Published February 21, 2012
Volume 20, Number 2

The Tri-Valley is Emerging as a New Center for Innovation    

The regional economic climate, like the nation’s, has not been at its strongest in recent years. While the situation is currently improving on both fronts, a number of changes have occurred in the Tri-Valley during this time which should help the area economy come back stronger and more vibrant than before, increasing both the region’s wealth and its ability to weather this sort of recession in the future.

“The Tri-Valley is really becoming another center of gravity in the Bay Area for what we think of as the innovation economy,” says Scott Peterson, deputy director of the East Bay Economic Development Alliance (East Bay EDA). While the Tri-Valley does not yet have a nickname like “Silicon Valley,” the confluence of ground-breaking businesses, national laboratories, and the collective brainpower of experts in a huge variety of disciplines means that the region is becoming a magnet for both ambitious entrepreneurs and established industry leaders seeking to break new ground in their fields.

These are some of the conclusions reached in the East Bay EDA’s recent publication, “Building on Our Assets.” The study, which serves to identify the region’s opportunities and challenges for future growth, is the result of an in-depth analysis of employment, business, workforce, infrastructure, and land use characteristics, as well as interviews with East Bay business executives.

“Innovative companies are playing (a significant role) in driving the economy, and that includes sectors such as information technology, clean technology, and professional, scientific, and technical service-related occupations and firms,” says Peterson. “What we take from that is that the national labs that are in the East Bay, and in the Tri-Valley in particular with Sandia and Lawrence Livermore, are helping to launch and spark creativity and innovation in business.”

The East Bay is particularly strong in this regard. UC Berkeley is ranked by the National Research Council as the top-ranked graduate research institution in the country, and the three national laboratories — Sandia, Lawrence Livermore, and Lawrence Berkeley — are more than exist in any other region. These institutions employ over 30,000 directly and have played a role in supporting many of the region’s professional, scientific, technical and information service and advanced manufacturing businesses, according to the East Bay EDA report. Industries that have benefited from this synergy include engineering, scientific research and development, biotechnology, pharmaceuticals, biofuels, and other clean energy activities. The region’s innovation engine has not gone unnoticed by investors, either; in terms of venture capital investment, the East Bay ranks second only to Silicon Valley in industrial (clean) energy, semiconductors, and electronic instrumentation, and companies here in computer technology, consumer and business products, and biotech also rate highly.

“What the report shows is the linkage between these research institutions and spinoff companies or even just brand new companies, and how much we need to do here in the East Bay to help them grow,” adds Peterson.

While the national laboratories and other public research institutions are by definition a hotbed of ideas, Peterson notes that these entities are not alone in that regard. “The health care research that Kaiser Permanente is doing, particularly on the information technology side, is quite remarkable,” he says. Kaiser’s IT campus, which is located in Hacienda, is ground zero for an innovative program which has seen the entire organization move away from paper to electronic health records, under the “KP HealthConnect” banner. The vast database holds the history of 9 million patients, making it the largest private sector electronic health care database in the world, and Kaiser has recently rolled out mobile applications to give their members access to their records via smart phone. “This is the future of health care. This new level of connectivity is happening (in) real time, and it is happening on a larger scale than anything like it in the world,” says George Halvorson, chairman and CEO of Kaiser Permanente. “The fact that a Kaiser Permanente patient in an emergency room in Paris or Tokyo can simply pull out their mobile device and have immediate and current access to their own medical information is an evolutionary and revolutionary breakthrough for medical connectivity.” The records are also proving to be a boon to researchers, who are using them to track treatments and outcomes for Kaiser patients and share the findings with the worldwide medical community.

Overall, the report notes that the region’s professional, scientific, and technical services (PSTS) industries are strong and growing. While employment in this sector has increased nationwide over the last 15 years, growth in the East Bay has outpaced the nation, state, and even the rest of the Bay Area in that time. The East Bay EDA forecasts an annual growth rate of 3 percent in the PSTS sector over the next decade, making this area a significant driver of the regional economy, and notes that these highly-skilled jobs offer salaries that are almost double the area average. The Tri-Valley is well represented in this area, thanks to nearby companies involved with computer systems; scientific research and development; architecture and engineering; and management, scientific, and technical consulting.

The East Bay EDA report also identifies a number of other Tri-Valley assets. Perhaps the single most important factor in giving the region economic strength and resilience is the diversity of businesses in the area. Unlike some locales which depend largely on a single industry, the study identifies no less than 12 key industries in the East Bay, most of which are prominent in the Tri-Valley. They include computer systems design and related services; scientific research and development services, including biotechnology and clean energy; architectural, engineering, and related services; management, scientific, and technical consulting services; semiconductor and other electronic component manufacturing; navigational, measuring, electromedical, and control instruments manufacturing; medical equipment and supplies manufacturing; and pharmaceutical and medicine manufacturing, all of which can be found in Hacienda.

The diversity of businesses goes hand-in-hand with another regional strength: an impressive workforce full of capable employees. Over 46 percent of the East Bay workforce are college graduates, a higher figure than both California as a whole (37.5 percent) and the nation (35.2 percent). On the opposite end of the spectrum, only 13.4 percent of East Bay residents failed to complete high school, significantly less than the California average of 19.4 percent and the national average of 15.1 percent. As one East Bay business leader told the East Bay EDA, “In the Bay Area, the quality of talent for startup companies is unmatched. Firms in the East Bay can access the rich, talented labor force of the entire San Francisco Bay Area.”

The workforce picture is not entirely rosy, however. The Baby Boomers now beginning to leave the workforce are the best educated generation of any in the nation’s history, but those entering the workforce fall short of that mark. Peterson sees this as one of the key challenges facing the region in coming years but notes that a proactive approach could mitigate any future issues. “The report shows how important it is for us to link the current employers with the workforce preparation system, so that those companies can be more engaged in helping develop curricula today that their future employees are going to need for the jobs of tomorrow,” he explains. “Linking business with education and workforce preparation programs is really important in making sure that businesses in the long term are really sustainable and viable. We do have a well-qualified workforce here and we just need to keep it that way.”

The other building blocks to a successful regional economy are in place and growing. The Tri-Valley’s transportation infrastructure, for example, is among the strongest in the Bay Area. Interstates 580 and 680, whose expansion greatly influenced Hacienda’s initial development in the 1980’s, continues to serve the region well. The Bay Area Rapid Transit system (BART) has continued its expansion into the Tri-Valley with the opening of the West Dublin/Pleasanton station and plans are afoot to extend the line to Livermore. Extensions to Pittsburg and Antioch in Contra Costa County will bring an even greater pool of potential employees into the Hacienda commuteshed. Meanwhile, many roadway-based regional transit services will continue to serve the area, as will the Altamont Commuter Express (ACE) train.

The good news, the East Bay EDA report concludes, is that the fundamentals of the regional economy are strong. “The East Bay possesses human, physical, and cultural assets that are the envy of other regions. This report seeks to illustrate how these assets help drive our economic growth and prosperity. They are the reason why many companies start and expand here. They are why a talented workforce chooses to live here.”

For further information on the East Bay’s economic climate, download the East Bay EDA’s complete report, “Building on our Assets,” from the organization’s web site at www.EastBayEDA.org.

i-GATE Leading the Way in Public-Private Partnerships

One of the keys to the Tri-Valley’s economic success has been the ideas and technology generated by the combined assets of public organizations like Sandia and Lawrence Livermore national laboratories and the area’s vibrant business community. These organizations have joined forces once again to create i-GATE, Innovation for Green Advanced Transportation Excellence, one of six designated innovation hubs (iHub) in California.

i-GATE is a regional public-private partnership designed to maximize the economic potential of green transportation and clean energy technologies. Programs include efforts to provide opportunities for collaboration and expedited technology transfer, entrepreneurial education and assistance, the i-GATE Academic Alliance, and an incubator for the development of green businesses. Participating organizations include Sandia and Lawrence Livermore national laboratories, the U.S. Department of Energy’s Joint BioEnergy Institute, the cities of Livermore, Pleasanton, Dublin, and San Ramon, universities including Cal, UC Davis, and CSU-East Bay, a host of venture capital firms, and many other public and private institutions.

As part of i-GATE’s ongoing operations, two corporations have been formed: National Energy Systems Technology, or NEST, and the i-GATE Development Corporation. As the name implies, NEST is an incubator designed to foster technology-based economic development and supports new science and technology companies to develop green transportation and clean energy technologies. Towards this end, NEST offers entrepreneurial mentoring and educational services; technology transfer assistance; collaboration opportunities; and more. The i-GATE Development Corporation assists in these efforts by providing facilities for NEST start-up firms.

Another key element is the i-GATE Academic Alliance, an effort to provide entrepreneurial education, technology commercialization support, and internship opportunities related to transportation and renewable energy. Academic partners include the University of California at both Berkeley and Davis, CSU East Bay, Las Positas College, Golden Gate University, the University of Michigan, and the University of Oklahoma.

For more information, access the i-GATE web site at http://tinyurl.com/8x37p89.

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