Made in the Bay Area: A look at the regional manufacturing ecosystem

What do solar panel connectors, stereo systems, t-shirts and beer all have in common?

Answer: They’re all made in the Bay Area. Four businesses– Bentek, Meyer Sound, Marine Layer and Anchor Steam Brewing—representing each of these sectors were featured at the San Francisco Business Times “Made in the Bay Area” event on August 11.

Given that local manufacturing sector has been a pillar of San Jose’s economic strategy for the past decade, my OED colleague Reena Brilliot and I made it a priority to attend.While OED’s work is focused on nurturing businesses within city boundaries, we recognize that these businesses operate within a regional economy and face global competition. To the extent that we can leverage regional collaboration to strengthen manufacturing throughout the Bay Area, that’s a good thing for San Jose and its businesses.

Here are four key insights about regional manufacturing that I gleaned from the panel.

1. Bay Area manufacturing is a large and diverse sector.

Yes, we still make things in the Bay Area—a lot of different things, in fact. From artisanal chocolate to electric cars, the Bay Area still manufactures much more than the average person may think. A recent report by the Bay Area Economic Council Institute estimated 300,000 manufacturing jobs in the nine-county Bay Area (Santa Clara, San Mateo, San Francisco, Alameda, Contra Costa, Marin, Sonoma, Solano and Napa Counties).

San Jose alone is represents a significant piece of that ecosystem, with over 56,000 jobs at roughly 1,000 manufacturing companies. Six of the world’s ten largest electronic manufacturing service providers—Foxconn, Flex, Jabil, Sanmina, Celestica and Benchmark—have facilities in San Jose. We’re not just about electronics, either. We are also home to manufacturers of baked goods, bike parts, furniture, and, yes, of course, beer.

2. Access to customers and a talented workforce are two big reasons to stay in the Bay Area.

Despite being in very different sectors, all four businesses on the panel cited similar reasons for staying in the Bay Area, despite the relatively high cost of real estate and labor.

Mitch Schoch, CEO of Bentek, pointed out that being close to customers enables Bentek to deliver on its core value proposition: a high level of service and quality. In San Jose, talented labor is in plentiful supply, and though wages are higher than other areas, labor remains a relatively small fraction of Bentek’s total cost of goods.

Meanwhile, Anchor Steam Brewing takes advantage of San Francisco’s role as a tourist destination to create alternate streams of revenue to supplement the sale of its beer.

3. Attracting young people into manufacturing is a major challenge—and opportunity

As the manufacturing workforce ages, attracting young people into the field is becoming an increasingly urgent matter. In the Bay Area, manufacturers like Meyer Sound compete with corporate giants like Google and Facebook that can offer high wages and fancy perks such as commute shuttles and free gourmet food. Founder John Meyer lamented the fact that the school system no longer teaches students how to work with their hands.

Yet, as SFMade founder Kate Sofis pointed out, the maker movement is feeding a resurgence of interest in the skills, tools and processes for making things. Makerspaces like the TechShop are exposing young people to 3D printing, laser cutters and other new technologies and changing how they think about manufacturing.

Attracting young people into manufacturing careers has been a goal of our work in San Jose. Here’s a case study on how we partnered with San Jose manufacturer Jabil to provide an internship program for local youth. National Manufacturing Day is also a big annual event where local businesses open up their facilities to the public. Stay tuned for announcements about this year’s tours!

4. Manufacturers need help organizing at a regional level

The leaders of companies like Bentek and Anchor Steam Brewing are busy all week long dealing with product development, sales, distribution and growing their organizations. They don’t have time to organize around how the community college system or state legislation could work better for them. This is a role that a regional intermediary organization could play. In San Jose, we’ve started down this path with the Silicon Valley Manufacturing Roundtable, and we see value in Bay Area-wide collaboration as well.

On that note, we’re excited to announce that OED is partnering with SFMade and the cities of San Francisco, Fremont, and Oakland on a regional survey of manufacturers that will help us quantify the impact and needs of our businesses. San Jose manufacturers of all sizes and sectors, look out for a postcard and email coming in early September!