversify what was a very narrowly
based economy. That was the right thing to do based on the circumstances.
Today though, it's become more of a focus -- not only the external focus
of attracting companies, but also the internal focus to encourage homegrown
enterprises, entrepreneurship. It's not either/or; its both, so that's
a shift that's underway. So we see these shifts in those areas, and
it's something that's underway and you see examples of it across the
you tell me perhaps what industries would be more open to entrepreneurial
activity? I know the high tech area in Sacramento and Placer Counties
has a lot of entrepreneurial activity. Are there any others you can
think of in terms of industry types?
In terms of entrepreneurship
and new enterprises and innovation, it's really important to understand
that isn't just about high tech. This is about improving technological
innovation across a number of sectors. So entrepreneurship, innovation
-- absolutely. In health care, in tourism, in areas we don't necessarily
associate with that. There needs to be innovation across the whole spectrum.
And that's what we talk about here. Let me say it again: I think it's
an important point to say, because many take a look at it and say, "Its
all about high tech." It isn't. Entrepreneurship is not just about
high tech. It is about innovation across all industries. In terms of
products and processes, that's what the new economy is all about. It
is about that level of innovation and no one is excluded from that.
It also means everyone can participate and with the right set of strategies,
the new economy, entrepreneurship requires growing numbers of people
with the skills and knowledge to compete. There's a great opportunity
to add to the equation.
the powers that be follow the guidance you've given in your report,
what do you see for the Valley in say 2020 or 2030?
I think we would
see a regional economy, or sub-regional economies, that would have --
over a period of time -- broadened their diversity, deepened their distinctiveness,
and improved their quality such that you would see clusters of innovative
entrepreneurial companies thriving across the geography, across jurisdictions.
You would have an image to match. It would be a region where the economy
and the quality of life are compatible, and even reinforcing. And it
would be a region where you would see that people participate in economic
activities. It would be a normal level of participation. The standard
of living, broadly shared would be rising.
much time do you think the Valley has in terms of developing this new
mindset before it goes into meltdown?
Well, the people
keep coming, so the Valley needs to get about the business of determining
its own destiny. And people will keep coming. The choice before the
Valley is to find a way to take the high road and look at its distinctiveness,
diversity, and quality and make choices about the kind of economy it
wants to have -- rather than letting forces just have their way. I can't
sit here and tell you what it will look like but what I can say is that
there is an opportunity to choose the Valley's destiny. And it will
be up to leadership and the people of the Valley to actually do that.
how does this translate into approaches for the four regions you mentioned?
I think it's important
to understand that for each of the regions of the Sacramento Valley,
none of them has to follow the pattern of someone else's success. There
doesn't need to be a cookie cutter approach here. Each of these regions
can define their destiny, on their own terms, can pursue a strategy
of deepening the diversity, broadening the distinctiveness, increasing
the quality of their economy, compatible with their own unique quality
of life. That's the opportunity of this new economic environment we're
in. You can determine how you put the pieces together. Everybody will
look differently, and there's room for everybody to succeed.