San Jose has a strong legacy as a manufacturing center – even before silicon was made into chips, we produced farm machinery and mined and refined metals. The manufacturing sector continues to thrive, and a recent gathering of 180 people hosted by Manufacture: San Jose (MFG:SJ) and the Office of Economic Development provided an interesting and encyclopedic look at this sector of our economy.
The keynote address was given by Mayor Sam Liccardo, who answered the question that he felt was implied in the event: Why do we need to talk about manufacturing?
He answered the question with some major advantages to the city of this economic sector:
- There is a trend in the technology world to bring manufacturing closer to home – re-shoring
- Having manufacturing situated close to the sites of innovation and research is synergistic and saves time and resources
- The less travel and less shipment of goods across the globe, the smaller our carbon footprint
- Manufacturing offers our residents access to a career path that can keep people living and thriving locally
Within the context of a nationally flourishing manufacturing revival, San Jose is home to more than 1,300 manufacturing companies that collectively employ approximately 50,000 people. The local manufacturing sector not only directly contributes to the number of quality jobs locally but also has the largest economic multiplier of any sector in the U.S. economy, supporting 2.5 jobs for every one in manufacturing. Manufacturing is one of the few sectors capable of moving the needle in a positive direction around economic equity in a time when regionally we are seeing more inequitable distribution of income and wealth than ever. No city better understands the perils of this growing inequity than San Jose: a recent Brookings Institute report found the income gap between San Jose’s rich and poor is the second fastest growing in the nation. And even as the economy booms, low-income communities of color, particularly San Jose’s Latino and Asian immigrant communities, continue to experience disproportionately high unemployment rates.
These trends were illustrated as Kate Sofis. CEO and Co-Founder of MFG:SJ and SFMade presented an overview of their just-published report, “San Jose’s Manufacturing Real Estate Landscape: Sustaining Jobs, Economic Impact, and Shared Prosperity for Diverse Residents January 2020.”
The report includes analysis of employment broken out across the various categories, as well as average wages and salary in manufacturing companies in San Jose and in the County as a whole. An important takeaway is that the average salary in manufacturing is $75,000, with significant upside potential.
A look at the geographical dispersal of manufacturing within the City was surprising to many in the audience – although there are significant concentrations in North San Jose and the Edenvale area, companies manufacturing products are found in every San Jose neighborhood.
The report also takes an in-depth look at the industrial real estate market in San Jose. To no one’s surprise, the market is quite tight, currently at a 3% vacancy rate.
Summing up, Sofis had the following recommendations for San Jose:
- Strengthen existing industrial zoning, esp around transit
- Moratorium on self-storage in industrial areas
- Be aware that industrial zoning can support jobs-dense manufacturing or the must lower employment profile of warehousing or distributions uses.
- Consider creating Incentives to modernize, subdivide or demolish old industrial buildings to better suit today’s manufacturers.
- Consider multi-story industrial near transit hubs, pioneered in New York and SF
- Resist pressure to rezone industrial for housing. Even affordable housing.
Reflecting on the human aspect of the statistics presented in the report was a series of quick presentations providing a close-up look at the city’s robust food-and-beverage manufacturing sector, including the founders and/or heads of Nox Cookies, Hermitage Brewing Company, Chromatic Coffee, Sweetdragon Baking Co., 10th Street Distillery, and California Vegan Food Company.
The video of the event provides all the details of the lively presentations and discussion featuring Nathan Pendleton/Nox Cookie Bar, Peter Light/Hermitage Brewing Company, Hiver van Geenhoven/Chromatic Coffee Co., Hway-ling Hsu/Sweetdragon Baking Co., Virag Saksena, 10th Street Distillery; and Rosa Contreras/California Vegan Food Company. Some of the highlights:
- Nox Cookies are being sold at four local Safeway Stores.
- San Jose brewers don’t compete with each other – they are joined in competing with the rest of the world’s beers.
- Our agricultural heritage actually fosters the curation of excellent products like coffee, even if they aren’t grown here.
- The Bay Area has not yet developed a “pie culture” – but it will!
- Vegan food is totally delicious.
Finally, a panel moderated by Chris Burton, City of San Jose Deputy Director of Economic Development, provided insights into the advanced manufacturing sector. On the panel were Zahid Hussain, Vice President of Operations for Flex; Kelly Dutra, Manufacturing Director, ME solutions, Cobham; and Paul Estey, Executive Vice President, Maxar/SSL.
Introducing the panel, Chris shared that although it was easy for him to assemble a dream panel on advanced manufacturing in San Jose, he just realized that he had identified three people who were not allowed to explain their products for national security reasons. However, without violating their confidentiality constraints, the panel provide a lively discussion about their shared major concern – sourcing skilled workers – and their shared commitment to operating a manufacturing facility in San Jose.
The discussion ranged from converting old industrial buildings for today’s manufacturing needs, ideas for creating a viable pipeline for skilled entry-level workers, and the possible career trajectories in manufacturing, especially for those starting out without a four-year degree, and how these companies are making it possible. For details, check out the full event video.