An interview with...
Central Valley Futures Inst.
hear a lot about the new economy developing in the San Joaquin Valley,
the Central Valley and the Great Basin. What are they looking at when
they describe the new economy?
In about 1997, the
economists around the state were saying that it was a new industry that
was going to take over the existing industries, like defense and aerospace
and things like that, with a decline in those industries. By the year
2000, those same economists were saying that the new economy was not
about a new set of industries, but it was about the same industries
that we have in the state competing in completely different ways. In
other words, information technology enabled things to move a lot faster,
have higher quality control -- all the gains of productivity -- and
it was about every industry innovating with the use of information technology.
does that affect the Central Valley?
It's a huge impact.
In the San Joaquin Valley, we have historically been built on industries
that didn't necessarily require a lot of innovation or technology. When
the global economy shifted towards this new knowledge-based economy,
it pretty much happened all around us and we didn't feel the impact
quite as much as other parts of the state. We didn't experience the
tremendous economic upswings in the late 1990s and the beginning of
this century, but it did get on our radar screen and a lot of our local
companies and industries started realizing that they too had to compete
in a different way, or else we'd risk falling further and further behind.
is "cluster-based" economic development, and how does it apply
to improving our economy?
development is really gaining a lot of speed all over the world. In
the San Joaquin Valley, we've been working on cluster-based strategies
for the last several years, with the help of Great Valley Center, and
Collaborative Economics out of Palo Alto. Essentially what cluster-based
economic development refers to is working from your existing industrial
strength. In other words, we don't want to be the next Silicon Valley,
and we certainly do not have the capacity that they do in the information
technology area -- but we do have real economic strengths in the San
Joaquin Valley. By organizing those industries that do compete well
in the global economy, and providing specific support to those industries,
they have a better chance of succeeding. They come together to work
collaboratively, so that they can compete better on a global basis.
The clustering strategy and the support that goes into that is simply
a way of making sure that those cluster industries get the resources
they need to expand and to compete globally.
that being developed now?
Yes, we're very
active in cluster-based economic development in the Central San Joaquin
Valley, which is the Fresno/Madera area. We want a water-technology
cluster that capitalizes on this region's strength in precision irrigation,
and other water and flow technology, and we're looking at how we can
transition or expand that industry to be one that really serves a worldwide
market. If you think about it, it makes perfect sense; as developing
nations all over the world grow in population, as our needs in freshwater
here in the Valley, in the state, and certainly in the nation increase,
the people who make the technology that make the maximum use of water
possible are pretty important. So we think that the San Joaquin Valley
can be the Silicon Valley of water technology.
other areas are you looking at besides water?
Similar to water
technology, we're looking at our strengths in agriculture and in looking
at the possibility of launching a food technology cluster. We're still
18 months away of having some real data on what we might be able to
do with that segment, but it would capitalize on our production side,
and hopefully maintain the processes and the science and the technology
that goes into turning the raw products into the finished product that
you and I enjoy as a consumer.
your report, you talked about moving focus away from Highway 5 to Highway
99. What will that do to the population explosion that we are already
feeling -- the belief that we're going to be one big city? Would bringing
in these industries and developing them around Highway 99 cause more
problems than it might relieve?
That's not an area
that I could really speak to, but the one thing I will say is that considering
the population growth that we're expecting, now is the time that we
-- as a region -- have to decide where we want that growth to happen.
Although a report has been developed that suggests that it happen on
the 99, I think that it's time to open up the discussion and get all
the regional stakeholders at the table to figure out, what does our
vision of success look like in ten years and twenty years? And there's
a lot of work being done in those areas -- but if we don't figure it
out now, it will just happen, and then we will have many unintended
consequences and a lot of the trouble that you're talking about.
many things cross over regional lines, in terms of developing these
different economies; do you think that it is possible to reach a consensus
on issues such as developing these cluster industries?
Yes, I think it
is possible. The real opportunity however is to make it specific. In
other words, instead of saying, as a region, "We have to make all
the decisions together"
that's a pretty difficult task to
achieve. But if you say, "Boy, we really need to come to some consensus
we best compete with in the global economy." It's a pretty simple
discussion to have and it's easy to identify our partners, and to look
at the data, and come up with a consensus. If you look at the issues,
many of them are regional in nature, and as long as they are taken on
single point, it is possible to bring people together. They are always
going to be somewhat macro, and then you have to look to be able to
implement them in each sub-region, and that's a challenge in and of
itself. But I do think that there's a growing momentum in the Valley
-- thanks to the work of many organizations; the Great Valley center
is certainly one -- to help us to at least start embracing the idea
that we should be thinking and talking together. In my experience, simply
talking to one another is a big step forward. It is not that we have
to reach the same conclusions or work at the same pace to get things
done, but those dialogues are a critical first step.
would a plan like yours do for the unemployment issues that are raised
very strongly in this area?
Clearly the goal
is to reduce unemployment, increase per capita income, and improve the
quality of life for all residents in the San Joaquin Valley. That's
what we're all doing. In terms of helping the unemployed now, either
through direct, new unemployment opportunities, and through addressing
underemployment -- which is just as important as unemployment -- it
is much more difficult to measure. But the fact is, if we could advance
folks who are underemployed into higher level positions where they could
benefit from income increases, we have an opportunity for the lower-skilled,
unemployed population to move up into entry-level positions and have
their turn to be trained and move up through a career progression plan.
It is really about moving the total work force through training and
increased skill development and all kinds of techniques to higher positions.
Clearly we can't do that without increased economic opportunities, growing
the companies we have, and overall, innovating.
broadens the issue further. Many of these people who are in position
to take these jobs have not had an education at all.
Work force is critical.
I would venture to say, that in this day and age, work force is the
premiere issue. It is not about attracting businesses. It is about improving
the work force. If you build it, they will come. In a knowledge-based
economy, companies compete better when they have smart people who know
how to innovate and know how to take their company to the next level.
The focus in the economic world is almost entirely on the work force
development. A really good quote that I'll give you just as an example:
Kansas City recently just went through a strategic planning process,
and their conclusion was, "The city with the smart people wins."
If your region can do what it takes to attract and retain intellectual
capital, you're going to see economic growth.
kind of comparisons can you see in something like the Sacramento Valley,
which is going toward this high tech profile, and the San Joaquin Valley?
Two things; I will
give you an example. I think that we have a very active, thriving, successful
healthcare and medical cluster in the San Joaquin Valley. Healthcare
delivery systems are excellent, some of the best in the country when
it comes to children's hospitals -- central California for example --
two very acute and thriving healthcare delivery systems. At the same
time, our large populations demand that we provide healthcare at pretty
substantial levels. I believe that we can leverage off of that and see
some economic opportunities from the existing systems that are here,
and couple that with some research and development moves towards biomedical
clusters, life sciences, combining our expertise in agriculture and
animal science. I think that there is some potential in Central San
Joaquin Valley for life sciences in general and for biomedical development.
Will we realize those opportunities as quickly as Sacramento Valley
is experiencing information technology? I think it's at least ten-year
proposition for us. But there are some real building blocks, and it
is just a question of getting people organized and doing the work. I
think we will see gains in the next five years. The other thing I think
we've seen real improvements in is entrepreneurial activity in the central
San Joaquin Valley. We've got a very successful business incubator program
and entrepreneurs that are really models for the rest of the Valley.
And people from all over the country come to see what we are doing here
with micro-enterprise development and some pretty sophisticated entrepreneurship.
Those building blocks are starting to fall into place, and that in and
of itself is a pretty big accomplishment.
you talk a bit about risk development and risk capital?
Money makes the
world go round. If we are going to have a thriving entrepreneurial community,
we aren't going to get there without risk capital. We have virtually
no risk capital in the San Joaquin Valley. There are some really strong
efforts that have just been started recently to change that, but up
until now, there have been no risk capital funds in the Valley whatsoever.
Fresno State recently created a partnership with a private sector company
called San Joaquin Venture Partners, which is trying to raise a fund
in order to invest in local start-up companies, and there are some folks
in Northern California who are trying to bring resources up here too.
But when you look at what made Silicon Valley happen, you had a major
research university, you had access to risk capital, and you had people
who were smart -- and putting those together, you saw the revolution
that you had in the late 90s. That's a huge problem; I don't care where
you are in the Valley. Sacramento Valley is further along. They have
a few funds set up, but they are still falling short. They are going
to need to improve access to risk capital to see their entrepreneurial
sector grow as well.
types of people or organizations do you look for?
The problem is that
you have to have people who know how to manage those kinds of activities,
and you can go to one of two places -- or both. You can go to the government,
and there are places that you can go that take large pools of public
dollars and invest them in private sector: risk capital funds. Calpers
is a good example of that. It just had a successful statewide initiative
to infuse Calpers dollars into different underserved communities throughout
the state, did a great job, but still missed the San Joaquin Valley.
And you can go to private sector people and ask them to put money into
this fund, knowing that they'll yield great returns. The bottom line
is that you need fund managers and people with expertise to receive
those investments and turn them into profitable ventures. Once you have
the people who can do it, I believe the capital is out there; at that
point you just need to pursue it.
you getting the people?
We're trying. Several
people have moved away from the San Joaquin Valley, gaining expertise
in the Bay Area, and are coming back now. So we're hopeful, but we still
could use a lot more.
there a correlation between the amount of risk capital in a region and
its quality yof life?
Regions that compete
on low cost, and industry sectors that compete on low cost -- agriculture
would be one example -- compete based on the fact that it doesn't cost
them as much to do business. Therefore, they don't make as much of a
return or a margin on what they sell. Industries and regions that compete
on innovation and value added to the end user, those are the industries
and regions that see the premiums on the products and services that
they sell. So if you have a region made up of industries that are competing
on that basis, those individual companies are making more money, the
employees who work there are making more money, the quality of life
of the residents in that area will increase. That's the only way to
get to the point where you are improving the quality of life.
you were to develop cluster industries like you're talking about, that
would in turn provide the impetus for closing the gap between the have
and the have-nots.
You look for clusters
that either are or have the potential to compete on innovation. An interesting
thing happens when you start bringing together companies in a formal
cluster process: that's when the innovation happens. Innovation doesn't
happen with a person tinkering in their garage. Innovation happens when
they bump up against someone doing something similar or complimentary
about what they are doing. Those people start talking and they see the
synergies of their products and their services have to offer. Simply
convening cluster companies, and having them network together and work
on common problems and opportunities, we believe that will be able to
capture some specific moments to innovate. If you've got risk capital
to invest in those innovations, then you've got economic growth.
do you think the San Joaquin Valley will look like in 2020 if we manage
I'm an optimist,
so my vision of the San Joaquin Valley in the year 2020: high quality
of life. We've learned from the lessons of our very large urban counterparts
and we don't do sprawl, which Los Angeles and the Bay Area have done.
We preserve our ag land, and we develop parallel economies that build
off the strengths of agriculture but take us into completely new areas,
all involving science and technology; maintain the intellectual capacity.
We keep our kids here after they've gotten an education. They've got
opportunities because they're excited about the innovative industry
sectors that are here. Overall, I would say that it would be excellence
in every sector: excellence in education, in the industries that we
have. All of the industries that we have competing at their absolute
best; government leading in an excellent fashion -- I believe that is
what the global economy demands.
if we don't?
More of the same.
A deterioration quality of life, an expanded have and have-nots chasm,
and a continued feeling of a kind of "left-behind" region.