Despite its prime location on the edge of the Pacific Rim, San Diego isn’t living up to its full potential as an export hub, according to a market assessment released Monday by the Brookings Institution.
Armed with that report, a team of local business and civic leaders, including representatives from City Hall as well as the San Diego Regional Economic Development Corp., the Port of San Diego, the airport and the local World Trade Center, have joined forces on an initiative to create more export activity throughout the region.
The goal is to develop an export plan by August that will, among other things, aim at encouraging small and midsized businesses to sell their goods and services abroad.
“If you want economic growth, you either have to be on the trade bandwagon or be left behind,” said Peter Cowhey, dean of UCSD’s School of International Relations and Pacific Studies, who is part of the core team working on the export initiative.
San Diego County ranks 17th in total export value among U.S. metropolitan areas and 18th in the number of jobs that are supported by export activity, totaling 113,400 jobs, according to the Brookings report.
Those figures mirror the region’s ranking as the 17th-largest metropolitan area in the country, with the 17th-largest gross metropolitan product.
“The good news is that at least we’re consistent, in the same way that the Padres are consistent,” Cowhey joked.
But the bad news is that exports still represent a relatively small part of the local economy, Cowhey said.
When ranked by “export intensity” — the percentage of the local economy that is tied to exports — San Diego County ranks in 55th place, roughly the same as Portland, Maine; Hartford, Conn.; and Albuquerque, N.M., according to the Brookings report.
In addition, San Diego’s export growth has been relatively stagnant over the past decade, while U.S. exports have risen by more than 1.4 percent per year. And many exports travel only a few miles to the maquiladoras in Tijuana, where they are integrated into electronics equipment and then shipped back north, hardly qualifying as international trade.
In a meeting Monday at UCSD’s Faculty Club, members of the export initiative team ticked off a number of hurdles that San Diego faces in trying to boost more exports:
• Lack of information. “The biggest obstacle to small and medium enterprises to export is that it’s costly and risky to enter a foreign market without reliable information,” Cowhey said, adding that many entrepreneurs don’t know where to go for information on doing business abroad or entering alliances with foreign partners.
Steve Weathers, who heads the local World Trade Center, said his organization is already giving how-to seminars for business that are hoping for overseas sales. Together with local representatives of the U.S. Department of Commerce, he said he would step up those efforts.
But Port Commissioner Bob Nelson said it’s not just a problem for businesses not knowing what markets are like abroad. It also involves not knowing what opportunities exist locally.
As an example, he mentioned how Solar Turbines — whose factory exists on waterfront property leased from the Port of San Diego — used to strap its exports of heavy equipment onto trucks bound for cargo ships at Long Beach or Los Angeles, until port officials informed the company that it could ship its goods faster and cheaper from San Diego.
• Lack of diversity. Mayor Bob Filner said one relatively unexplored area for export growth is San Diego’s ethnic communities, which include entrepreneurs with ties to the Philippines, Latin America, India, China and other overseas markets. “This diversity is the strength of our community, but it’s also our weakness, because we don’t utilize their expertise, language skills or business skills,” he said.
Weathers agreed that it was important to make sure that the local pool of exporters was as diverse as possible. But he added that didn’t just include ethnic communities, but also different industries.
As an example, he said, real estate developers don’t often see a connection between their work and exporting. But things change when he tells them how selling property to a foreign investor is a type of export, bringing money from abroad into the regional economy. And there are plenty of investors abroad looking for real estate in places like San Diego.
• Poor infrastructure. Several of the team members talked about the need to improve wait times at the border, expand the capacity at the airport or create better road and rail connections to the docks as ways of improving trade.
But the Brookings survey also mentioned cyber-infrastructure as having an impact on exports, since so many small and local businesses still lack access to broadband communications that could help their sales both at home and abroad — or that could help their workers be prepared for more technology-oriented jobs.
“According to one study, 40 percent of San Diegans have no access to the Internet once they leave high school,” Powers said. “But having a well-qualified workforce is high on the list of concerns for local businesses.”
Cowhey said that San Diego should focus on bringing more broadband services to small and midsized businesses. “Places like Austin and Kansas City are already doing that,” he said. “Why shouldn’t we?”