The world’s most envied technology hub, California’s Silicon Valley, is seeing a somewhat surprising surge in manufacturing activity – a trend economic developers in the area hope to bolster.
Manufacturing-related activity accounts for about 20% of all jobs in Santa Clara County, where Silicon Valley is located, employing more than 150,000 people. “There has been a resurgence of high-tech manufacturing here,” said Kim Walesh, director of economic development for the city of San Jose, Santa Clara County's administrative centre.
San Jose, at the heart of Silicon Valley, is home to 2500 manufacturing-related companies, employing more than 65,000 people. About 840 companies in San Jose fall into the specialised high-tech manufacturing category. In San Jose’s five-year economic strategy, adopted by the city council in 2010, one of the top strategic goals highlighted was to “preserve and strengthen manufacturing-related activities and jobs”.
Over the past decade, San Jose lost manufacturing jobs, but at a lesser rate than California and the US. “During the recession we lost manufacturing jobs at a slower rate than the rest of the country and recovered them more quickly,” Ms Walesh said.
In a report released last year, think tank the Brookings Institute found that the San Jose-Sunnyvale-Santa Clara metro area was the second most ‘manufacturing-specialised’ among the US’s 100 largest metropolitan areas in 2010. (Wichita, Kansas ranked first). Manufacturing specialisation was defined as the share of local employment in manufacturing compared with the national share of employment in manufacturing.
In Santa Clara County 32 manufacturing sectors are considered highly ‘specialised’, meaning that they are significantly more concentrated than the national average; 29 of these are involved with high tech. Across Santa Clara County, these 29 specialised high-tech manufacturing sectors make up 76% of all manufacturing jobs.
In San Jose specifically, the production base mostly consists of original equipment manufacturers, contract manufacturers and supply network manufacturers.
“San Jose is a high cost/high value manufacturing location and has become specialised in supporting a new product introduction niche in the global manufacturing process,” stated a report produced by the city’s Office of Economic Development aimed at analysing the San Jose’s competitiveness in manufacturing. The report said that local manufacturing service providers are an important resource for the next generation of emerging growth companies in cleantech, medical devices, and information and communication technology.
Manufacturers consulted for the report cited the experienced, skilled workforce as a location advantage for San Jose, but also reported difficulty hiring appropriately skilled workers.
In March 2013, it was reported in the Financial Times that US multinational internet corporation Google plans to manufacture its latest high-tech gadget, interactive digital glasses, in Silicon Valley, providing a further boost to the region's high-tech manufacturing sector.