Excerpt taken from the Record Searchlight… August 2015
REDDING, California – Dan Morrow is a pioneer in Redding’s tech economy.
Morrow founded Op-Test about 15 years ago and has watched the firm grow, moving to a larger facility on Redwood Boulevard in 2013.
He loves to say his company, which makes products used in the semiconductor industry and tests LED lights, is an example of reverse outsourcing, jobs once plentiful overseas coming back to America.
So Morrow isn’t surprised that Redding was singled out in a Progressive Policy Institute report that highlighted California’s growing tech industry.
Tech-info jobs in greater Redding increased 20 percent from 2012 — the year employment in that sector bottomed out — to 2014, the July report said. Only San Jose, San Francisco, Santa Barbara and San Luis Obispo experienced a greater rate of growth. Tech-info jobs include software and Internet technology companies, and communications and content providers.
“That really correlates well with our experience. It feels like that to us,” Morrow said of the findings, adding most of the growth Op-Test has experienced has been since 2012.
In fact, Morrow is pondering another move to a bigger facility to accommodate the anticipated future growth of his company. Op-Test has 15 employees, but Morrow has said he would like to double his workforce over the next few years.
Op-Test’s work is becoming more familiar around the world and also locally.
“The bulk of our products go offshore, although the last couple of years we have started to establish some local market, especially assisting startups with hardware and software development,” Morrow said.
Like other tech firms that do business in the North State, Op-Test’s growth has been spurred in part because of the area’s lower labor, land and materials costs when compared to the Bay Area and Southern California.
“As the Internet matures and businesses come to understand how to leverage (costs) . . . using web-based resources makes it a lot easier for people to choose where they want to live to do their jobs,” Morrow said.
Using Bureau of Labor Statistics numbers, the Progressive Policy Institute report said California businesses have created 1.5 million new private-sector jobs since the recovery in 2009, and the number of tech-info jobs jumped 11 percent between 2009 and 2014, compared to about a 5 percent growth around the rest of the country.
Michael Mandel, chief economic strategist at the Progressive Policy Institute, authored the report. He said the growth in Redding has been impressive.
“What is interesting in Redding is this is off a relatively small base, but it’s a fair amount of growth,” Mandel said. “We are talking about a range of companies across industries, including publishing, video and various other types, so it’s not necessarily what we think of as cutting edge, but it’s all real.
“I think in the case of Redding, you are showing gains off a small base with the prospect of a lot more to come.”
The Economic Development Corporation of Shasta County (EDC) envisions its Shasta Venture HUB, scheduled to open Sept. 1, fueling more job growth, though the business incubator won’t be restricted to technology companies.
The Shasta Venture HUB in Mountain Lakes Industrial Park in north Redding will be a place where startups will be able to grow their business. The EDC also will move its headquarters to the incubator.
EDC President Mark Lascelles said the area’s startup community is dominated by tech companies and has grown to more than 50 firms over the past five years.
“I think it’s a good indication of what is going on,” Lascelles said of the Progressive Policy Institute report. “It’s an important message for the community to get because we get so focused on retail and service (jobs) that we forget about this other part of the economy that is actually doing well.”
While the Redding landscape is quite different than coastal communities such as Santa Barbara and San Luis Obispo, Mandel echoed Morrow that tech-sector jobs can be located anywhere. For example, the small Central Oregon city of Prineville — known for the birthplace of Les Schwab Tires — in recent years has landed Facebook and Apple data centers.
“What is united is the lifestyle,” Mandel said of smaller California communities like Redding, Santa Barbara and San Luis Obispo. “So if you have areas that are both a good place to live and are welcoming to small businesses, you will always have that potential of getting the benefits of growth.”
COST OF DOING BUSINESS
For Sam Lanier, co-founder of the geo-mapping company FireWhat Inc. in Dunsmuir, locating in rural Northern California was important because of its propensity to wildfire. FireWhat provides real-time fire information and mapping to incident management teams in the field.
But Lanier, who moved to Mount Shasta in elementary school, said there are also cost benefits to setting up shop in a town like Dunsmuir. FireWhat started in the Bay Area.
“The cost to operate business in Dunsmuir is virtually nothing,” Lanier said. “We have a 7,000-square-foot building that we rent for $1,000 a month — it has a T1 Internet connection, solar.” He estimates the same space in the Bay Area would cost five to six times more a month.
FireWhat started in 2011 with four people and has grown to 19 employees. The company recently acquired Geo-Spatial Solutions in Bend, Oregon, Lanier said. FireWhat also got a boost with an investment from a Fortune 500 company, which now has a 10 percent stake in the company.
“It is a very lucrative industry because it’s been so technically deprived,” Lanier said of mapping fires. “We are introducing something that will save them (customers) money and it will get information out quicker.”
Sean Weaver invented a road surface alternative to asphalt in 2007 and called it TechniSoil. Today the company, TechniSoil Global, is headquartered on Westside Road in Redding and has three divisions and 15 employees.
For his needs, Weaver said operational costs in Redding are favorable but he said it can be a challenge finding qualified workers.
“For the hands-on construction knowledge, Redding is a great place,” Weaver said. “From an Internet technology, managerial type position, it is difficult to recruit.”
Alan Leard, co-founder of LimelightHealth Inc., agreed that it can be difficult finding qualified candidates in Redding.
LimelightHealth currently has two openings for software developers that Leard would like to fill with people from Redding. The company has nine employees in Redding and 16 in the San Francisco Bay Area.
“But I will likely fill them in San Francisco because I am having trouble finding people here,” Leard said. “Not that there aren’t developers available here, but the area is already tapped out. They have jobs already or they are contractors and are really busy.”
For his part, Morrow of Opt-Test has not had trouble finding employees in Redding.
“We have had good luck,” Morrow said. “We do not do as specialized work as some of our counterparts because we are building assemblies. We find the labor pool to be very adequate.”
Meanwhile, TechniSoil has clients around the world. The company has 18,000 kilometers of contracts in Russia and in April built the road from the Pulkovo Airport in St. Petersburg to the International Economic Forum.
“We had 70 world leaders on that road,” Weaver said.
Weaver envisions building a global hub for his company where his employees would train before traveling to a job site. He believes a facility like this could employ about 40 people. While he would like to stay in Redding, Weaver doesn’t rule out relocating his company elsewhere.
“My crux is trying to make a decision about whether we want to put roots down here and build a big facility or not,” Weaver said.
Weaver is encouraged by the Progressive Policy Institute report because he believes the area needs more innovative minds.
“Innovation breeds innovation,” Weaver said.
Leard said he is eager to grow the economy with living-wage jobs and believes the tech sector can provide them. Leard co-owned Vintner’s Cellar in downtown Redding before it closed last year.
“The way to grow the economy is to bring more technology jobs to Redding,” said Leard, who founded LimelightHealth with Garrett Viggers, a Redding insurance broker. “I previously employed people making minimum wage at the restaurant.”
LimelightHealth was established in February 2014. The company has created a mobile app that enables insurance companies to simplify health benefits information and streamline proposals for clients in real time.
The company in July received $3 million in funding from MassMutual Ventures and AXA Strategic Ventures. LimelightHealth also has received seed funding from SAGE Angel Group, a group of local businessmen who to date have invested in four companies.
Since becoming EDC president in 2011, Lascelles has taken a sort of a small-ball approach to bringing jobs to the North State.
Lascelles still believes Stillwater Business Park and its vast acreage of shovel-ready land will eventually be filled with large manufacturers.
“It is a common belief in this industry that the home runs come once every 10 years,” Lascelles said. “In reality, if we can get three or four (of these smaller companies) every year, or four or five, we are getting the Knauf (Insulation) equivalent on our economy.”
Knauf Insulation is the German-based manufacturer that opened its 500,000-square-foot West Coast distribution plant in Shasta Lake in 2002.
Meanwhile, Mandel of the Progressive Policy Institute said the study provides an accurate snapshot of the current state of California’s tech economy.
“The growth is off a small base in the case of Redding, so I think the jury is still out whether or not this growth can be sustained,” Mandel said.