Small is beautiful.
So says an assessment of San Diego’s successful transition from an economy based on defense and aerospace to one based on high-tech.
The U.S. Small Business Administration has issued a case study of San Diego’s transition over the last decade, holding it up as a model other communities might duplicate. It is the first study of its kind undertaken by the SBA.
Small, high-tech companies were a crucial element in remaking the local economy in the face of defense spending cutbacks, the study says, adding that several elements in the local culture helped those small companies thrive.
Large amounts of federal, state or local money did not turn San Diego around; rather, “it was the leadership commitment and force of a bunch of individuals,” said Jere Glover, chief counsel for the SBA’s Office of Advocacy, in introducing the study last week.
“Developing High-Technology Communities: San Diego” may be accessed on the Web at (www.sba.gov/advo/research/rs198tot.pdf).
Glover, who is based in Washington, D.C., said “two things leaped out” at him in looking at the San Diego case study: how quickly the change occurred, and how significant it was.
The study notes that high-tech firms provided 61 percent of employment growth from 1990 to 1998, generating 66,349 of 108,479 new jobs.
Tech Payroll Blooms
It noted that from 1990 to 1998, high-tech payroll jumped from $4.9 billion to $8.6 billion. By contrast, visitor and agriculture payroll increased from $1.5 billion to $1.9 billion, medical services payroll increased from $2 billion to $2.1 billion, and defense payroll decreased from $1.6 billion to $1 billion.
The study also reported the average size of a San Diego high-tech company is 40 employees.
“High-tech and small business is synonymous in San Diego,” said an SBA-prepared summary of the study.
Terry Bibbens, who has the title of entrepreneur in residence with SBA’s Office of Advocacy, said it is frequently small firms that take ideas from the research world, then pass them along to large companies with marketing might.
The report studied how San Diego’s high-tech businesses spurred growth in unrelated high-tech disciplines, and how high-tech companies have multiplied from the likes of Hybritech, Linkabit, UCSD and Scripps Clinic and Research Foundation.
UCSD Influenced Growth
UCSD and its Connect program, which promotes university-industry cooperation, are featured prominently in the report, and credited for encouraging the growth of high-tech industry in San Diego (see accompanying story).
San Diego’s academic institutions train scientists, engineers and the technicians who back them up, the report noted, citing efforts by SDSU and San Diego City College in the latter category.
The report cited a “business friendly” attitude in local government, singling out San Diego Mayor Susan Golding for cutting regulations and streamlining permit processing.
Several other trade associations, community organizations, individuals, and government entities , including the SBA , are credited for helping San Diego’s turnaround.
According to Bibbens, the SBA considered several other “models of excellence” for its study before deciding on San Diego. These included the Ben Franklin Institute in Pennsylvania; North Carolina’s Research Triangle; Ann Arbor, Mich.; and Georgia Tech University. One reason San Diego was the best model, he said, was because the rest depended on government funding, and intergovernmental alliances that could break up if a senator or governor left office.
The unique histories of Boston’s Route 128 area and Silicon Valley probably make them models that one could not easily duplicate, he said.
Entrepreneurial Development
Clifford Numark, the new president and CEO of the San Diego Regional Technology Alliance, who came from a similar post in Los Angeles, said the neighboring regions have reacted to the defense downsizing problem differently.
“You do not see the level of entrepreneurial development in the Los Angeles area and Orange County area as you do in San Diego,” Numark told a group at the study’s unveiling last week at the La Jolla Marriott.
The success of San Diego is “really a tribute to local leadership,” he said. Los Angeles has had good leadership, he said. “This is exceptional.”
