< Previous68 C A L I F O R N I A I N V E S T M E NT G U I DE alifornia’s favorable business climate, proximity to global markets and its supply chain of more than 30,000 manufacturers has the advanced manufacturing industry seeing Gold. Across the Golden State, manufacturing firms produced more than 10 percent of the total gross product with an annual GDP output of $239 billion. The manufacturing sector accounts for more than 23 percent of the state’s economic output. With 36,3000 manufacturing firms employing 1.4 million people, the manufacturing sector represents eight percent of the nonfarm workforce in the state. California has a number of incentives and programs to encourage its strong advanced manufacturing industry to continue growing. The California Competes Tax Credit is one key incentive designed to bolster the state’s manufacturing sector. CA Made is the state’s no-cost labeling program to promote consumer awareness and promote the sale on locally made goods in the state. The program is Advanced manufacturing companies are proud to say their products are “Made in California.” C A D V A NC E D M A N U F A C T U R I NG by SAVA N NA H K I N GC A L I F O R N I A I N V E S T M E NT G U I DE 69 administered by the Governor’s Office of Business and Economic Development (GO-Biz). Several manufacturers of all sizes and within varying sectors have recently expanded or located in the state and were awarded a California Competes Tax Credit. Entekra LLC, founded in 2016, is a Ripon-based construction startup that has recently selected Modesto as the site for its new $35-million manufacturing facility. The new 200,000-sq.-ft. facility will create 250 jobs and boost the company’s annual production capacity by 3,000 units of its Fully Integrated Off-Site Solution™ (FIOSS™). The company touts its ability to reduce overall build time by as much as 33%, while also reducing skilled labor needs by more than 40% — a key consideration given the ongoing labor shortage faced by US builders. “Expanding our operations within the greater Modesto community, which has been supportive of our efforts from Day 1, will allow Entekra to effectively capitalize on the tremendous interest in transitioning to FIOSS from the inefficient and labor-intensive method of stick-framing houses on site,” said Entekra CEO Gerard McCaughey. Though relatively new to the US market, FIOSS has been used for more than 50 years in Europe and Asia. Entekra’s management team is comprised of key executives from Ireland’s Century Homes, who grew that startup into Europe’s largest off- site company and are responsible for nearly 175,000 FIOSS homes assembled on three continents. Katerra, another innovative construction technology company, announced in 2018 it would build a 577,000-sq.-ft. advanced manufacturing facility in Tracy, California. The Menlo Park-based company also has an office in San Francisco and a manufacturing facility in Phoenix, Arizona. The new facility was chosen for its rail, ports and freeway access. The expansion will create 500 new jobs. Printerprezz, a medical device manufacturer, chose to locate its headquarters in the high-tech Silicon Valley city of Fremont in early 2019. The Fremont location will allow the company to work with the region’s innovative hospitals and manufacturing industry, and a supply chain of over 1,200 high tech, life science and clean technology firms. The location coincides with its Innovation Center, launched in 2018, with the intention of bridging the industries of manufacturing and health care. “Fremont is in the heart of Silicon Valley and central to growth and innovation in the medical devices industry,” said Shri Shetty, CEO of PrinterPrezz. “The city has supported us from the beginning, facilitating the buildout of our operation and connecting us with like-minded peers. The supply chain ecosystem in Fremont allows collaboration from different industries which is central to our value proposition at the intersection of technology and medicine. We’re proud to do our work here and to call Fremont our home.” In Vernon, California, rPlanet Earth has opened a new 302,000-sq.-ft. recycling and manufacturing plant. The one-of-a-kind plant is the first in the world to be a completely vertically integrated PET conversion plant. The facility represents an investment of more than $100 million from private and public sources. The company was awarded more than $10 million from California Competes and Employee Training Program funds. “The supply chain ecosystem in Fremont allows collaboration from different industries which is central to our value proposition at the intersection of technology and medicine. We’re proud to do our work here and to call Fremont our home. ” — Shri Shetty, CEO of PrinterPrezz# 1STATEFOR LIFE SCIENCES EMPLOYMENT 958,000 Total Direct, Indirect & Induced Jobs $19 Billion Federal, California State and Local Taxes Paid How big is California’s biotech and life sciences sector? Really big, a new report reveals. by MA RK A RE N D T The Largest Life Sciences Cluster In the World BI O T E C H 70 C A L I F O R N I A I N V E S T M E NT G U I DE he California Life Sciences Association released the 2019 California Life Sciences Industry Report in November 2018. It puts numbers behind the claim that the Golden State’s biomedical industry is the largest such cluster in the world. The sector employs more than 311,000 people, has generated $178 billion — with a “b,” — is projected to attract $7.6 billion in venture capital and has received nearly $4 billion in grants fro m the NIH. The report, produced with PwC US, further quantifies the breadth and depth of this sector: 2018 saw a 4.2% increase in total life sciences jobs (up 12,500 from the prior year), with companies directly employing 311,226 people in California — the most in the nation — with wages averaging $119,000. Total jobs created by the industry in California surpassed 958,000 including approximately 647,000 indirect and induced employment. There are 3,418 life sciences companies (up 169 from the prior year) in California, that have 1,332 new therapies in the development pipeline. California biomedical companies are projected to attract more than $7.6 billion from the VC community, an increase of approximately nearly $1.5 billion from 2017. California has a 54.7% share of the nation’s total VC investment. The state’s universities graduated over 4,900 science and engineering PhDs, leading the nation by a wide margin. Universities and research institutes also brought in $3.9 billion in NIH grants, which also led the nation. “California’s thriving life sciences industry continues to grow thanks to the contributions of companies that have developed groundbreaking therapies to help treat many serious illnesses — including cancer, hepatitis and heart disease — and engineered more sustainable materials, smarter agriculture and cleaner chemicals,” noted then-Governor Jerry Brown. “Our innovative life sciences sector is a source of great pride for Californians and brings with it an impressive positive economic impact – more than 300,000 Californians are directly employed by life sciences companies, particularly in world-famous hubs in San Francisco, San Diego, Los Angeles and Orange County.” Additional Findings Biopharma and medical device employment in California combined grew 11.2% between 2013 and 2017. By contrast, those numbers declined by nearly 2% in the second-ranked state, New York, for the second year in a row. The Bay Area led the state with over 82,500 direct life sciences jobs (an increase of nearly 11,200 from prior year). Los Angeles County follows closely with 57,100 (an increase of 7,700), while San Diego County directly employs 48,400 an (increase of 6,500), and Orange County reported 45,000 direct life sciences jobs (up by 4,500). The industry paid workers $37.1 billion (a $3.1 billion increase) in salaries and wages during 2017 with the average annual wage of $119,000, up from $114,000. “When we look at the numbers for the statewide life sciences industry, we’ve seen really consistent increases over the past few years in California,” noted Peter Claude, Partner, Pharmaceutical & Life Sciences Advisory, PwC. We are seeing remarkable success in all aspects of the industry in California, and with continued investment, we can see more breakthrough technologies reach patients everywhere.” An enormous economic plus, California life sciences companies earned revenues of $178 billion in 2017, up from $169 billion the previous year. Biomedical exports increased to $25.2 billion, an increase of $2.5 billion from the prior year, and the industry and employees paid $19 billion in federal, California state and local taxes. Home to 1,848 medical device and equipment manufacturing firms, and 1,570 biotechnology and pharmaceutical companies, California’s total 3,418 life sciences companies — 169 more than the previous year — produce new technologies to improve patient care and boost the state’s economy. increase) in salaries and wages during # 1STATEFOR LIFE SCIENCES EMPLOYMENT 958,000 Total Direct, Indirect & Induced Jobs $19 Billion Federal, California State and Local Taxes Paid # 1STATEFOR LIFE SCIENCES EMPLOYMENT 958,000 Total Direct, Indirect & Induced Jobs $19 Billion Federal, California State and Local Taxes Paid Bayer to Expand its Berkeley Campus Bayer will invest $150 million in its Berkeley pharmaceutical development and manufacturing site to build a Cell Culture Technology Center that will be used to accelerate the development of biological therapies. Once complete, the new facility will support Bayer’s growing portfolio in biologics to serve multiple patient populations. “Bayer is deeply committed to bringing innovative medicines to market that provide significant patient benefit. This investment allows Bayer to expand our biologics development and launch capabilities as we advance our R&D programs internally and through strategic collaborations,” said Wolfram Carius, Ph.D., Executive Vice President and Head of Bayer Pharmaceuticals Product Supply. “We are especially proud to bring this investment to Berkeley, where Bayer has been for many years, and to the greater San Francisco Bay Area, the birthplace of biotechnology and a global epicenter of drug development innovation.” The new Cell Culture Technology Center will be built on Bayer’s existing Berkeley campus, home to its recombinant Factor VIII manufacturing center that produces hemophilia A treatments for patients in nearly 80 countries around the world. The new 40,000 square foot facility, which is expected to be ready for clinical production in late 2021, will support the development of emerging therapies in Bayer›s portfolio with an emphasis on oncology, cardiology and additional specialty care therapeutic areas. C A L I F O R N I A I N V E S T M E NT G U I DE 7172 C A L I F O R N I A I N V E S T M E NT G U I DE nyone thinking of California logistics thinks first of the Ports of Los Angeles and Long Beach, which together account for some 35% of total container volume in the U.S. Growing port operations in the Bay Area are pulling their fair share too. Those ports and other areas of the state have a secret weapon beyond massive cranes, trucks and railyards, however. The state is home to 17 U.S. Foreign-Trade Zones — designated areas where companies can set up operations with exempted or deferred tariffs on foreign merchandise. FTZs make U.S. manufacturing more competitive by reducing or eliminating unfair tax burdens on companies that make or assemble finished products using foreign components. In 2017, $241.5 billion in imports (10.3% of total U.S. imports) were admitted into the country’s 191 FTZs, where the number of operating firms reached 3,200. According to the Annual Report of the Foreign-Trade Zones Board California’s 17 U.S. Foreign- Trade Zones are major factors in the state’s — and the nation’s — economy. by A DA M B RU N S A L O GI S T IC SC A L I F O R N I A I N V E S T M E NT G U I DE 73 to Congress filed in December 2018, California is No. 2 in value of warehouse and distribution activity involving merchandise received at its FTZs, and No. 5 in the value of exports from its FTZs. FTZ No. 202 (Port of Los Angeles) is fifth nationally in value of warehouse/distribution merchandise received (and 10th nationally in value of exports), while FTZ No. 50 (Port of Long Beach) is ranked 15th; Stockton’s FTZ No. 231 is 24th; and Port Hueneme’s FTZ no. 205 is 25th. All told, 355 companies pursue warehouse/distribution activity in California’s 17 FTZs. Logistics — along with construction and business services — is among the sectors that will share in welcoming 320,000 new jobs in California in both 2019 and 2020, according to a recent economic forecast from the Los Angeles Economic Development Corp. (LAEDC), which also predicts 3% growth in gross state product in each of those years. In a March presentation to the Southern California Logistics Association, Gilberto Contreras, FTZ No. 50 administrator, and Mechelle Smothers, business development analyst, noted that the Port of Long Beach is the leading gateway for U.S.-Asia trade, tariffs or no tariffs. The port is connected to 51,000 jobs — one in every five jobs — in Long Beach, and to 575,000 jobs in the larger five-county region. The port’s 2018 total container volume of 8.1 million TEUs (20-ft.- equivalent units) was the highest in its history and a 7% increase over 2017. But that’s nothing compared to the future: The port forecasts 2040 cargo to total 18.5 million TEUs. The San Pedro Bay ports that encompass Long Beach and Los Angeles comprise no less than 35% of total U.S. container port volume. And its ports claim to beat the transit time to and from Asia by 11 days over the East Coast route via the Panama Canal: 21 days vs. 32 days. The Port of Long Beach is in the midst of a $4 billion capital program, including a new administration building, wharf construction and fill, development of the port’s third phase, and a 1.5 billion replacement of the Desmond Bridge, known as the “Bridge to Everywhere.” The Port of Long Beach is also known as the administrator of U.S. Foreign-Trade Zone No. 50, whose service area stretches as far east as San Bernardino County and from San Clemente in the south nearly to Simi Valley to the north. Among the benefits an FTZ confers is inverted tariff relief: Companies in FTZ Board- approved manufacturing zones can elect whether to pay tariffs on input or on finished product. CARGO FORECAST *millions of twenty-foot equivalent units (teus) or 20-foot-long containers74 C A L I F O R N I A I N V E S T M E NT G U I DE F I L M & T E L E V I S I O N I N D U S T R Y Television and film projects are choosing to produce in the Golden State, thanks to its attractive incentive. HOLLYWOOD IS HERE TO STAY by SAVA N NA H K I N G Photo courtesy of NetflixC A L I F O R N I A I N V E S T M E NT G U I DE 75 hether it’s on the big screen, the silver screen or streaming, The Golden State has a long history of bringing stories and characters to life. Since 2014, the state’s ability to retain and attract production jobs and economic activity has grown significantly. Legislators bolstered the state’s film and television industry, tripling the size of California’s film and television production incentive from $100 million to $330 million annually. Program 2.0, as the updated tax credit is known, is awarded based on jobs, wages, and qualified spending on vendors, equipment and other criteria. Several projects, including big-budget and indie productions, have been selected for the latest round of tax credits, including “Akira,” which will be produced by Leonardo DiCaprio for Warner Bros. The movie will be filmed in California over the course of 71 days thanks to a $18.5 million tax credit. “We are thrilled with the opportunity to shoot ‘Akira’ in California,” said Ravi Mehta, Warner Bros. Pictures EVP of physical production and finance. “The availability of top-notch crew members, plus the wide variety of location choices and predictable weather are second to none.” “Akira” is set in 2060 in Tokyo and will generate an estimated $92 million in qualified spending, including $43 million in wages to 200 crew members and more than 5,000 extras. With the addition of “Akira,” California has attracted 13 big-budget feature films under Program 2.0. Large projects such as these are specifically targeted by the state’s expanded tax credit program for the significant boost they give to the economy. “Big-budget film projects bring big employment and big spending, and we’re able to bring them home to California more cost effectively than other locales that don’t have all that we have to offer,” said California Film Commission executive director Amy Lemisch. The tax credit program’s success also applies to long-term television projects. To date, 74 TV projects including new and relocating series, pilots, MOWs and mini-series have been accepted into the program since it was launched in 2015. One of the most recent shows to receive the credit is SHOWTIME’s Emmy-nominated series, “Penny Dreadful.” “With its established track record and top-of-the-line production value, a relocating series like ‘Penny Dreadful’ brings long-term jobs and significant in-state spending,” Lemisch said. “Global competition and increasing reliance on VFX make it possible for projects set almost anywhere to film wherever they get the best value. We’re delighted that California crews and service providers will benefit directly from this project, which is set in our own backyard.” Previously filmed in Dublin, Ireland, the series is set in Victoria-era London with the new season’s storyline taking place in 1938 Los Angeles. Several other locations were considered for the project. “Penny Dreadful: City of Angels” will employ more than 350 cast members, 150 crew and 10,000 extras. “Choosing where to set up production for the next chapter of the ‘Penny Dreadful’ fable was one of the most important decisions we had to make, and there were many options we looked into,” said Jana Winograde, President of Entertainment, Showtime Networks Inc. “Shooting in California obviously has many attractions, but without the state’s Film and TV tax credit it could become cost prohibitive. We couldn’t be happier about how things worked out or the benefits it will bring to the job market.” Several other popular television shows have chosen to relocate to California including “American Horror Story” from Louisiana, “Veep” from Maryland and “Good Girls” from Georgia. Streaming Giants In the not-too-distant past, Netflix was limited in its offerings to only streaming licensed movies and television shows from other studios. Today, the streaming giant has become a Hollywood powerhouse of its own making with original content. The company is expected to spend $15 billion this year on content creation. Netflix is expanding its operations in Los Angeles with two new leased buildings, making it one of the biggest office tenants in LA. The company is based in Los Gatos in Silicon Valley. Another giant in the video streaming space is LA-based Hulu, which launched in 2008. It has since grown to more than 25 million subscribers in the U.S. Hulu is the only service that offers viewers access to current shows from every major U.S. broadcast network as well as many Hulu Originals. Several of the company’s original shows have won or received a nomination for Emmy or Golden Globe Awards, including “The Handmaid’s Tale” and “Marvel’s Runaways.” Wn a land as storied and fabled as California, adventure and fun are around every corner. Whether visiting the state’s more than 800 miles of Pacific coastline, nine National Parks, the Hollywood Hills or Disneyland, people from around the world want to have their own Golden State experience. Travel and tourism are big business in the Golden State and getting bigger every year. by SAVA N NA H K I N G I T O U R I SM 76 C A L I F O R N I A I N V E S T M E NT G U I DE Photos courtesy of Visit California According to data from the U.S. Department of Commerce, national Travel & Tourism Office, the number of visitors to California has increased 1.3 percent year over year. Tourists from Brazil (+32.5%), Italy (+30.2%) and India (+14.5%) are leading the overall increase in visits. In April 2018, more than 211,942 Chinese visitors arrived at California ports of entry, with nearly 60 percent of those arriving at Los Angeles International Airport (LAX). LAX was recently ranked the fourth busiest commercial airport in the world, while also increasing its global rankings for its cargo operations, according to Airports Council International. LAX served a record number of guests in 2018 — 87.5 million — representing an increase of 3.5 percent from the year before. “Los Angeles is a leading international destination for commerce and leisure travel, and the continued growth of passenger and cargo traffic in 2018 further affirms the importance of our global airport,” said Deborah Flint, CEO of Los Angeles World Airports (LAWA). “LAX’s record number of passengers and rise in world rankings is a testament to the discernible modernization and innovation that is underway and the gold-standard service we take great pride in delivering.” The travel industry employed 1.1 million people in the state in 2017 and generated $132.4 billion in travel- related spending. State and local tax revenue for this period reached $10.9 billion, a 2.8 percent increase year-over-year. With nine national parks and 28 total National Park sites across the state, many tourists are basking in California’s vast outdoors. According to the National Park Service, 40.5 million visitors spend an estimated $1.9 billion in the local gateway regions while visiting the state’s 28 National Park Service lands in California. Other popular destinations include Lake Tahoe, which is enjoyed year-round. During the warm summer months, visitors spend days boating on the lake while the winter months give way to skiing and snowboarding. Laguna Beach is another favorite place to see California’s natural beauty. Situated between LA and San Diego, Laguna Beach’s scenic coastline includes Main Beach and Crescent Bay and nearby Crystal Cove State Park. Big Sur’s rugged coastline along the Pacific Ocean offers visitors 90 miles of oceanfront and hiking in the surrounding mountains and valleys. The region is home to iconic roadway Highway 1, which snakes along the coast. In May 2017, a landslide forced the closure of a scenic section of the highway and has recently been rebuilt to take motorists from Monterey in the north to San Luis Obispo in the south. “Highway 1 is better than ever, and California’s Central Coast is eager to welcome visitors to experience it for themselves,” said Visit California President and CEO Caroline Beteta. Next >