Mid California Trade District P3 Moving Ahead

California’s Economic Future.  Is in its interior. 

Much is written about California’s difficult business climate and how business suffers from a challenging regulatory and permitting environment. As a company that works with businesses across both the US and internationally, we can confirm that there are significant and real challenges for business investment in the Golden State.  With that said, GLDPartners’ direct experience is that California has tremendous underlying growth potential supporting a range of sector investments and we’re involved in some things that are paving the way to a new round of growth there.

Being the home of globally notable supply chain hubs in sectors like aerospace, pharma & medical products, agribusiness, telecommunications and software production, California boasts a country-level economic base with some important key advantages.  These include 1) a range of world-class academic and research lab institutions, 2) several key global cargo logistics seaport and airport assets, and 3) a huge indigenous consumption and production base. To a range of some of the most dynamic international business sectors California is still a very fertile ground.

Unfortunately, urban legends and hearsay have accentuated the negative business effects of the State Government’s emphasis on certain regulatory areas, most notably around the very real concerns associated with improving air quality but also high tax and utility costs.  Add to that, for a period of time there was a fairly low-touch economic development strategy at the State level, and one might think that there’s little potential outside of some trendy super high-tech businesses in the Bay Area, or perhaps in Los Angeles or San Diego.

We feel there is a huge geographic swath of the State that has great potential for economic growth, and in fact probably represents the future of California’ economic growth potential.  California’s Central Valley is today a globally important agriculture region but can be much more potent given its proximity to major Northern and Southern California supply chain bases and to the global logistics hubs in Los Angeles and the San Francisco Bay Area.  Combined with a comparatively low cost of land and labor, a very large and diverse labor market, being home to a consumption base of about 4oM people and having direct border crossing access to Mexico, the Central Valley’s economic development cocktail is quite compelling.

That said, the Central Valley is today largely seen as irrelevant to national and international risk capital investors including major property development concerns, and property and infrastructure funds.  The fact is that they simply haven’t seen much of a market, so they have stayed away.  Odd for a place that has so much to offer.  There is definitely some chicken and egg here, without world-class assets there is literally nowhere for new company investment to consider landing, so the fact of the matter is that it isn’t happening in any significant way.

It’s quite apparent to us that the public sector has had little to offer here and has largely not recognized the opportunity.  To us, this needs to be much more than an economic development organization’s promotional efforts. There are some very important exceptions and one quite significant example is emerging in Merced County, where the local government has taken bold steps to assemble a unique business strategy to develop the almost 2000 acre Castle Airport as a multimodal (air, rail, road) trade and manufacturing hub.

Merced County is located toward the northern half of the Valley, directly east of San Jose – and sits just about in the geographic center of California. It’s in the middle of one of the richest agricultural areas in the world, with major crop production ranging from radicchio, to almonds to tomatoes. Beyond ag, as is largely the case in the Valley, the region is relatively light on manufacturing and it certainly punches well below its weight in terms of economic vitality and growth.

The GLDPartners’ Competitiveness Model shows that this region can compete for a range of investments in sectors like food production, specialty chemicals, industrial machinery, commercial space systems, medical products and automotive technology. With a world-class physical product, transport connectivity via modern fit for purpose infrastructure and government support – places like the Mid-California Trade District can become manufacturing centers serving industries that are part of supply chain systems that are present in the higher-cost urban places of the State and taking advantage of the State’s unique logistics connectivity to foreign markets, especially Asia.  The MCTD will become an export center hub using the State’s cargo seaport and airports.

Castle is a former Strategic Air Command Air Force Base that closed in a BRAC process in 1995.  Today it is a general aviation airport and an underdeveloped business park. Following the results of a robust competitiveness analysis, GLDPartners and the County have developed an investment prospectus that details the site’s competitive market position for a range of sector manufacturing and distribution investments. Plans are now underway to refine a strategy with the FAA, develop a new highway road connection to the CA99/I-5 highway systems, revise zoning, intersect skills development and support targeted incentives for new business.  Business partnership bridges are being developed with key institutions such as the State’s seaports and business associations – in other words Merced County is producing a comprehensive business plan that will come to life via a sophisticated P3 arrangement that will blend public and private resources.   This is a remarkable undertaking for a local community and will yield dividends for itself and for the State.

More to follow as this unfolds. Read and watch some recent press coverage.

TV:  ABC30 Fresno – Watch the video clip: Castle Development Plans Move Forward

Newspaper:  Merced Sun Star   County Envisions Castle as Manufacturing Hub  Merced Sun Star