MIXNER STRATEGY

1+714.449.1040     www.mixnerstrategy.com

Containers - lots of them - come into the US through the Ports of Long Beach and Los Angeles. From a national point of view, the ports dominate west coast container shipments arriving from Asia.

Three key points:

1. Shippers will go where the costs are cheapest and the down time to unload cargo in port is shortest (Levinson).
2. Baja California is considering building a multi-billion dollar port south of Ensenada in Baja, California (Dickerson).
3. Local authorities, the Air Quality Mangement District if I am not mistaken, are beginning to ban older, more-polluting trucks from servicing the harbors (to pick up incoming containers) because they are polluting the air (Roth).

Trumping the billion dollar investments in the LA ports by the Mexican government and its contractors to build an entirely new port without green restrictions is an iffy proposition in a down economy.

Less pollution and less traffic flowing through the LA region is perhaps the only positive outcome of a Baja port. In the short run, a successful bid to build a port in Baja is a disaster for the middle-class truck drivers servicing the LA ports.

What should the ports do?

One solution is to slowly wind down. That'll will take some time as the investments and infrastructure are huge and not easily - or sensibly, I know - abandoned.

The other solution is to turn the problem - regulation leading to higher costs - into a marketing opportunity.

1. Make sure that every shipment through the ports is branded with the green port label.
2. Make sure the shippers know about the green port label.
3. Make sure ultimate consumers know about the green label, so much so that they demand green labeling on everything they buy.

The Ports have a choice:

• Wind down now or sometime in the future or
• View things as a very large marketing opportunity and act accordingly - now.

Given the large investments already sunk in the ports, I suggest the later.

One last thing about green labels: they only last so long before everyone else - the other harbors - have a green label of some sort of their own. While the label may work for a while the harbor's task is never done. After the green marketing effort, they need to address other things, like pay to employees (why do they always come first), technology to speed handling of containers, train and truck technologies, and other things to speed containers off the ships and on their way to consumers.

References

Dickerson, Marla. Mexico plans huge Baja port for U.S. trade. LA Times. 28 August 2008. http://www.latimes.com/business/la-fi-mexico28-2008aug28,0,844963.story

Levinson, Marc. The Box. How the Shipping Container Made the World Smaller and World Economy Bigger. Princeton University Press. 2006.

Roth, Alex. Two California Ports Will Ban Older Trucks. Wall Street Journal 29 September. A32.

Posted by jackmixner at 08:23 AM | Permalink

714 449 1040.      www.mixnerstrategy.com

Before 1800, the human population relied the "contemporaneous energy of the sun, mainly in the forms of food, fuel wood, fibers, and a modest capture of wind and water power (Sachs, 64). The energy sources were limiting on population growth.

After 1800, the limits were "surmounted by coal, oil, and natural gas (Sachs, 64)." Population began to explode.

Since I like to watch technology companies grow, I was heartened to realize, thanks to Sachs, that one invention, particularly, allowed the human population to soar. In fact, it wasn't just any old invention.

The Haber-Bosch process for synthesizing nitrogen-based chemical fertilizers allowed for 80 percent of the growth of cereal production in the twentieth century (Sachs, 65-66). That one chemical reaction was basically responsible for much of the green revolution, or certainly the "food" revolution, across the world.

One invention. Huge growth.

Of course, there is another story that goes along with this wonderful one, that of the growth of global warming from the burning of fossil fuels and the expansion of arable land by burning existing forests and grasslands. Sachs summarizes the effects of the global warming that has paralleled the growth in technology based agriculture and manufacturing. The expected results are just a scary as we have been led to believe by the media, perhaps worse.

Since about 1800 or so technology has allowed the expansion of the global economy and population. The results of that expansion will "come home to roost" over the next century. My optimistic nature believes that there will be technological mitigations for the forecasted problems, but they remain to be seen. Sachs says mitigating these areas may be enough (Sachs, 97):

• deforestation,
• emissions from electricity production and automobiles,
• clean up steel, cement, refineries and petrochemical production,
• economize electricity and
• replace furnaces with grid power.

That list looks more doable that the hand-wringing we are seeing in the press.

Reference

Sachs, Jeffrey D. Common Wealth. Economics for a Crowded Planet. The Penguin Press. New York. 2008.

Posted by jackmixner at 04:24 PM | Permalink

714 449 1040     www.mixnerstrategy.com

The heroes in community growth are the folks who never get any credit. Their networks reach across the community, tying out-lying organizations together in unexpected webs.

Local CEOs and power brokers, you say? Nope.

They are bakery owners who hire immigrants - and show others how. They are cops who create a system to help victims of domestic violence. Maybe even, simply, a CEO who hosts meetings for the community in her boardroom (Stephenson, 33). 

Posted by jackmixner at 10:20 AM | Permalink

714 449 1040     www.mixnerstrategy.com

The Milken Institute's survey of best performing cities 2007 is out. Ranking of cities are based upon job growth 2001 and 0225, wage and salary growth in 2000 and 2004, short term job growth (march 06 versus March 2007), relative high tech GDP growth with 2001 and 2005 as a base-line, location quotients relative to job growth (Milken, 11).

Orange County didn't make the list. Riverside and Ontario, and Las Vegas made the list. I wonder which cities will make the list in 2008, what with all the economic changes across America.

Best Performing Cities 2007. Milken Institute. http://www.milkeninstitute.org/pdf/best_prfrmg_cities.pdf

Orange County 2008 Community Indicators. Children & Families Commission of Orange County. http://www.ocbc.org/Community%20Indicators%20Rpt%202008.pdf

Posted by jackmixner at 05:01 PM | Permalink

714 449 1040     www.mixnerstrategy.com

There is a truly startling possibility that Lake Meade will empty within the next thirteen years given current population growth and snow levels in the Rockies.

Now is the time for planning, for our businesses, strategically, and our regions.

Barringer, Felicity. Lake Mead Could Be Within a Few Years of Going Dry, Study Finds. New York Times. 13 February 2008. http://www.nytimes.com/2008/02/13/us/13mead.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1202922487-xAs3kSgt1/xlPpcIqdbjRw

Posted by jackmixner at 07:06 AM | Permalink

Copyright Jack Mixner.     7134 449 1040.     www.mixnerstrategy.com

For centuries and centuries, China barely recognized the existence of anyone outside its boundaries, much less responded to them.

Times have changed, China along with them. The real question is, "What about the future?"

Six key points (Gelber, 427-442):

• Demographics.
• How will 'one child' play out in the end?
• What about the real interest in having sons?
• Immigration is huge in much of the world. What role will it play in China?
• Governance.
• Tiananmen Square spoke loudly to the reality in China; however, things continue to evolve.
• The Party is not going away. How will it evolve, especially in a wired and televised world.
• Economics.
• Entrepreneurism is almost in the Chinese genes. The government sparked growth with all sorts of incentives. Many have not flowed nation-wide. How will that play out?
• Will growth continue at break-neck speeds? Will investor capital continue to flow into China?
• China's role in science and technology.
• Will over-capacity and banking scandals bog things down?
• Borderland relations.
• China doesn't want refugees from Korea, or a war, for that matter.
• It seems able to postpone resolving the Taiwan issue.
• Either could prove incendiary. India enters the equation as well, as does Russia.
• China's place in the global balance of power.
• Accommodation with the West seems likely to continue, assuming "reasonable good sense" (Gelber 439) on both sides.

China is now a participant in the world economy. Let's hope things stay positive, long-term.

Reference

Gelber, Harry G. The Dragon and the Foreign Devils. China and the World, 100 B.C. to the Present. Walker & Company. New York. 2007.

Posted by jackmixner at 12:01 PM | Permalink

Copyright Jack Mixner.     714 449 104.     www.mixnerstrategy.com

It's an interesting time to suggest "standing up to the environmental interests" (Kotkin, A13) what with global warming and restricted water supplies in the LA Basin, but Kotkin suggests just that. He also suggests re-directing masses of graduating high school students not to college but to skills training and blue collar jobs that pay pretty well.

His example? The San Pedro/Long Beach harbor. If we don't cut the harbor some slack environmentally, and train more workers for jobs in the harbor, there could be ramifications. The most interesting possibility? Moving the harbor to Baja where there are lots of people looking for jobs, and minimal environmental concerns.

Sounds far-fetched until you think about it. Wouldn't take that much to build a new harbor in Mexico. Then all they'd need are rail connections going all the way across the northern part of Mexico capable of tapping connections up to Chicago, the mid-west, and the east. All because we didn't take the time to train enough trades workers and figure out a way to resolve the environmental issues.

Every time I hear about the Baja plan, I smile and think it'll never happen. Some Southern California possibility thinking and problem solving might be in order before we actually do lose a very useful - and job generating - asset.

Reference

Kotkin, Joel. The Myth of Deindustrialization. Wall Street Journal. 6 August 2007. A13.

Posted by jackmixner at 01:45 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

There is talk of the creation of a new incubator in Orange County focusing on medical device start-ups. 

Before the tech bust, there were multiple proposals for tech incubators in Orange County. A couple of years ago, the Digital Media Center in Santa Ana opened with federal and community college support. Now, a new incubator with University and business ties is on the drawing boards.

Our information says the location has been selected and interested parties are meeting about next steps.

Sounds interesting. Let's hope the next Allergan or AMO gets its start with the incubator's help. 

Reference

Stewart, Colin. Boosting medical device enterprises. Orange County Register. 10 May 2007. http://www.ocregister.com/ocregister/news/local/irvine/businessnews/article_1690192.php

Posted by jackmixner at 12:57 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

By now, I imagine everyone has moved on from the Avalon wild fire story. For me, I will never forget the image in my mind of the US Navy delivering firetrucks to fight the fire - by hovercraft. This time, they got it right.

Photos:

http://www.latimes.com/news/local/la-catalinafire-pg,0,1155669.photogallery?coll=la-home-center&index=7 

Posted by jackmixner at 10:01 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Strategic leaders in Southern California regional economic development:

AeA. http://www.aeanet.org/ 

BIOCOM. http://www.biocom.org/ 

California State University Fullerton. http://business.fullerton.edu/Centers/iees/ResearchAsso/PuriAnil.htm

Chapman University. http://www.chapman.edu/argyros/asbecenters/acer/forecasting.asp

Life Science Industry Council.  http://www.elinc.org/

Los Angeles Economic Development Corporation. http://www.laedc.org/

Milken Institute. http://www.milkeninstitute.org/

OCTANe. http://www.octaneoc.org/

Orange County Business Council. www.ocbc.org 

Orange County Workforce Investment Board Economic and Workforce Intelligence Committee. http://www.ocwib.org/lmi/index.asp

Southern California Association of Governments.   http://www.scag.ca.gov/

Posted by jackmixner at 09:57 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Manufacturing jobs in Orange County peaked at 231 thousand in 1990, with a smaller peak of 217 thousand in 2000. Right now, we're at approximately 183 thousand (Tolkoff, 4).

Strengths in aerospace and defense have evolved to those in medical devices and, if things go very right, in biosciences.

Orange County is lucky. Cluster diversity in Orange County leads the nation. When aerospace and defense tanked in the early 90s, computer software, pharmaceuticals and communications equipment grew.

Planning for the future necessitates a continual look at what we have and making them stronger. It also requires that we consider what we might have in the future and how to help clusters that aren't very strong yet continue to grow.

Manufacturing will likely continue to migrate to cheaper locations. R&D will stay if we continue to improve our universities and trade organizations, says Jack Kyser, chief economist for the LA Economic Development Corporation (Tolkoff, 4).

Within the county, manufacturing is largely centered in the north. The biggest losses in jobs have been concentrated there (23,143 jobs lost in north Orange County versus 5,815 lost in south County) (Tolkoff, 4). Replacing those lost jobs requires engagement of the north Orange County community in creating jobs, especially high tech, high multiplier jobs.

References

Los Angeles County Economic Development Corporation. Mid-Year Updat: 2--6-2007 Economic Forecast & Industry Outlook for California & Southern California including the National & International Setting.  http://www.laedc.org/reports/Forecast-2006-07.pdf 

Orange County 2007 Community Indicators. www.oc.ca.gov/ceocommunity.asp.

Tolkoff, Sarah. Manufacturing Jobs Steady, But Booms Likely Thing of Past. Orange County Business Journal. 16 April 2007. 4.

Posted by jackmixner at 10:37 AM | Permalink

Copyright Jack Mixner.    714 449 1040.     www.mixnerstrategy

I attended a one-day conference (CalEDGE) in Sacramento two weeks ago on helping businesses take advantage of the new bond funds for infrastructure construction approved by the electorate in California in 2006. Added together, it looks like there are $50 billion in funds available for construction over the next years.

Sounds great, especially if you own a construction company. One big problem: there aren't enough construction workers to construct all the infrastructure envisioned. It seems, in our focus on training technical workers, we forgot to train construction workers in the now very limited vocational programs we used to be so proud of.

Which brings us to the other problem. Since there aren't enough workers, the construction companies are ending up solo bidders on major work. LAUSD reported at the conference that one of their recent contracts was four times more expensive on a square foot basis than the preceding contract.

Will we be able to train enough construction workers in time? By the time they are ready to make a living at construction, will there be any funds left for construction, or will it have been frittered away on cost padding? Time will tell.

Reference

CalEDGE. http://www.californiaedgecampaign.org/

Posted by jackmixner at 01:24 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Interim Assessment of the Empowerment Zones and Enterprise Communities (EZ/EC) Program. Content updated on 31 March 2005.  http://www.huduser.org/publications/econdev/ezec_execsum.html

...Findings that are consistent with little or no positive impact of the EZ/EC Initiative, or of the significant challenges faced by EZ/EC grantees, include the following:

...In the survey of zone businesses conducted in 2000, 65 percent of all EZ businesses reported no benefits from being in the EZ.

...Other Important Findings

...Zone programs have relied heavily on engagement with nonprofit and private partners. Creating and maintaining these partnerships has required significant time and effort. Building internal capacity within community organizations to undertake such long-term partnerships has been an area requiring special attention, but not many sites invested heavily in such efforts.

Section II-Enterprise Zones: Key Issues. Content updated 31 March 2005. http://www.huduser.org/publications/polleg/ez_bib/ez_bib2.html

Urban Enterprise Zones: Inner City Panacea or Supply-Side Showpiece?, ACCN-4565

Charles M. Haar et al.
1983, 41pp., CPD 755-R
Available from HUD USER, P.O. Box 23268, Washington, D.C. 20026-3268
Phone: 1-800-245-2691

...Federal funding should be made available for infrastructure improvement, a source of venture capital should be provided through tax policy, technical assistance should be provided to zone businesses, and zones that work with established neighborhood groups should be favored.

Impact of Enterprise Zone Tax Incentives on Selected Small Businesses, ACCN-4577

Coopers & Lybrand Economic Studies Group
1982, 58pp
Available from HUD USER, P.O. Box 23268, Washington, D.C. 20026-3268
Phone: 1-800-245-2691

Coopers & Lybrand Economic Studies Group1982, 58ppAvailable from HUD USER, P.O. Box 23268, Washington, D.C. 20026-3268Phone: 1-800-245-2691

...The tests indicated that the incentives have only a marginal impact on cash flow during a new firm's first years; thus the incentives would be of most value to established firms considering expansion.

State Enterprise Zone Programs: Variations in Structure and Coverage, ACCN-4589

Roy E. Green and Michael Brintnall 1986,37pp. Unpublished paper Available from HUD USER, P.O. Box 23268, Washington, D.C. 20026-3268
Phone: 1-800-245-2691

...The cumulative impact of enterprise zones can be judged on (1) the extent to which they emphasize a freer marketplace to meet public need rather than greater government intervention; (2) the extent to which they emphasize entrepreneurial opportunities rather than a government focus on preconceived needs along which entrepreneurs would be directed; (3) the extent to which they create incubator environments for small, new ventures rather than relocating existing ones; and (4) the extent to which the zones focus on business creation and growth rather than a more diversified social agenda.

 

Posted by jackmixner at 07:48 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Maybe ten years ago, I got to know Gary Wertz. Gary ended up running marketing for a local company, FlexFoot, acquired in 2000 by the Icelandic firm Ossur. Because of Gary, I have watched FlexFoot continue to grow.

Wired just published a long article on Oscar Pistorius, a runner poised to make the South African Olympic team, all the while running on Ossur/FlexFoot prosthetic legs. He is crossing over from stardom on the South African Paralympic team to their Olympic team.

Interesting quote about the ethics of all this: "If you think having carbon-fiber legs will make you faster sprinter, have the operation and we'll see you at the track."

Reference

McHugh, Josh. Blade Runner. Wired. March 2007. 136.

Posted by jackmixner at 09:00 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

All of us who understand the travails a start-up pharmaceutical or medical device company goes through are willing to cut the businesses some slack. Hundred million dollar investments are the norm, even before profits, or sales for that matter, kick in.

Is this all a tremendous waste of time - and money? The reason we all put up with is it is the assumption that the alternative, that of developing drugs in-house at the big pharmaceutical companies, is just as inefficient, or more so.

Two assumptions are a work here:

• Little is better - less bureaucracy means faster development times
• There is plenty of money available to startups from the venture capital process.

Maybe we're wrong. It might make sense to reevaluate the efficiency of large companies' research and development process (Pisano). Perhaps they are better than we think at identifying just when an investment in a new drug needs to end. A good portion of the venture capital sloshing around on the balance sheets of startup pharmaceutical companies may be ill-invested (Pollach).

While we rely on capitalistic markets to ultimately decide whether an investment is a good one or not, it appears that a re-examination of the pharmaceutical market might be in order, especially if the money you are about to invest is your own.

References

Pollack, Andrew. It's Alive! Meet One of Biotech's Zombies. New York Time. 10 February 2007. http://www.nytimes.com/2007/02/11/business/yourmoney/11xoma.html?ei=5094&en=5b835935e2350efa&hp=&ex=1171170000&adxnnl=1&partner=homepage&adxnnlx=1171144076-/NBOQr59NAwxcKfsl4xHbw

Pisano, Gary P. Science Business: The Promise, the Reality and the Future of Biotech. Harvard Business School Press. 2006.

Posted by jackmixner at 02:11 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

For a while now, the US government has complained about the scarcity of vaccines to treat various illnesses. A plant was closed in the UK and Americans couldn't get flu shots last year. Lately, complaints surface occasionally about the problems to come if bird flu makes a major jump from wildlife to humans. Vaccines aren't necessarily profitable for companies to create. Plus, sterile manufacturing at large volume is apparently problematic. Thus the shortages.

Somebody is doing something about it, and we still hear complaints. Indonesia is starting to sell samples of the bird flu virus to Baxter Healthcare, in a newly formed non-exclusive arrangement. The World Health Organization is complaining (McNeil). 

What's wrong with this picture? The public good is colliding with capitalism. In the long run, we will have to see if it will work. In the short run, the WHO still has a role, that of ensuring that Baxter, and other for-profits that compete for the virus to create vaccines, have the capacity to protect against disaster.

In the long run, my suspicion is that we are in good hands. In the short run, let's keep an eye on those hands. We need to make sure enough manufacturers are supplying enough for all of us.

References

McNeil, Donald G., Jr. Indonesia May Sell, Not Give, Bird Flu Virus to Scientists. The New York Times. 7 February 2007. http://www.nytimes.com/2007/02/07/world/asia/07birdflu.html?_r=1&ref=health&oref=slogin

Posted by jackmixner at 01:35 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Evidence suggests that economic growth in less developed regions of the world requires "economies of scale or scope or the use of new technologies capable of producing significant advances in overall productivity and incomes (Bhide, A16)." Micro loans in developing economies - without broad-based changes - aren't enough (even with Nobel Prize recognition including the recent award to Yunus this past year).

So where do micro-loans really work? Micro-loans might work better in impoverished areas in developed economies (Bhide, A16).

Orange County has problems - some severe - with unemployment and low incomes in various cities. Maybe a useful solution is a micro-loan program to stimulate growth in center city environs?

References

Bhide, Amar and Carl Schramm. Phelps's Prize. Wall Street Journal. 29 January 2007. A16.

Posted by jackmixner at 10:29 AM | Permalink

Copyright Jack Mixner.     714 449 1040.    www.mixnerstrategy.com

"For many lay people, economic development - by which we mean the analysis of the economic progress of nations - is what economics as a whole is designed to address. Indeed, what but to find the "nature and causes" of economic development was Adam Smith's purpose? For modern economists, however, the status of economic development is somewhat more uncomfortable: it has always been the maverick field, lurking somewhere in the background but not really considered "real economics" but rather an amalgam of sociology, anthropology, history, politics and, all-too- often, ideology (New School)."

Classical economic theory said intervention helped grow economies. Neoclassical economic theory, however, has discounted the possiblity that government planning, with attendant bureaucracies, spurs economic growth.

What does it mean for local economies like Orange County?

A few things continue to be clear. K-8 eductation is crucial. Mis-matches between supply of labor and employment trends, if pointed out early enough, may be reduced. There will be shortages of college educated workers and professionals with advanced training in the future (Orange County).

Intervention necessary from local government? Probably not. Spotlight on coming problems and mismatches? Good idea.

References

New School for Social Research. Economic Development. http://cepa.newschool.edu/het/schools/develop.htm.

Orange County Workforce Investment Board. Closing the Gaps Employment Demand and Workforce Training in Orange County's New Economy. http://www.ocwib.org/lmi/Docs/2000%20Workforce%20Assessment%20-%20

Posted by jackmixner at 10:08 AM | Permalink

Copyright Jack Mixner.    714 449 1040.     www.mixnerstrategy.com

The price of oil is falling. Certain sectors of the oil market require high oil prices to remain profitable. Low prices will send some companies, like low efficiency ethanol-from-corn producers, reeling (Zuckerman).

Green laws are requiring the ethanol content of gas to rise, raising the price of corn the feed stock for ethanol production.

High prices for corn raise the price of tortillas, a food staple in Mexico (Barclay). The government is importing corn to drive down corn prices.

This is a new, disorganized, and inefficient market. Politics are effecting the price of oil and corn. Relying on either of them for long term growth and profitability will require knowledge, efficiency - and luck.

References

Barclay, Eliza. Tortilla Trouble in Mexico. BusinessWeek. 29 January 2007. 10.

Zuckerman, Gregory and Ann Davis. Who is Hurt by Oil's Fall? Wall Street Journal. 19 January 2007. C1.

Posted by jackmixner at 10:10 AM | Permalink

Copyright Jack Mixner.    714 449 1040.     www.mixnerstrategy.com

The top six strategic initiatives facing management in Orange County:

1. Streamlining business processes
2. Enhanced reporting and analytics
3. New systems initiative
4. Cost control and containment
5. Internal Controls
6. Alignment with operating units (Adibi, page 3).

This is supported by the liklihood (according to the survey) of increased capital spending and increased spending on technology.

Reference

Adibi, Esmael and Greg Edwards. Economic Pulse of Orange County. Second Annual Survey of Financial Executives. A. Gary Anderson Center for Economic Research. Chapman University. 12 January 2007.

Posted by jackmixner at 05:02 PM | Permalink

Copyright Jack Mixner.     714 449 1040     www.mixnerstrategy.com

"Why do some communities sustain steady progress, while others emerge, then recede?

At first, we thought it might be technology. Then we looked at the presence of education and research institutions and wealth. Then we thought the silver bullet might be clusters: networked firms that competed and cooperated together.

The communities that are the most optimistic and ready for the new world practice 'collaborative advantage.' They enjoy tight relationships at the intersection of their business, government, education, and community sectors, which provide regional resiliency and a unique ability to set and achieve longer-term development goals (Henton, page xvi)."

"Stage I - Initiate. The Motivator and The Networker give a wake-up call and get friends to commit.

Stage II - Incubate. The Teacher and The Convener put the facts on the table and discipline for results.

Stage III - Implement. The Integrator and The Driver manage leadership transitions and press for measurement of outcomes.

Stage IV - Improve and Renew. The Mentor builds a platform for continuing collaboration, nurtures lasting culture and reaches out to involve newcomers (Henton, page 77)."

Accelerating the process is straightforward using a four step process:

• Recognize leaders in the civic entrepreneurship process,
• Network them together,
• Educate on the process, accross generations and
• Support collaborative initiatives and organizations (Henton, page 208).

Strategic Implication

A business can not succeed as an island. Besides customers, it must support the community. Henton et al present a model for leadership. The first step is to realize the need to get involved. The second is to show up - and lead.

References

Henton, Douglas, John Melville and Kimberly Walesh. Grassroots Leaders for a New Economy. Jossey-Bass. 1997. http://www.coecon.com/

Posted by jackmixner at 08:53 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

One of the reasons I like Orange County so much is that the infrastructure - even though we complain about traffic - is so nice and new. I grew up in New Jersey in a house that fronted a colonial road. The road was narrow. It was buried about six feet below the surrounding terrain, the result of almost three hundred years of constant traffic. Since houses were built right to the edge of the road, widening and modernizing it would have cost a fortune. 

When I arrived in Orange County, it was a relief, if only for the seemingly wonderful local roads.

The point of all this? Donald Bren was just named Businessperson of the Year. Part of the reason so many of us like where we live is that a few people have taken the time to make sure things will stay fresh for a long time to come. Donald Bren is one of those wonderful people. Thanks. And best wishes. 

Reference

Mueller, Mark. Businessperson of the Year: Donald Bren. Orange County Business Journal. 1 January 2007. Page 1.

Posted by jackmixner at 01:46 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Letts says that Scotland and England are considering dis-banding the United Kingdom formed in 1707.

Most interesting quote: "If Scotland and England go their separate ways the British would probably disappear as international diplomatic players."

I don't know about you, but that quote caused me to pause, for sure.

References

Letts, Quentin. Scot Free. Wall Street Journal (Opinion page). 8 December 2006. Page A16.

Posted by jackmixner at 03:23 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Two updates on medical device companies in Orange County:

Advanced Medical Optics, Inc. is recalling 3 million bottles of contact lens solutions because of contamination of their production line in China. They're not blaming some other product or people who use their solutions. They're just recalling everything and, a bonus, rebuilding the entire manufacturing lines used to manufacture the products.

Looks like the perfect course of action, especially in light of the recent disasters their competition has faced through less vigorous action in similar situations (Reed, page 1).

SpaceLabs Healthcare, Inc. is relocating to Seattle. An M&A transaction is causing the consolidation and move back to the parent's geographical location (Tolkoff, page 5).

Strategically, the move might make sense, especially if there are actual synergies when manufacturing facilites are merged. Companies buy other companies because they believe they add something special that makes the newly merged company more valuable. We'll see if this is the case this time.

References

Reed, Vita. Advanced Medical: Recall Strategy, Fallout. Orange County Business Journal. 4-10 December 2006. Page 1.

Tolkoff, Sarah. Irvine Device Maker Relocating to Seattle. Orange County Business Journal. 4-10 December 2006. Page 5.

Posted by jackmixner at 11:56 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Investment banks are buying advisors of bankrupt businesses and out-of-court restructurings (Wall Street Gets Ready).

Easy credit has allowed companies to mask underperformance by re-scheduling debt. The median bond rating is BB, high grade junk. A decade ago it was BBB, an investment grade rating.

The investment bankers with their new consultancies are ready for a new round of defaults. Interesting times may be brewing, not all of them good.

Strategic Implications

Manage your debt. Get your house in order. Tough times may be around the corner.

References

Wall Street Gets Ready for Rain. http://dealbook.blogs.nytimes.com/2006/11/14/wall-street-gets-ready-for-rain/

Posted by jackmixner at 03:52 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

I have been working on economic development issues in Orange County since the early nineties. Back then, we assumed that the medical device industrial cluster in Orange County was one of the strongest in the world. If memory serves me well, employment in the cluster was about 14,000 people.

Today there are about 28,745 peopled employed in the biomedical cluster. That includes many employess in sub-clusters like pharmaceuticals and doctor's back offices.

Growth looks robust. What's the problem? Projected growth in the cluster through 2025 shows a 3.3% loss in employment (2025 Wake Up, page 16).

Strategic Implication

Orange County lost its strength in defense related spending during the nineties. It is at risk of losing its medical device strengths unless it takes action - now.

Traditional economic development strategies include stealing businesses from other locations and keeping the businesses we already have from moving to low expense manufacturing areas like Mexico or the Inland Empire in San Bernadino and Riverside Counties. They might work in this case. However, there is something better.

What to Do

Orange County should focus on building new companies in the medical device space. Innovation and increases in productivity in current companies both come from the excitement new companies cause in the marketplace. Traditionally, as companies came and went in an economy, productivity continued to increase. This increased overall GDP in the economy.

There is a better way to do this that is less wasteful. Grow companies and keep them solvent by focusing management talent on their needs early in the growth process (Hubbard, page 4.) Help them hire managerial talent earlier than they would normally expect to. Continue to train them as part of external - or internal - continuing education.

Reference

Orange County Workforce 2025: A Wake Up Call? http://www.ocwib.org/Docs/Workforce_2025.pdf

Hubbard, Glenn. The Productivity Riddle. strategy+business. Winter 2006. http://www.strategy-business.com/press/article/06402?gko=e1377-1876-20605692

Posted by jackmixner at 11:18 AM | Permalink

By Jack Mixner     714 449 1040     www.mixnerstrategy.com

Plastics contract manufacturers in the medical device business will manufacture your product in the US, in India or Taiwan. You get to decide. The price may vary as much as twenty five per cent one way or the other (Conkey, page B1).

Strategic Implication

If you have issues with manufacturing abroad, have it your way. If you want to save some money, manufacture in Taiwan or India. The supplier has set up to meet your needs.

This will help in branding if you need to use a Made in USA tag. Eventually, I believe that the price differential will fall and some of the manufacturing will return to the US. Logistics and "buried technology" based upon interaction between the engineer/designer and the manufacturer will make it a better bet.

Reference

Conkey, Christopher. Made in USA? Now, Customers Get to Choose. Wall Street Journal. 9 August 2006. Page B1.

Posted by jackmixner at 12:22 PM | Permalink

By Jack Mixner     714 449 1040     www.mixnerstrategy.com

Major investments in Chinese infrastructure by manufacturing companies are starting to decline. Honda, for instance, will complete its new manufacturing facilities on schedule and, when it needs more, move elsewhere. More and more of the Japanese companies are focusing high end manufactring in Japan (Batson, page A4).

What gives? Batson mentions one company that moved manufacturing operations from Taiwan in 1995 cutting costs fifty per cent. Its next move will be to Vietnam, again cutting costs - over China - by thirty-five per cent.

China remains a good place to manufacture things. Infrastructure is strong. The domestic market is huge. Its price advantage over other locations is declining, however.

Strategic Implications

China could move up-scale in its manufacturing content, beginning to compete on the world stage to manufacture higher-end goods. The next ten years will be crucial - and interesting to watch.

Middle market companies which need to manufacture in lower cost production locations will look beyond the Chinese market. High value-added manufacturing may return to local production.

Reference

Batson, Andrew. China Loses Some Allure as World's Factory. Wall Street Journal. 7 August 2006. Page A4.

Posted by jackmixner at 06:49 AM | Permalink

By Jack Mixner

Last month, Wallace Walrod of the Orange County Business Council invited me to a presentation by the senior regional managers of the U. S. Army Corp of Engineers. They were talking about their focus on keeping infrastructure working in Orange County. They talked about the very successful work they did on Prado Dam out near Corona. Making it higher clearly saved us from significant flooding during storms last winter.

Before the presentation, we all went around the room introducing ourselves. I said I felt like a fish out of water because, to me, infrastructure means access to capital, not cement. Without capital, companies don't grow.

It turns out that access to capital in the U.S. is easier than other places like Europe.

Today's New York Times tells about a $9 million investment the Scottish national government made in a local biotech company with the intent of keeping it there. Only two months later, the company moved to New Jersey. While they left R&D in Scotland, they needed more money in order to grow. The US was the only place to get it. I have had other clients who moved from New Zealand and Korea for the same reasons.

Infrastructure is crucial for rapid growth in science and technology companies. It includes people, location - and money. While I don't really like the way companies are coming to the financial markets (the New Jersey company reverse merged with an existing, basically defunct company) because of the strength of the capital markets here, more companies will do the same thing.

Let's hope it's a win for everyone.

Strategic Implication

Capital formation is crucial to company growth. Rapid growth is some companies requires debt financing. In others, venture capital is required. Focus your efforts of securing capital when you don't neet it, not when you will fail without it.

Reference

Pollack, Andrew. U.S. Finance Pulls Biotech Across Seas. New York Time. 12 July 2006. http://www.nytimes.com/2006/07/12/business/worldbusiness/12place.html

Posted by jackmixner at 04:05 PM | Permalink

By Jack Mixner

Business, NGOs, and Governments Work Together?

Businesses, non-governmental organizations or governmental agencies can no longer solve issues like globalization, health and environmental risks or inadequate infrastructure alone. Solutions demand the willingness and ability to work together at the intersection of the three groups – the Mega Community in Gerencser et al’s terminology. They use examples in Italy (securing availability of liquefied natural gas), AIDS in India, small business vitality in Harlem (a project led by Bill Clinton), and rain forest conservation in South America. The process seems particularly effective in communities where there is no clear leadership on issues the have long term effects.

The Orange County (California) Workforce Investment Board has a current project focusing on the nursing shortage. The WIB brought together management of hospitals, universities, and colleges all of whom had stakes in the problem. One of the outcomes is a new nursing school at the University of California Irvine. Everybody should be proud of the result.

How good is the OC solution?

Housing costs will eventually force nurses who work in Orange County to live elsewhere. Transportation costs, including travel time, will make that prohibitive. Even the new nursing programs will need short term (if not long term, as well) fill-in from nurses trained elsewhere. That backs into the national immigration discussions.

Suggestions from the Mega Community

• The community must realize there is a problem and come together to solve it together with none of the different leaders demanding the leadership role.
• Leaders must state what the problem is to a larger audience.
• Negotiation begins in a cross-sector solution.
• Experiment, learn, and monitor progress.

And in OC?

• Applaud current results in nursing.
• Address next phase in the larger discussions on, for instance, housing and infrastructure.
• Lead discussions with all the communities.
• Utilize a mega community for the solution.

Reference

Gerencser, Mark, Fernando Napolitano, and Reginald Van Lee. The Mega Community Manifesto. Public, private, and civil leaders should confront together the problems that none can solve alone. http://www.strategy-business.com/press/article/06208 . strategy+business. June 2006.

Posted by jackmixner at 07:01 AM | Permalink

By Jack Mixner

Posted by jackmixner at 11:33 AM | Permalink