Diversity is an essential element to economic development on the West Coast. Communities and regions are looking to expand their manufacturing base with companies that require a highly skilled work force.

“We feel a strong economy is dependent upon a diverse business base comprised of many industries,” says Mike Nelson, economic development manager for Rancho Cucamonga (Calif.) Redevelopment Agency. “As such, we are always looking to place companies that can contribute to our local economy.”

With major ports up an d down the coast, warehousing and distribution operations are also in great demand. Manufacturers located in the Midwest U.S. and westward have a direct line to the Pacific Rim and the rest of Asia through the West Coast.

Combined, the gross domestic product of the states of California, Oregon, and Washington is about 20 percent of the U.S. GDP.

Meanwhile, each West Coast state touts its advantages:

•    Oregon is home to the one of the leading clusters of solar cell manufacturers, and it is one of a few states to adopt CO2 emissions targets and aggressive renewable energy goals.

•    Companies in Washington have access to a highly educated and skilled workforce, new and fast growing opportunities for capital, and a well-connected global trade network.

•    California is the No.1 state for venture capital, receiving four times more, as a share of gross state product, than the national average. The state also attracts substantial manufacturing, both foreign and domestic. In fact, it ranks first for attracting foreign direct investment, and U.S. subsidiaries support 133,700 manufacturing jobs. Moreover, manufacturing companies tend to have a strong “multiplier” effect on the economy-stimulating a substantial amount of activity and jobs in other sectors through their demand for services from other suppliers.

Trade-related manufacturing sector

When people talk about Los Angeles, Hollywood usually comes to mind first. Or, maybe it’s the beaches. Either way, it’s usually not manufacturing. However, what many people don’t realize is the substantial amount of industrial and manufacturing development located in the metro area, says Michael Keenan, economic analyst for the Port of Los Angeles.

“Los Angeles is the nation’s leading manufacturer in terms of the number of manufacturing jobs available,” he points out. And much of it is trade-related, with manufacturers taking advantage of the port, as well as Los Angeles International Airport.

“In an increasingly globalized world, increasingly focused on trade, and Los Angeles is the prime gateway to Asia,” Keenan says.

The port has more than 80 country-trading partners, including Japan, Taiwan, China, South Korea, and Thailand. There is also major business with Australia, New Zealand, western Mexico, South America, India, and the Persian Gulf region.

The economic impact of the Port of Los Angeles reaches far beyond city or state boundaries. Operations at the port are responsible for more than 1 million direct and indirect jobs in California, and for more than 3 million direct and indirect jobs nationwide. Nearly 40 percent of imported goods for the West Coast and about 20 percent of goods for the U.S. enter through the Port of Los Angeles.

Because the port handles such a large portion of the nation’s imports, it primarily handles containerized cargo, but can also handle dry bulk and breakbulk cargo, Keenan says.

Since October 2009, the port has seen double-digit percentage increases in the number of exports. Much of the exports are paperboard, raw materials, waste paper, and scrap metal shipped to Asia and either eventually exported back to the U.S. as finished goods or kept in Asia.

The port is also planning for the future, spending an average of about $1 million a day during the past year on capital improvement projects. It is planning three major terminal expansion projects: China Shipping will add 35 acres and new wharf by the end of 2014; APL will add 40 additional acres and a new wharf by 2014; and TraPac will add 60 acres, on-dock rail, and a new wharf by 2015.

The port is also nearing the end of a decade-long, channel-deepening project that will allow for the largest ships in the world to dock there.

An argument made by many competitor ports-along the West Coast, as well as on the East and Gulf coasts-is that the Port of Los Angeles is too congested for new business. Keenan counters that argument, maintaining that the port hasn’t experienced congestion since 2004. “We have essentially adjusted our operations,” says Keenan, adding that the port has doubled its capacity and moves goods during off-peak traffic times.

“Everyone has a memory of that significant event (2004 port congestion),” Keenan says. “It is something that recedes further in the past and hasn’t reflected the port since its occurrence.”

Bringing in the building materials

The Port of San Francisco plays a niche, yet substantial, role in a network of ports located throughout the Northern California region, and it is at the heart of a large market that includes 15 million consumers, says Jim Maloney, maritime marketing manager for the port.

From the carriers’ perspective, the port is attractive because it is the closest U.S. port to Asia, the closest port to open sea in Northern California, and right off the major shipping lanes.

The port handles breakbulk, liquid bulk, and bulk shipments.

“We bring in a lot of raw materials for building and infrastructure projects for the greater Northern California area,” Maloney says. For example, much of the aggregate used in concrete production for roads and buildings in the region are imported from British Columbia through the Port of San Francisco. There are myriad benefits for this transportation mode, he adds.

“It is a more environmentally sound way of shipping, because it takes a lot of trucks off the highway, reducing traffic congestion and pollution,” Maloney points out. “It also reduces the cost for many of the projects, so it is beneficial for the developer and end user.”

The port benefits other infrastructure projects, including power generation. Turbines for wind energy development come into the port and move by truck inside of California and by rail to outside of California.

Maloney says the port hopes to handle shipments for the new Toyota-Tesla electric car production initiative at Toyota’s NUMMI auto plant in the Bay area community of Fremont. The port handled materials for the former Toyota-General Motors joint venture at the plant, which shut down earlier this year.

The overwhelming majority of the port’s business (95 percent) is imports, though Maloney says it is trying to diversify that ratio. Its biggest markets are China, Japan, South Korea, and Taiwan. European nations-including Germany, Belgium, the Netherlands, and France-are also important import markets by way of the Panama Canal. The port’s primary export is tallow, which goes to Japan, Indonesia, and South Korea, where it is used as a base product for cosmetics, candles, and animal feed.

The port completed construction of an intermodal bridge last year, giving its primary breakbulk project cargo facility direct access to the main rail line for the first time in a decade. “It allows us to more widely market the terminal,” Maloney says.

Plans are on the board for developing a portion of vacant land into an export bulk terminal. The port is currently working on a concept plan to seek funding, says Maloney, adding that if the project comes to fruition, it will allow the port to handle additional bulk exports such as iron ore. “We are seeing a big demand for iron ore, primarily in China, but in other parts of Asia as well,” he points out.

Influence beyond Oregon

Diversity is a strong point of the Port of Portland, an inland port 100 miles up the Columbia River. It handles a variety of commodities in container, bulk, and breakbulk facilities.

The port has four marine terminals and recently purchased two post-Panamax cranes, and it is in the final stage of a 20-year project to deepen the lower Columbia River. The project should be competed within the next year, says Josh Thomas, media relations manager for marine and industrial development for the Port of Portland.

There have also been major rail improvements between the port and the area’s largest industrial park, with BNSF and Union Pacific having dual access to its facilities.

The influence of the port spreads beyond Oregon. The states of Washington and Idaho benefit from the port, as well, Thomas says. Automobile imports shipped to the Port of Portland travel overland as far as the East Coast.

Lewiston, Idaho, is home to an inland seaport using the Columbia and Snake rivers from the Port of Portland. Companies can bring trans-Pacific cargo 450 miles upriver. It is the shortest, cheapest route to get cargo to the oil field of Alberta, and companies can also ship product overland to the upper Midwest U.S., says Lane Packwood, administrator of the Economic Development Division in the Idaho Department of Commerce.

Lower cost of operating a business

The fact that Southern Oregon is nearly equidistant between Mexico and Canada is a good selling point to manufacturers needing to do business up and down the West Coast. “We pitch ourselves as the nexus of the I-5 Corridor, as well as being on the edge of the Pacific Rim,” says Ron Fox, executive director of Southern Oregon Regional Economic Development Inc. (SOREDI), which represents private companies, public utilities, and local governments in Jackson and Josephine counties.

However, another major selling point, according to Fox, is cost. He says SOREDI can document a 35 to 40 percent business cost operation advantage compared with California. Electricity prices in Southern Oregon are up to 50 percent less than in California, he adds.

“As the world continues to evolve in a global economy, it is about how you can serve your customers and how a particular location allows you to do that most competitively,” Fox points out.

Fox insists that Southern Oregon is not looking to entice manufacturers to relocate their operations from California. Rather, the region looks to attract California companies considering an additional facility, or manufacturers from other parts of the country looking to locate a facility on the West Coast.

Thanks to its location, Southern Oregon has a concentration of transportation companies, mostly trucking firms, that service the I-5 Corridor. The region is also home to the world’s commercial heavy-lift helicopter companies and several boat manufacturers, and it has a cluster of value-added and specialty food manufacturers and small high-tech companies that provide components to larger tech companies.

Southern Oregon’s workforce is evolving from its historical base built around natural resource utilization, such as logging, to a more diverse set of skills and experience, Fox says. “That works to the advantage of the business community; the workforce is ready to meet its needs,” Fox stresses. “The region is very attractive in terms of companies that need to attract highly skilled, specialized people to fill their requirements. Companies don’t experience as much turnover as they might in other metropolitan areas.”

Rancho Cucamonga

The Inland Empire region of California markets itself as a lower-cost alternative to Los Angeles and other areas of Southern California nearer to the Pacific Ocean. Being located at the western end of the Inland Empire, Rancho Cucamonga’s lease rates are more attractive than other communities further east and north in the region. It is also closer to the ports of Los Angeles and Long Beach (both about 40 miles).

The city is trying to fill some of its new and existing properties with green technology companies and other growth industries, says the Rancho Cucamonga Redevelopment Agency’s Nelson.

Logistically, Rancho Cucamonga has an international airport less than five minutes from the city that serves commuter and freight customers; has freight and commuter rail service with rail-served buildings and facilities; and is adjacent to three major freeways: I-10, I-15 and I-210.

Many communities are well suited for logistics operations, offering some of the most versatile and largest distribution facilities found anywhere, Nelson says. There are many distribution facilities of 1 million square feet or more in the region. Land prices are also less in the Inland Empire because there is more land available for large distribution operations.

Rancho Cucamonga boasts of a highly educated workforce, with about 25 percent of its residents having a Bachelor’s, Master’s, PhD, or other advanced degree, Nelson notes. “Our data indicates these residents are willing to work for up to 8 percent less than workers in Los Angeles and Orange counties just so they can work closer to home,” he stresses.

“We have a large population in both counties that is readily available to support companies’ employee requirements,” he adds. wt





Ken Krizner is a freelancer writer based in Cleveland, Ohio, where he writes often on economic development and technology issues.