California

No Time To Whine for Wineries in Economic Downturn

It is common knowledge that in an economic downturn, alcohol and cigarettes are perceived to be virtually recession proof. And as wine making in America has significantly increased from 440 local wineries and vineyards in 1970 to a current 7,000 across the nation, one would expect that the business of wine making and selling is indeed resistant to the outcomes of a recession or drop in the United States economy. However, while the business of a vineyard may seem impervious and ever-growing, let’s take a hard look at what a recession would mean for the American wine industry.

Positive Facts

The American wine industry is the fourth largest producer of wine in the world and 34% of US citizen alcohol expenditures are defined as wine sales. Every state in the nation has at least one winery producing quality American wines but the Southern California Wine Country with regions of Napa and Temecula share over 90% of the U.S wine producing markets. With California’s widely known financial situation, housing over 90% of the vineyard market would imply that local wineries are indeed recession proof, but while these positive facts may be inspiring for local winery owners but they do not mean that the industry as a whole is unfazed by America’s most recent economic struggles.

A Change in Purchasing Habits

When we have economic struggles, we often see a change in purchasing habits. Retail stores see fewer customers during conventionally busy seasons and American residents cut back on the items they feel they don’t need to survive.
California resident and wine expert, Dr. James Lapsley of the University of California said it best in an interview where he discussed the changes in purchasing habits of wine drinkers, “What happened during 2008 to 2011 was that people who were fairly rich and who had seen their portfolios decline suddenly tightened their belts and said, ‘I’m no longer buying $60 Cabernets, I’m buying $30 Cabernets.’ And people who were buying $15 wines said, ‘I’m now buying $7 wines.  If you were a winery producing inexpensive wine – which meant you were a very large winery because this is where you really need to have economies of scale both in production and distribution – you did really well.”

Large vs Small Wineries

The wineries in Temecula, CA are considered larger wineries not unlike those mentioned by Lapsley in his interview. However, the recession and a possible downturn today would not bode well for small wineries who may have been counting on selling their bottles at $60 to stay in business. This can mean distressed sales in locally produced wine but with a simple adjustment to pricing, our small local vineyards can last through a downturn to see the light at the end of the tunnel when the economy begins to move back into the black.

Affect on Local Wineries

While the business of a vineyard may seem impervious and ever-growing, it is obvious that just like millions of other small businesses across the nation; small local vineyards may have difficulty remaining in business. However with an adjustment to pricing and production, we can expect to see the business of a local winery make it though a down economy or recession.

Guest Author Bio

Stacey Waldron is the Internet Marketing Director for Bel Vino Winery located in Temecula California. She enjoys gardening and playing with her two dogs, Banjo and Karly on hot summer days and always makes time for a good bottle of red wine shared amongst friends.

UC Berkeley Report – California Green Jobs and Workforce Impact of Proposition 39

The Donald Vial Center on Employment in the Green Economy at the University of California, Berkeley has released a report which provides a detailed analysis of the jobs and workforce impact of Proposition 39, which California voters approved in Nov 2012.

UC Berkeley report on Proposition 39 green jobs

Proposition 39 green jobs report (photo – berkeley.edu)

Proposition 39, aka the California Clean Energy Jobs Act, allows the state to impose income tax on multistate corporations based on a percentage of their sales in California.

It increases the state’s revenue by a billion dollars annually, and half of the new revenue collected over the next five years will be allocated for energy efficiency projects in California’s public schools, community colleges and universities.

The stated aim for the use of funds is that it should create good-paying clean energy and energy efficiency green jobs in the state. As such, some of the funds will be used for workforce training and helping youth and veterans gain employment doing these jobs.

Based on the assumption that $550 million will be provided by California in grants for energy efficiency retrofits, it will result in the creation of 3,410 direct person-year jobs and 7,843 total person-year jobs annually.

A person-year job is a full-time job for one year. Out of the total number of direct jobs, around 2,273 will be skilled construction jobs.

If a revolving loan fund is created to pool $50 million of the Proposition 39 funding each year for the next five years, it could be leveraged into a total of $700 million in investments, leading to the creation of 4,340 direct jobs. If a $100 million revolving loan fund is set up, it would result in an investment of $850 million and would create 5,270 direct jobs.

The idea for creating a revolving loan fund using a part of Proposition 39 funds was explored in a study released last month by the UCLA Luskin Center for Innovation and commissioned by the Los Angeles Business Council Institute (LABC).

LABC President Mary Leslie said that Proposition 39 had opened up an opportunity to fulfill two of the state’s priorities at the same time – increasing commitment to environmental sustainability while adding thousands of green jobs.

Leslie added that the revolving loan fund would support innovative projects in public-private partnerships and maximize the benefits of Proposition 39 funds for the environment and the economy, and for California workers.

Read the full UCLA and the UC Berkeley reports on Proposition 39.

NBCUniversal Kicks off $500M Plan to Bring Harry Potter to Hollywood

After a long decade of planning on its $1.6 billion “Evolution Plan” for its operations in Los Angeles, California, NBCUniversal has finally crossed the last major regulatory hurdle with the plan being approved by the county board of supervisors.

NBCUniversal Evolution Plan

NBCUniversal Evolution Plan (Infographic from nbcuniversalevolution.com)

Following the vote, NBCUniversal announced that it will be kicking off the project with a $500 million investment in the first phase, which includes bringing the Wizarding World of Harry Potter to Universal Studios Hollywood.

This phase, which additionally includes construction and upgrades of television production facilities, new and modern office space and other infrastructural improvements at Universal Studios, will create 2,000 construction jobs.

The full $1.6 billion Evolution plan includes a whole lot more, and will eventually lead to the creation of more than 30,000 jobs, including for both construction and operations.

The full plan, which includes the construction of the Hogwarts Castle, a couple of 500-room hotels, new post-production facilities and sound stages, is expected to generate $2.7 billion in economic activity during construction, and $2 billion in annual economic activity for operations thereafter. The county expects to gain $15 million in additional tax revenues each year.

NBCUniversal will be spending $100 million just to improve the transit and transportation arrangements and ease traffic in a 50-square-mile area around the Universal property.

They’re building a bikeway and a riverfront trailhead park, and working with local organizations on improvement and landscaping projects for neighborhoods adjacent to the 391-acre Universal Studios site.

In a blog post following the vote, County Supervisor Zev Yaroslavsky called the massive project a stimulus package, and said he expects it to pay dividends for generations to come.

Ron Meyer, president and COO of Universal Studios, said the county’s vote approving the plan sets the stage for their next 100 years in Los Angeles.

Corinne Verdery, chief real estate development and planning officer, NBCUniversal, said the working relationship they have built up with the community was critical to the progress achieved with the plan.

Verdery added that they were now looking forward to bringing Hogwarts to Hollywood, which she claims will change the face of tourism in Los Angeles, which is one of California’s premier tourist destinations with almost 42 million annual visitors.

BIO Report – Bioscience Economic Development Best Practices

The Biotechnology Industry Organization (BIO) has released a comprehensive report that serves as a best practices guide on bioscience economic development and provides data on state-by-state legislative initiatives and regulatory reforms introduced to support economic growth in biosciences.

BIO report on bioscience economic development

BIO report on bioscience economic development (photo – bio.org)

The report, titled “Bioscience Economic Development: Legislative Priorities, Best Practices, and Return On Investment,” was unveiled during the 2013 BIO International Convention underway at the McCormick Place Convention Center in Chicago, Illinois.

BIO undertook a review of initiatives in support of bioscience companies in all 50 states. Highlights from the report:-

- 15 states offer Small Business Innovation Research (SBIR) matching grants;

- 39 states offer R&D tax credits, many of which are higher if it is an in-state university doing the research. Seven states have made these R&D tax credits refundable, while three have made them transferable;

- 35 states offer sales tax exemptions for R&D equipment, while 33 states offer sales tax exemptions for biomanufacturing equipment. Seven states are even more specific, and have a sales tax exemption offered exclusively to bioscience companies;

- Seven states have a tax credit program for angel investors who invest in bioscience companies; and

- 14 states have made direct investments in bioscience companies.

Jim Greenwood, president and CEO of BIO, said that industry growth and bioscience economic development required wide-ranging collaboration between policymakers, the private industry and universities.

The report also includes a section on ROI success stories (scroll down to pg 11) which includes five case studies of stellar biosciences initiatives and investments made by California, Massachusetts, Kansas, Pennsylvania and Texas.

One of these case studies is the California Institute for Regenerative Medicine (CIRM), created in 2004 to further stem cell research and funded with $3 million in bond sales over a 10-year period. CRIM provides research funding, training and facility setup.

As of July 2012, CIRM had committed $1.1 billion in grants, which added to another $884.3 million in matching funds put up by grant recipients and other supporting organizations. This investment has created 24,654 new and full-time jobs, and generated $201 million in local and state tax revenues.

California’s biomedical industry has received $1.98 billion in venture capital funding and $3.33 billion in NIH grants over the last decade, which has provided the following returns:-

- 2,321 biomedical companies that generate a combined $69.2 billion in annual revenues;

- Together, these companies employ 152,806 employees at average annual wages of $101,658;

- Biomedical exports from California are worth $20 billion per year.

The U.S. bioscience industry supports 1.6 million jobs that pay 79 percent higher wages as compared to an average worker in the private industry.

Read the full bioscience economic development report from BIO – Download (pf)

Environmental Achievements in Walmart Global Responsibility Report

Walmart unveiled its 2013 Global Responsibility Report (GRR), which highlights the company’s 2012 accomplishments in terms of environmental, corporate and social responsibility.

Walmart Global Responsibility Report

Walmart Global Responsibility Report (photo – walmart.com)

The 172-page report has a lot of data to wade through, but it’s clear that the environmental achievements and the company’s stated goals for this decade are massive, regardless of whether one thinks Walmart is doing enough.

Highlights from the report’s environmental responsibility section (begins on page 52):-

Walmart installed more than 100 rooftop solar installations last year in different states including California, Arizona and Ohio, in addition to a 1MW wind turbine. In total, Walmart has more than 200 solar installations which combine to make it the largest on-site green power generator in the U.S., with over.

On a global level, the company has more than 280 renewable energy projects operational, which provide more than 1 billion kilowatt hours of renewable electricity per year – enough to power 95,000 American homes.

Currently, 21 percent of their energy needs are fulfilled through renewable sources. The company’s Vision 2020 goals call for huge increase of renewable energy usage to 7 billion kWh per year by 2020 through on-site generation and purchase.

As per a pledge made in 2012, Walmart was to have reduced greenhouse gas emissions by 20 percent by 2012. They wrapped up this pledge a year ahead of schedule, and are on track to reduce their global supply chain GHG emissions by 20 million metric tons by 2015.

They have also committed to reducing Co2 emissions by three million metric tons by 2020, which is the same as taking 625,000 cars off the road.

Walmart’s fleet efficiency has gone up by 10 percent in 2012. They drove 11 million fewer miles last year despite having to deliver 297 million additional cases. If they had not improved fleet efficiency, they would have had to drive an extra 70 million miles.

This efficiency has saved $130 million in fuel costs and reduced Co2 emissions by 103,000 metric tons (equivalent to taking 20,000 cars off the road).

In terms of waste reduction, Walmart reduced plastic bag shopping waste by 38.1 percent in 2012, and partnered with suppliers to reduce packaging by five percent and the overall GHG emissions from packaging by 9.8 percent in U.S. Walmart stores, and by 16 percent in Walmart Canada stores.

Andrea Thomas, Walmart’s senior vice president of sustainability, said their customers should not have to choose between sustainability and affordable process, and promised they would continue to fulfill commitments to operate responsibly while keeping costs low for customers.

Read the full Walmart Global Responsibility Report – Download (pdf)

The Solar Foundation Report on National Solar Jobs Census

The Washington, D.C.-based non-profit The Solar Foundation (TSF) put out its third annual solar jobs census, which shows that the U.S. solar industry now supports 119,016 jobs, which is a 13.2 percent (13,872 jobs) growth in solar jobs in 2012 as compared to 2011.

National Solar Jobs Census

National Solar Jobs Census (photo – thesolarfoundation.org)

Solar jobs are defined by TSF as those where workers spent at least half their time on solar related job functions.

California leads the rankings of the top 10 states with the most solar jobs. The Golden State has a full one-third of all solar jobs in the country, which is four times higher than the 9,800 jobs in Arizona, which is ranked second followed by New Jersey in third place.

These three states also top the rankings for the most solar capacity. Although New York does not figure in the top three states for solar jobs or installed capacity, it does top the list of states providing the most public workforce funding for solar companies, followed by California and Texas.

Andrea Luecke, executive director of TSF, said that this latest data proved that the solar industry has become a dependable job creator, and that employers were confident about further growth in 2013.

As per the census, nearly 45 percent of solar firms will be adding new jobs, while less than four percent will be cutting jobs.

A majority of the jobs (57,177) are in the installation sub-sector. Solar manufacturing jobs actually fell by 8,000 last year, but the number is expected to grow by nine percent this year. Finance, R&D and “other” solar industry jobs accounted for 8,105 jobs. This sub-sector grew at a stunning 46.1 percent.

Gianluca Signorelli, renewable energy finance manager at Rabobank, N.A., said in a statement that the bank’s solar team has grown to manage the increase in demand for solar financing, and this spurt in demand has obviously led to employment growth across all sub-sectors in the solar industry.

Causes of growth listed in the report are reduced component pricing, favorable state legislation and federal tax incentives. The report notes that if costs continue to decrease, the increase in installation demand will require the solar industry to provide employment for 340,000 workers by 2030.

Read the full TSF National Solar Jobs Census 2012 – Download (pdf)

San Francisco, Sarasota Receive APA ED Planning Awards

The City of San Francisco, California and Sarasota County, Florida were jointly awarded the Donald E. Hunter Excellence in Economic Development Planning Award yesterday evening during the American Planning Association (APA) 2013 National Planning Conference currently underway in Chicago.

SF OEWD

Photo – SF OEWD

The award is named after the late Donald E. Hunter, who was a member of the APA and served on the boards of the International Downtown Association (IDA) and the International Economic Development Council (IEDC).

Members of the APA Economic Development Division were part of the awards committee that chose San Francisco and Sarasota as co-winners for this year’s award.

The San Francisco Office of Economic and Workforce Development (OEWD) was chosen for its Central Market Economic Strategy to revitalize San Francisco’s Central Market District.

This is supposed to be an artsy neighborhood with galleries, retail outlets and entertainment options, but suffered from blight, low occupancy levels and difficulty in attracting private capital. Not to mention social illnesses including homelessness and proliferation of drug addicts.

The Central Market Economic Strategy was developed after nearly a year of research, community outreach and collaboration with stakeholders to develop a unified plan. As a result of this unified plan involving a dozen entities, the district has gained nine tech companies and a venture capital firm as new tenants in the past year, occupying a million square feet of space.

Eight new small businesses have set up shop and two existing ones have expanded, and nine new performance and gallery venues have opened or are in the process of doing so. There are 3,300 residential housing units now under construction in the Central Market District.

Sarasota won the award for its master plan to develop the 600-acre Nathan Benderson Park as an aquatic and nature center. The core part of the plan involved creation of a rowing venue that would provide health benefits, improve quality of life and enable Sarasota and Florida to pitch it as a venue for international competitive aquatic events.

The project to convert the borrow pit lake into a sports tourism magnet involved a diverse set of interested parties including the local economic development corporation, state and county officials, a property developer, rowing clubs, recreation experts, schools and local residents.

Sarasota estimates the project will generate $13 million in direct spending by attendees and participants who come for events, and the total economic impact on the region will be about $25 million.

Last year’s winner of the APA Excellence in Economic Development Award was Innovation Square in Gainesville, Florida. The Pyramid Lake Paiute Tribe in Nevada received a honorable mention for finally coming up with an economic development plan that was accepted and adopted. They had previously tried and failed seven times over 22 years to come up with an economic development plan for the reservation.

Massachusetts Tops Milken State Technology Index

The non-profit Milken Institute released its 2012 State Technology and Science Index, which showed that Massachusetts is still the best destination for hi-tech companies, jobs and careers.

Milken Institute State Technology and Science Index

Milken Institute State Technology and Science Index (photo – milkeninstitute.org)

This index evaluates each state’s capabilities in the science and tech sectors based on 79 unique indicators, including the state’s ability to leverage these assets for attracting companies and high-paying jobs.    

Milken has published this index every two years for the past decade, and Massachusetts has been on top every single time. In fact, Massachusetts with a score of 86.40 has actually widened the lead this year over Maryland which scored 79.41 and retained its second place showing.

Kevin Klowden, senior economist at Milken and co-author of the report, called Massachusetts the “indomitable state” with a critical mass of research centers, hi-tech firms and universities.

California (75.70), which had been in fourth place in the 2010 index, jumped up one place to push Colorado (75.07 ) down to fourth place. Here’s the list of the top ten states in the Milken State Technology and Science Index.

1. Massachusetts

2. Maryland

3. California

4. Colorado

5. Washington

6. Virginia

7. Utah

8. Delaware

9. Connecticut

10. New Hampshire

The 79 indicators the index is based on are categorized into five groupings under technology and science work force, technology concentration and dynamism, human capital investment, risk capital and entrepreneurial infrastructure, and research and development inputs.

The state which surged the most in the rankings this year was Tennessee, which jumped from its 41st spot in 2010 to 35th in 2012, thanks to huge gains in the risk capital and entrepreneurial infrastructure category, which means the state saw a lot of growth in companies getting venture capital or cashing in with public offerings.

Virginia likewise jumped two spots to a 6th place ranking based on a stellar performance in the risk capital category. Rhode Island cracked into the top 20 with a 17th place ranking due to its gains in the technology and science work force category.

Klowden says the index shows how important innovation is for state economies. States such as California with a traditionally strong science and technology sector have been able to claw their way back out of the recession by riding on the backs of a comeback in the tech sector.

Read the full Milken Institute 2012 State Technology and Science Index – Download (pdf) 

Utah, Virginia Team up to Offer East-West U.S. Expansions

Companies entering the U.S. or expanding their presence often have to deal with choosing a location on one coast without completely giving up on the other one. That may not be a problem for much longer, if Utah and Virginia have their way.

Welcome to California sign

Welcome to California sign (photo – Twam/wikipedia)

Utah Governor Gary Herbert and Virginia Governor Bob McDonnell are undertaking a joint trip to California, where they will be co-marketing Utah and Virginia to companies looking at expanding in the United States.

This does have shades of the recent campaign undertaken by Texas to entice California companies, but CA Gov. Jerry Brown is in China on a trade mission and unable to provide free publicity to interlopers with a colorful remark.

The only official California response so far has been from Riley Ray Robbins, deputy director of Go-Biz, the California Governor’s Office of Business and Economic Development, who thanked the governors for their “double-occupancy contribution” to the Golden State’s tourism industry.

But the real news here is about the joint effort by the two states, which is an original concept since it works specifically because of their vast geographical separation. Virginia officials apparently cooked up the idea of teaming up with Utah to offer an East-West expansion strategy so that they can jointly provide more options for companies looking to expand in either the Mountain West or on the East Coast.

They choose Utah as a partner for this effort because the governors have gotten to know each other, and Utah and Virginia are the top two states for doing business, as per the annual Forbes rankings.

Governor McDonnell, talking about the 16-day economic development trip he is undertaking to California and Asia starting April 10, 2013, said in a statement issued by his office that “we will have the unique opportunity to partner with Utah and get in front of California-based companies looking to expand their national footprint.”

In California, the two governors will be jointly hosting a luncheon and receptions. They have arranged their schedules to make room for joint stops in San Francisco, Silicon Valley and Orange County. After the California trip (April 10-12), Gov McDonnell will head for China (April 14-22) and Japan (April 23-25).

Virginia is promoting its agriculture and tourism industries during this three-leg trip, and the Governor is accompanied by senior officials from the Virginia Tourism Corporation, the Virginia Economic Development Partnership (VEDP) and the Virginia Department of Agriculture and Consumer Services, among others.

California Pulls Out All The Stops to Land Drone Test Sites

The FAA’s site selection process for choosing six pilot sites for testing integration of unmanned aircraft systems (UAS) with the National Air Space (NAS) officially began in February when they put out a Screening Information Request (SIR) asking for proposals from interested sites.

FAA talks UAVs at CA symposium

FAA talks UAVs at CA symposium (photo – AIAA)

The FAA announced that it has now received applications from 50 sites spread across 37 states (see map).

The six chosen sites are likely to be announced by the year-end. Meanwhile, some of the more likely contenders such as California want to leave nothing to chance. The Golden State has two separate teams vying to be selected as one of the test sites.

One of the teams is the Southern California Unmanned Systems Alliance, led by Ventura County and the Ventura County Economic Development Association (VCEDA).

Assemblyman Jeff Gorell (R-Camarillo) is leading the push, with a three-day symposium on the “Future Civilian Applications of Unmanned Aerial Vehicles” in progress March 26-28 in Thousand Oaks, CA.

The symposium, co-hosted by Assemblyman Gorell and the American Institute of Aeronautics and Astronautics (AIAA), has panels on the possible use of drones for everything from the movie business to agriculture and disaster response.

More importantly, there are discussions highlighting the economic development opportunities for the UAV industry in California. Ventura County has several speakers in the line-up at the symposium, and VCEDA hopes they can showcase their effort for gaining a UAS-NAS test site.

In a statement for a select committee hearing which heard from both of California’s dueling teams, VCEDA President/CEO Bill Buratto said a UAS test site would be a perfect fit for the county. “We have a high-tech educated workforce, a great relationship with our Navy bases, and an established local connection to the aerospace industry,” added Buratto.

Assemblyman Gorell has taken matters one step ahead of the site selection process by introducing legislation (Assembly Bill 1326) to provide state incentives for drone manufacturers.

AB 1326 seeks to provide sales tax exemptions for purchasing machinery that is used by UAV manufacturers, and a $20,000 tax credit for each new worker hired for a UAV manufacturing facility.

California’s second team is the Cal UAS Portal Consortium led by Kern County and the Indian Wells Valley Airport District, which seeks to establish a “UAS Center of Excellence” with Inyokern Airport as its central core. Their Cal UAS Portal provides detailed information regarding their infrastructure and advantages for UAS testing.

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