The North Bay has the chance to become a regional manufacturing powerhouse—but will we seize it? NorthBay biz talks with the players who are trying to facilitate this development.
At one end of the scale, small town mayors are fond of walking into nice shops and restaurants in neighboring communities and telling the owners they’d be more at home a few miles up the freeway. At the other extreme, larger communities like Santa Rosa and Rohnert Park battle over sales taxes, playing the “zoning for dollars” game to attract the newest big box store, then decrying the subsequent low-paying jobs and acres of parking lots.
Are there better economic development strategies, ideas that foster success for private enterprise and create good-paying jobs while preserving each community’s independence?
Dick Herman, President of 101MFG (previously SRMFG), an organization of North Bay manufacturers, calls for a regional economic development strategy. Herman says, “Santa Rosa, Petaluma, Novato, Napa and so forth need to think like a region. We’re the front door to the nine-county Bay Area, which is the 29th-largest economy in the world. Our cities shouldn’t isolate themselves from the rest of the region; that’s not how a dynamic economy works.”
Lessons from recent history
Herman uses the growth of Silicon Valley as an example of what could happen in the North Bay: “They proved it. Attract education, companies and high-end workers, and don’t try to slug it out with other cities for every job, every dollar. Win the new business selection or the expansion of our region first, then let the individual location decisions sort themselves out.”
Is Herman suggesting that the North Bay become the next Silicon Valley? “Heck no,” he laughs, “I moved my family here from Silicon Valley. But we can learn to cooperate like the individual cities of Silicon Valley did. What we have here is something so beautiful, so unique. We need to think of it that way so we can control our own destiny. There’s so much opportunity here to create high-value products that create good jobs and have very little impact on our natural resources.”
Dr. William Silver, dean of the school of business and economics at Sonoma State University, is thinking along the same lines. “Regional cooperation is what’s needed,” he says, “and there is momentum in the business community.
“We have an opportunity for the business community and the political community to work together,” Silver adds. “What would a regional manufacturing base look like?”
Silver acknowledges that, “Communities all have different perspectives on what they want, but we have an opportunity to build a larger vision. It won’t happen if we sit in isolation or if we pilfer business from each other. We can all become ambassadors of the North Bay.”
Along county lines
Marin County Supervisor Charles McGlashan is interested in the concept of regional economic development, but admits Marin has to get its own priorities sorted out first. He’s one of the founding members of the Marin Economic Forum, a group of public officials, along with nonprofit and private enterprise leaders, who’ve been meeting since last summer to create a vision for economic development in Marin County.
Isn’t it difficult to run a manufacturing business in Marin? “That reputation is well-deserved,” McGlashan admits. “Marin is a very hard place to do manufacturing.” He points out that Marin made a series of policy choices to protect open space that have resulted in constraints on certain types of economic development. “It can be a challenge to preserve our environment and support business when there’s so little room for industrial parks in our small county.”
McGlashan sees a future in Marin County where “cluster” development supports manufacturing in a way that fits Marin’s personality as a collection of villages. He believes it will take a new model made up of virtual clusters in the downtowns. “We could site a number of small, entrepreneurial businesses in our villages—job shops, small shops that fit in.” He mentions two large companies—Autodesk and the Buck Institute—as examples of firms that could support several small manufacturers. “What kind of feeder companies do they need to buy stuff from? We don’t have the land to create a physical campus, so let’s create a virtual campus.”
McGlashan says he’s ready to think outside the box of municipal boundaries. “If I can help a city in Sonoma County get a company like Agilent, my citizens will benefit. For a variety of reasons, I’d say Marin would step up to the table. I’d be the first to volunteer.”
Dr. Robert Eyler, economics department chair at Sonoma State University, has been contracted to help develop the Marin Economic Forum. He also recognizes Marin’s challenges in the area of friendliness to manufacturers, especially in land and lease costs. “The demography of Marin County has changed,” he says. “There’s a higher rate of return for population-serving businesses [retail and direct service].”
Eyler says politics is “one of the biggest hurdles to jump over, whether we can deal with zoning issues and the ‘not in my backyard’ mentality.” But, he says, there may be opportunities for businesses that are focused on green technology and light manufacturing.
Marin is more reluctant than Sonoma to go into partnerships with other counties, believes Eyler, who adds that the Marin Economic Forum is trying to change that with a more regional mentality. “Sonoma County has a lot of small manufacturers that are either spinoffs from other companies or startups. Manufacturing in Marin is more constrained, and its residents’ political will to change that is low.”
McGlashan agrees. “Sonoma County has a better opportunity to focus on clusters and corporate campuses—a hell of an opportunity to get ahead of the curve. That doesn’t need to threaten Marin. We can all win if we work smart in our ecoregion.”
Susan Gorin, mayor of Santa Rosa, says she’s open to a regional strategy. “I could see that happening. When we talk to a business, we might talk to them about Sonoma Mountain Village [in Rohnert Park] or even Petaluma. We recognize that any great employer locating in Sonoma County benefits us all. Our city is actively participating in regional economic development efforts,” she says.
Gorin says Santa Rosa is friendly to manufacturers and wants to be more so. “We’re coming forward with aggressive economic development strategies, approaching businesses with fresh eyes, and looking at land use and procedural changes. If manufacturers want to locate in Santa Rosa, they should come forward, we want to hear from them.”
But, she adds, despite having suitable land and leasable space, “It depends on what kind of manufacturing makes sense up here. We’re positioning ourselves as a green hub and a technology hub.”
What would help?
If community leaders could see past their current (and very real) economic fears and develop a regional economic development strategy, what steps would they take?
Sonoma State’s Silver believes that it’s time to move beyond talking about it. “We need to focus on a couple of key goals and start getting some work done. Can we coordinate our economic development sales force?” he asks. “Can they go out and market for each other? We have 14 Chambers of Commerce in Sonoma County alone: How can they cooperate and work together?”
Convening an economic summit might be the next step. Silver recognizes, “Different communities are going to have their own interests, whether that’s biotech, green manufacturing, wine or hospitality.” He believes sharing information about common interests and unique differences would be helpful to all parties. “Healdsburg, for example, needs to identify and share its vision and focus for economic development with Windsor, Santa Rosa, San Rafael and others.”
Silver also suggests that businesses that find the political climate disappointing should do something about it. “How many City Council and Board of Supervisors meetings have you gone to, to make your voice heard? The voice of the business community is missing.”
Silver is willing to go as far as a regional tax sharing strategy. After all, if Rohnert Park and Santa Rosa shared a portion of sales tax collections, they might not try and woo large retailers away from each other, which creates instability in the workforce and leaves empty stores. “Can we, across communities, agree to standardize incentives (for business attraction) instead of fighting over developments?” Silver says. “What if we agreed to share in the victories?”
In Silver’s scenario, a regional economic development corporation would require seed money from the participating municipalities, but could then be funded by its own successes, with an emphasis on marketing the region and attracting more companies.
Standardizing development and permitting rules would also help, according to Herman. “Most businesses will grow just fine on their own, what government can do is try not to get in the way,” he says. “Let’s think in terms of streamlining regulatory processes. Instead of a government telling a business what rules to follow, why not offer to help with regulatory filings? Why not look at it as a service rather than a requirement?”
Herman calls for a unified set of permit and development standards for the region, streamlined or even delivered through software or the Internet, so cities save administrative and staffing costs, get their fees and permits, but businesses are slowed and projects aren’t delayed, which can be costly. “If the IRS and Quicken can do it, so can we,” he says.
“What if we all got together? It could be like a ‘virtual’ trade zone that overlaps municipal boundaries. Everybody wins. What cities forget is, even if they don’t get the new industrial tenant, their residents may get some of the job opportunities.”
Ben Stone, economic development coordinator for the County of Sonoma, supports more efficient regulations: “We did a study a few years ago,” he says. “The average business in Sonoma County has 25 permits.”
Keeping it close to home
Not everyone is focused on regional collaboration. Many communities are looking inward. The city of Napa has millions in redevelopment investment, both public and private dollars, in its downtown area, and seems resigned to the fact that most of its manufacturers are making the same thing—bottles of really good wine.
Cassandra Walker, economic development director for the city of Napa, notes most of the area’s business parks are built out, and available land for additional industrial development is scarce. “The wine industry is heavily represented in the industrial parks with bottling, administrative, storage and distribution facilities,” she says. “We do have a number of other types of manufacturers, but we have a limited capacity for growth in the future.”
That doesn’t mean Napa hasn’t been busy. National brand retailers, high-end hotels and restaurants, and a focus on riverside development has changed the face of downtown. Following the lead of Healdsburg, St. Helena, Mill Valley and other boutique communities, Napa is focusing on lifestyle.
What’s next?
Despite concerns about costs and regulations, California—especially the North Bay—is a great place to live and a pretty good place to work. California manufacturing workers produce at twice the world average. We attract the best and the brightest, and many of them are innovators who force each other to excel. In Herman’s words, “To be competitive in California, you have to be great, because you’re playing on the world stage, not just in your own backyard.”
The weather is incomparable, and even NIMBY Marin seems to have gotten a lot of things right when you look at its matchless scenery. With that in mind, it’s no wonder we’re passing all sorts of laws to protect ourselves from ourselves. Simply put, it costs more to live here and it costs more to do business.
According to Stone, if we want to be successful, we might want to start watching global economic trends. “In general, the megatrend as we go through this recession is that China is going to become more of a consumer and we’ll become more of a producer,” he says.
Stone predicts we’ll have 1.5 billion new customers in China as their standard of living rises. “It’s the theory of comparative advantage,” Stone says. “As they get more successful, they’ll want our products.” Just as American consumers have positive opinions about German cars, Swiss watches and French cheese, Chinese customers will clamor for California-sourced wine, technology and more.
“A healthy aspect of the North Bay is that it’s diversified,” says Silver. “We don’t have one sector that’s leading the way.” He says that while a “star” sector (like microchips) might be easy to market, it’s worth the extra effort to “keep a lot of sectors growing at once” to shield the region from a downturn in a specific economic segment.
Will the North Bay form a regional economic development corporation? The idea is picking up steam. At the SSU Economic Outlook Conference in February, participants were urged to study the concept and get involved. And Marin’s McGlashan says, “We can walk and chew gum at the same time. We can protect our open space while we buy into an integrated economic development vision."
