By Gus Koehler, Ph.D. Principal, Time Structures

1. California’s New Argonauts: Producing New Technology and Products for New Markets in Real Time By Gus Koehler, Ph.D. Principal, Time Structures for the California Council on Science and Technology, and the California Space Authority June 27, 2007

2. Six Global Drivers Affect the Innovation Corridor’s Future Prosperity • First: Emergence of new global companies and very large markets in Eastern Europe, China, India, and South America. • Second: Continuing improvements in manufacturing productivity dependent on global IT networks for research, sourcing and assembly of components, financing, logistics, and for services • Third: Convergence of new enabling technologies and materials (Nano, Biotech, IT) • Fourth: Migration away from petroleum-based energy to new forms of energy and of conservation • Fifth: Radical changes in workforce demographics and competition to build and sustain a creative, scientifically literate workforce • Sixth: Global warming changing agricultural practices and producing rising sea levels that will affect major segments of the U.S. and world’s urban production and population centers

3. Its Not Your Parent’s World!

4. The Global Race The Global Race: When China, India, Russia, Brazil Overtake US and Other G6 Overtakes Overtakes Overtakes Overtakes G6 (US, Japan, UK, Germany, France and Italy)1 BRICs (Brazil, Russia, India and China) Overtake Source: Goldman Sachs (2006). Dreaming With BRICs: The Path to 2050. http://www2.goldmansachs.com/insight/research/reports/ 99.pdf#search=%22goldman%20sachs%20size%20of%20brazil's%20economies%22

5. Global Market Crossover Source: Goldman Sachs and JP Morgan date interpreted by Agtmael, The Emerging Markets Century.

6. New Global Market: Emerging Chinese Middle Class • By 2004, 52 million or twice Canada’s population • 2014: 400 to 500 million • Chinese middle class are trend Setters (updating their cell phones, cars, foreign brand-name apparel, computers and high-speed Internet links and car-crazy). • 12.4 million privately owned vehicles in 2003, up 25% from 2002 • Expect to sell 4.5 million cars annually by 2010 Lester Brown, Plan B. and Asian Pacific Foundation of Canada, Feb., 2004. http://www.asiapacificbusiness.ca/apbn/pdfs/bulletin144.pdf

7. Globalization: Established Multinational Companies are less Attached to their Countries • 50 largest multinational Manufacturing companies had 55% of their employees and 59% of their sales outside of the home countries • Revenue growth is coming from overseas, not domestically • In 1988, 38 of the 64 largest food processing firms owned a total of 682 food processing plants in foreign countries. • Pillsbury, Green Giant, and Alpo pet foods are owned by a British firm, Grand Metropolitan, PLC. Nestle, based in Switzerland, operates 421 plants in 60 countries. Sixty-seven of these plants are in the United States. • Establishing production facilities in foreign countries avoids tariff and most nontariff trade barriers. Many firms prefer producing in the foreign country for their markets rather than exporting from home. Bureau of Economic Analysis (2006). Summary Estimates for Multinational Companies: Employment, Sales, and Capital Expenditures for 2004. Time Structures

8. Source: Agtmael (2007). The Emerging Markets Century.

9. Current and Emerging Multinational Firm Characteristics • Globally competitive quality, design, technology, and management • Brand building and manufacturing for first world brands (Nike tennis shoes) • Excellent Logistics • Rapid response to changing markets • Small and Medium Company acquisition savvy • Sustained edge in use of IT • Unconventional thinking • Play both competitor and partner Source: Agtmael (2007). The Emerging Markets Century.

10. Large Companies from Different Countries have Different R&D Concentrations Dti (2006). The R&D Scoreboard. The Top 800 UK and 1250 Global Companies by R&D Investment.

11. International Innovation and Intellectual Property Competition Source: World Intellectual Property Organization, 2007.

12. Corporate Intellectual and Innovation Competition is Global Source: World Intellectual Property Organization, 2007.

13. US Productivity is One Global Advantage US productivity nearly doubled since the 1950s. Manufacturing productivity outpaced the rest of the economy since 1977 US productivity Exceeded US’ principal trading partners. Time Structures

14. Global loss of Manufacturing Jobs to Productivity Increases: California is not alone William A. Ward Clemson, Manufacturing Productivity and the Shifting US, China, and Global Job Scenes—1990 to 2005, University Center for International Trade Working Paper 052507, (August 4, 2005)

15. IT has made a Major Contribution to Global Productivity

16. IT Global Network Source: Joint Venture Silicon Valley, 2007 Index of Silicon Valley. Time Structures

17. Information Technology Integration Across Divisions and Around the World Generates High Velocity Business Innovation and Productivity Car Manufacturing & Sales Divisions Time Structures Software Programs

18. One Million Corridor Good Paying Manufacturing Jobs at Risk 1 Million to 1.3 Million to Other Nations? Current at jobs at risk = 1.5 Million 0.750 to 1 Million To Other States? Time Structures

19. Losing High Paying Jobs Biggest Looser, yet our Greatest hope Time Structures

20. Job Loss is Not Only Due to Low Wages Source: McKinsey and Company, CalEd Conference, 2006.

21. The Core of California’s Future Competitive Advantage Advanced Manufacturing Technologies + + New Materials Global Logistics Systems + Energy Efficiency and Emission Reduction Diverse Networks (Research, Financial, Production, Energy, Conservation, etc) Innovative Workforce Skills Ubiquitous use of IT + + + = Proprietary Technology Time Structures

22. The Dynamic Innovation Triangle Entrepreneurial Advantage: Technology, Product, Process, VC$, Logistics, Global Research-Finance-Production Networks, S&T Small Business Emergence, and IT Dominance Knowledge Advantage: Private and Public Sector Research in IT, Bio, Nano, Energy, Manufacturing, etc, Dominance People Advantage: Ethnically and Generationally Mixed, S&T Migrants, Evolving 21st Century Work Skills, Just-Time Life-Long Training, & Innovative and Adaptive

23. California is Highly Invested in High-Tech Employment

24. Materials Revolution: Nanotechnology Changes Everything Stronger Lightweight Steel Electric Muscle Zero-emission Power Source Lubricant-free Bearings Self-cleaning Surfaces Real-time Payload Measures Electric Drive Source: Caterpillar Inc. Time Structures

25. Nanotech and Water Purification Different Scales addressed with different applications. Source: Nanofrontiers, Woodrow Wilson International Center for Scholars, 2007.

27. Nanotech Related Employment: 226,800 California Jobs by 2015 Source: Adolfo Nemirovsky (2005). nanoEducation and Training Forumhttp://nanosense.org/documents/nanoed05/presentations/NanoCareersAdolfo.ppt#1 Time Structures

28. Converging Technologies: The Evolving 21st Century Biotech Industry Time Structures

29. Boston New York Baltimore Philadelphia Seattle La Jolla Los Angeles San Diego Chicago San Francisco Houston Pittsburgh St. Louis Ann Arbor Durham Cambridge New Haven Chapel Hill Stanford Atlanta California Dominates Top 20 NIH Cities Receiving Biotech Research Funding (1994) Source: NIH last city ranking at: http://grants1.nih.gov/grants/award/awardtr.htm Time Structures

30. California is Strong in all Biotech Clusters (2002) Source: California Trade and Commerce Agency, 2002.

31. Biotech In California: 2005 and 2010 • Biotech industry generated $62 billion in revenue • 2,700 biotech companies operate in California • 260,000 employees, exceeding the numbers found in other states. • 943,000 Jobs in the Biotech Industry Cluster by 2010 • Received almost half of the $5.9 billion in venture capital • Biotech scientists received $3.6 billion in grants from the National Institutes of Health in 2004.

32. Jobs by Biotech Industry Segments

33. Where Biotechnology Companies and Jobs Are In The Innovation Corridor Source: California Trade and Commerce Agency, 2002.

34. Energy and Transportation Source: Gupta, Los Alamos National Lab;, 2006.

35. Energy Drives Economic Development (or not)

36. Energy Production and Conservation: US is a Big Market

37. Potential Energy Efficiencies in Key Sectors Are Very Large

38. California: Roads and Miles Driven and Logistics • 169,580 miles ofroads in 2003 • 1,105,000 registered vehicles • Vehicle miles driven: 51 billion in 1967 to 153 billion in 1997 • California sea, land and airports handle one-fifth of all U.S. goods trade totaling $406.5 billion in 2003 • Between 1998 and 2020 tonnage is projected to more than double; California may see a tripling in freight volumes

39. Hydrogen will Require New Production and Infrastructure Facilities Time Structures Source: BP

40. Intelligent Transportation Systems Work • 24% to 50% accident reduction • 40% reduction in incident response times • 13% to 18% reduction in travel time • 14% to 33% reduction in emissions

41. Movement, Fuels, and ITS Jobs Source: LMID & Time Structures

42. Global Warming: The Economic Development Spoiler and Opportunity Generator Source: CEPA, Climate Action Team Report to Governor Schwarzenegger and the Legislature, 2006.

43. Global Warming Effects: • Agriculture Will Change • Urban Energy Use Will Increase • Coastal Flooding will be a problem Current Climate Vegetation Future Climate Source: Union of Concerned Scientists, and Ecological Society of America (1999). Confronting Climatic Change in California.

44. Summary of Future High Tech Jobs: Industry Conversion and New Technology Source: Time Structures

45. Additional California Job Projections The Center for the Continuing Study of the California Economy projects the following new and replacement jobs by sector for 2014: • Nursing: 55,000 new and 50,000 replacement • Production: 50,000 new and 250,000 replacement Construction: 175,000 each for new and replacement; and • Repair: about 80,000 new and 125,000 replacement. [i] Source: Center for the Continuing Study of the Economy, 2006 report.

46. The Workforce Skills Gap: Problems with Innovation Corridor’s Future Competitive Advantage Source: D. Ellwood/Aspen Institute, 2005.

47. The Workforce Challenge • Today: • California needs an additional 650,000 associate and above degrees in adult population age 25-44 to keep up with world’s top nation’s performance (Canada for example). • By 2025: • California will need 278,000 adults with some college • 2,457,000 with a Bachelors • 994,000 with a graduate degree to fill jobs [i] U.S. Census Bureau, 2005 ACS; OECD. Hans Johnson and Deborah Reed (2007). Can California Import Enough College Graduates to Meet Workforce Needs? Population Trends and Counts, Vol. 8, No. 4, May.

48. Technical and Professional Workforce is Aging 50% Source: US Census Bureau Source: LMID and Time Structures Time Structures

49. Retirement of Skilled Workers will Accelerate Source: Mapping the Growth of Older America, Brookings, at: http://www3.brookings.edu/views/articles/200705frey.pdf

50. California is Young Compared to Rest of Globe(65+ as Percent of Total Population (2004)) Source: Mortensen, Center for European Policy Studies.