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Defense, tourism still leading industries for San Diego

High-tech, finance and services diversify local economy

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San Diego’s diverse economy, once dominated by defense, also is driven by manufacturing, tourism, high-technology, biotech, financial and business services, health care and retail. Situated on one of the busiest international borders in the world, with one of California’s five major port operations, San Diego is also fueled by international trade and shipping.

Defense spending has remained relatively stable over the last several years, and the industry helped lessen the impact of the recession in San Diego. The Department of Defense is the single largest employer in the county, and military investment in the region also affects manufacturing, software and computer services, communications, professional services and recreational goods. In addition, many of the firms that once focused on military-related goods and services are now expanding into consumer products.

Manufacturing in San Diego includes the areas of shipbuilding and repair, industrial machinery and computers, metal production and the manufacture of toys and sporting goods.

Tourism, which includes hospitality, conventions and gaming, employs a workforce of more than 160,000 in the region, according to the San Diego Convention and Visitors Bureau. San Diego is considered a top U.S. travel destination and hosts more than 31 million visitors each year. These visitors spend more than $7.5 billion annually, creating an economic impact of over $17 billion for the regional economy.

San Diego’s innovation economy includes the life sciences, technology, telecom and cleantech sectors. The cluster employs more than 170,000 people, and includes over 80 research institutions in the region, according to the San Diego Regional Economic Development Corp.

San Diego is home to more than 1,400 software and computer services companies. The region has become a leader in software development, programming, systems integration and other related services. Its life sciences companies and research institutions form one of the top three biotech clusters in the nation, while the burgeoning cleantech sector has seen growth in areas such as biofuels, smart grid technology, solar energy, energy efficiency and energy storage.

As the U.S. economy continues its slow recovery, businesses remain cautious about expanding. And while access to credit has improved, many businesses and consumers will continue to struggle to get loans from financial institutions. Local banks, now going through a spate of mergers and acquisitions, should further improve financial performance.

Some economists say the jobs market here won’t return until the construction industry recovers. But with a surplus of distressed and vacant properties, there’s little demand for more construction. Education, government and civic projects continue to form the lion’s share of current construction.

The housing market remains slow, though showing signs of improvement. Commercial vacancies are still high in many areas, and ongoing challenges to the industry include maturing notes that will be unable to be refinanced and underwater loans.

The local health care industry is a bright spot, and expects to see robust growth. An aging population, innovative therapies and better survival rate for injuries and diseases will keep demand for health care high.

San Diego is also home to many professional and business services, such as legal, accounting and management. These sectors help diversify the local economy and should aid in job creation.


-Klam is a San Diego-based freelance writer.

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