That’s one takeaway from the East Bay Economic Development Association’s fall meeting held Thursday at the Rosewood Commons conference center in Hacienda Business Park.
The two East Bay counties, Alameda and Contra Costa, collectively have an excellent ecosystem for manufacturing. That includes transportation (the Port of Oakland, rail lines and Interstates 580, 680, 880); relatively affordable manufacturing space, the great strategic location (close to the innovation hub of the Silicon Valley, the Peninsula and San Francisco plus access to skilled workers living outside the nine Bay Area counties), and strong training resources with the community colleges.
It results in a sector that has added 102,600 manufacturing jobs in the last five years (through 2018) so it employees 102,500 people. The highest employment was 120,000 pre-crash that dwindled to 80,000 in 2011 before starting to grow strongly.
More significantly, it contributes 15 percent of the East Bay gross regional product while employing 8 percent of the population. In short, it’s batting way above its weight.
In the Tri-Valley, James Paxson, general manager of Hacienda Business Park, pointed out that manufacturing now accounts for 5 percent of Tri-Valley jobs, an increase of 31 percent (2,200 since 2013). That includes Lam Research, which makes multi-million dollar machines for semi-conductor manufacturing; Gillig Buses that makes public transit vehicles; as well as local life science companies such as 10x Genomics, Unchained Labs, Roche, Thermo Fisher and others.
For the Tri-Valley, the life sciences sector totals about 100 companies employing 7,500 people, according to Gregory Theyel, director of the Biomedical Manufacturing Network in the Bay Area. That’s topped by Pleasanton with 55 companies and 5,500 employees, while Dublin has five companies with 800 employees. San Ramon has 20 companies with 750 employees, while Danville has 5 with 50 employees and Livermore has 18 companies and 300 employees—to say nothing of the two national laboratories.
Most of the morning was devoted to a panel with CEOs of four companies ranging from the manufacturer of $10 million high-tech research machines (a spinout from the Stanford Linear Accelerator named Lynclean Technologies) to Galaxy Desserts in Richmond. Lynclean and Evolve Manufacturing Technologies are both in Fremont, while Pulse Systems (which makes components of medical devices, is in North Concord.
Gene Russell, CEO of Manex Consultants in San Ramon, moderated the panel and observed that California is the No. 1 state for manufacturing, but it’s not well known because most of the companies are small (50-60 employees).
One common factor is how they all are taking a hard look at the cost of employees as wages continue to rise in the full-employment economy. Evolve automated inspections with technology backed by artificial intelligence. An iPad takes pictures of the finished products and then flags any errors. It’s faster and more accurate than having a worker do the same function. The machine required a $70,000 investment.
Founder Noreen King said they continue to try to reduce the headcount with the goal of having fewer and higher paid employees. That’s in the competitive industry of contract manufacturing with its low margins.
By contrast, Lynclean is a project-based company with a two-year timeframe to construct one of its $10 million research machines.
Jean-Yves Charon started Galaxy Desserts after his girlfriend, a lawyer, complained her firm could not find a quality baker for morning treats. He volunteered that he could make those and his company was born because other companies wanted that quality of product.
Despite knowing little about manufacturing and having read lots about its demise in the United States, it was a much more interesting morning than I had anticipated.