OC Beats SD
VIEWPOINT
by Charles D. Martin
There long has been a quiet, friendly rivalry between Orange County and San Diego,a rivalry in which Orange County often seems to suffer from an inferiority complex.
I believe this view is misplaced, and recent events prompted me to do some comparative research.
The results may surprise you.
Certainly San Diego County has one of the best regional economies in the nation. It has California’s second largest city and a great deal of parochial pride. It often is said that the large landmass of the Camp Pendleton Marine base protects San Diego from the southern expansion of the Los Angeles metropolitan area. San Diego also has a well-organized program to promote the region.
The identity-development and promotion effort in Orange County, by contrast, is fragmented. The political structure of the county certainly contributes to the problem. Orange County does not have a large city at its core.
Instead, it is comprised of 34 different cities that have no coordinated promotion and development program. Those cities morph into each other with boundaries often difficult to distinguish. Although it is a patchwork of municipalities, our region operates as a single, integrated economy.
Recently, the Orange County versus San Diego issue came to my attention again as I visited with the very accomplished new dean that the University of California, San Diego hired to start up its new business school.
Robert S. Sullivan is from the East Coast and has a viewpoint about the California regions that I found interesting.
Because I am actively assisting University of California Irvine, in its own search for a new dean to head its Graduate School of Management, I decided to meet with Sullivan to see what I might learn.
At one point in our conversation, he asked me, “Are there many big companies in Orange County?”
I must say that I reacted somewhat defensively, responding, “If you listed all the companies that had more than a half a billion dollars in revenue or a market capitalization of at least a billion dollars in each county, you would find that Orange County had three times more than San Diego.”
I was shooting from the hip and on the drive home decided that I needed to do some research on that claim.
It turns out I only was slightly off. According to the “2003 Book of Lists” published by the Orange County Business Journal and the San Diego Business Journal, Orange County had two and a half times as many companies (public and private, excluding nonprofits) that met the revenue or market cap threshold (48 for OC, 20 for San Diego).
There were more interesting findings.
In the sector that I expected San Diego to dominate,biotech, pharmaceuticals and medical devices,it turned out Orange County had six companies with a combined $5.7 billion in revenue versus only two companies with $900 million in revenue for San Diego.
(This did not include the healthcare services sector where Orange County had three companies to none for San Diego.)
In technology, both counties had nine companies.
San Diego had one giant, Qualcomm, but not much else that was impressive.
On the other hand, Orange County had many outstanding companies,Broadcom, Conexant, Emulex, QLogic, Western Digital, Ingram Micro, Kingston Technology and Quest Software.
The OC tech companies generated about $33 billion in revenue, compared with $18.6 billion for Qualcomm and the other eight San Diego companies.
In Orange County there were many excellent “rising stars” just below the threshold criteria (FileNet, Powerwave, etc.) but nothing similar on the horizon in San Diego.
Another observation that I found interesting was the breadth of the Orange County business base.
It had at least three major companies in eight different industry sectors, while San Diego was more narrowly focused with three or more companies in only two such sectors.
Another interesting set of data was this year’s BusinessWeek “Hot Growth Companies” report.
I found seven Orange County-based companies on the list of the top100 in the nation and only three from San Diego. This also compared favorably with the “hot” over much-touted Northern California. It only had eight in all of its counties combined.
Orange County and San Diego are about the same in size with the population and gross county product edge going to OC.
But if you subtract the large Navy and Marine components from San Diego’s economy, Orange County is 25% larger, according to published data.
Orange County also is more affluent, with $73,097 in median family income versus San Diego’s $60,100.
It is important to consider the impact of each county’s contiguous economies.
San Diego is somewhat isolated and independent, bordered on the south by Tijuana and on the east by the Imperial Valley desert.
Orange County is neighbored on the north by Los Angeles and on the east by the rapidly growing Inland Empire.
The bottom line: While the Orange County economy and business environment is not well understood by others outside the region,and perhaps even by us,we have a great business community.
We can take pride in this and build upon it.
Martin, an Orange County-based venture capitalist, is the retired founder of Enterprise Partners and partner emeritus of Westar Capital.
