W hat is in store for an economy that has grown past US$1 trillion and has led the nation in job creation each of the past five years?

Plenty, if you're California.

Through the first half of 2000, California has added more than 227,000 new jobs in virtually all of California's industry sectors. New plants and expansions numbered 2,137 for 1999, and are on the rise in 2000. California's economy is now into its sixth year of expansion, a duration that has significantly exceeded all expectations.

This recent period of expansion has fundamentally retooled the state economy and has paved the way for multi-industry leadership in the "New Economy" of the new millennium.

Once heavily dependent on defense-related jobs in the manufacturing and government sectors, California lost big when the Cold War ended in 1989. But following a protracted recession of the early 1990s, California came back stronger, bigger and more diversified than ever. California is now more appropriately characterized as an international knowledge-based service economy.

California's Hot Industries

From food processing to telecommunications, aerospace and the Internet, California is developing new ideas and establishing new trends. Following are updates on some of California's emerging industry clusters that many feel will help power California for years to come.

Biotechnology. California is home to more than one-third of the nation's biotechnology firms. In 1993, fewer than 300 biotech companies were located in California. Today, there are more than 2,500. The San Francisco Bay Area has the largest concentration in the nation, followed by New England and San Diego. The Los Angeles/Orange County area also ranks within the top 10 biotech regions in the nation.

Exploding cluster growth in the San Diego area has created fertile soil for growth. For example, California universities and research labs have played a major role in industry development. The California Health Care Institute showed that a California research university or institution played a key role in the growth of 28 percent of biotechnology companies. And, 46 percent have a clinical research or sponsored research agreement with a California public or private health/academic institution.

The presence of world-class research institutes such as Salk, Scripps and Burnham provide a major draw for other suppliers and researchers to California.

In 1999, the state served as home to 34 percent of the public companies and more than half the nation's employment; when compared to the United States, California's public biotech concerns generated 58 percent of total U.S. revenues, according to a 1999 study by Ernst & Young LLP.

Agriculture. With 350 crops and commodities, California is the nation's breadbasket for agriculture production, now a $27 billion industry that sustains jobs for more than 406,000 Californians. The nine-county Central Valley region is the cornerstone of the state's agriculture industry cluster, and all signs point to even more growth.

Fresno, with more than $3.5 billion in agriculture sales annually, anchors a cluster that also boasts the nation's leading milk producer, representing 18 percent of total production. The northern coastal region is the largest cluster of wine-grape growers, as California produces more than 90 percent of the nation's wines. Lettuce, broccoli, strawberries and artichokes are principally grown in the Central Valley.

Northern California has developed into a bellwether for rice production, with 1999 exports to Japan approaching $69 million. In May, NRE World Bento announced it would open a factory in Fairfield, Calif., to package and produce California-grown rice and vegetables into "bento boxes" for export back to Japan -- a clear signal that Japan sees long-term value in establishing new relationships with California.

Telecommunications. The San Francisco Bay Area and Southern California regions represent more than 75 percent of the state's telecommunications industry, which employs 150,000 people and accounts for more than $50 billion in revenues.

While Los Angeles has the largest concentration of telecommunications firms in the state, Santa Clara County is next, with more than 17,000 employees -- nearly triple what it had as recent as 1990. And, more rural areas of the state are successfully pursuing new firms. Colorado-based Network Photonics, a maker of specialized optical fabric switches for fiber-optic networks, announced in July it will employ 130 people in Sonoma County's "Telecom Valley." "What we looked for was a talented labor pool," Steve Georgis, president and chief executive officer of Photonics, told the Santa Rosa Press Democrat. "When you have one, then two, then four telecommunications companies, there is a critical mass of employees. And you have a quality of life that will entice engineers to join us."

As a related aside, more than 500 of the world's 1,200 Internet firms are headquartered in California, and growing. California e-commerce firms generate more than one-third of the $301 billion in total U.S. Internet-based revenues.

Film and Entertainment. The advent of digital imaging in the mid-1990s spawned an explosion in the cross-pollination of several industries to form a multimedia cluster that is driving California's film and motion picture industry.

Los Angeles is well known as the nation's leading motion picture cluster with employment ranging between 250,000 and 300,000. However, the industry is expanding to other parts of the state. The San Francisco Bay cluster combines the high-technology centers of Silicon Valley with "Multimedia Gulch" in San Francisco, which specializes in multimedia products for computers, film and video games.

Supplier jobs are also closely tied with the industry, such as catering, computer graphic artists, portable dressing rooms, electronics and special effects specialists. Venture capitalists are clustering to the Bay area to such an extent that the San Francisco region is now attracting 46 percent of the nation's venture capital dollars.

Aerospace/defense. The aerospace/defense industry is also attracting renewed interest. Lockheed Martin Corp. and Boeing Co. are building prototypes of the Joint Strike Fighter, the next-generation multiuse aircraft, at USAF Plant 42 in Palmdale. California is competing against Lockheed's Ft. Worth, Texas, facility and Boeing's St. Louis operation in a three-way competition that could result in 30,000 new jobs for the winner. The contract's value ranges between $300 billion and $500 billion, and will arguably be the largest defense contract ever awarded.

California has stepped-up its pursuit of the jet fighter. Sen. Dianne Feinstein has co-authored federal legislation calling for a cost-comparative study of all three sites, a study which California officials hope will reveal hard evidence of a generally held belief that Palmdale offers the most cost-efficient, top-to-bottom site in the country. A "flyoff" will take place next year, with the winner-take-all award being made in early 2004.

Private companies are again looking to California, as evidenced by the December 1999 announcement that SR Technics would site its North American heavy maintenance facility in at Plant 42 in Palmdale -- a deal that will add 6,000 new jobs to the region over the next three years.

Sacramento has more than taken notice in efforts to aggressively assist the state's new economy juggernaut. Included in California's 2000/2001 Budget are a bevy of tools for economic development practitioners: a $14.6 million package that includes $3.4 million for space commerce and aeronautics, $5 million in grant funds to match federal and private funds for the Next Generation Internet Centers, $2 million for the E-Commerce in Rural Economic Regions Demonstration Project, $2.2 million for the California Technology Investment Partnership Program and $2 million for the Manufacturing Technology Program.

California clearly is on the cutting edge of laying a long-term economic development foundation. The state will be closely watched by its competitors in the coming years. But if recent results are any indication, the state is well on its way toward sustaining a vibrant economic future.