Tech Companies Know The Way To San Jose

The San Jose MSA, otherwise known as Silicon Valley, ranks highest among all 315 U.S. MSAs on IndustryWeek's list of World-Class Communities. Once a haven for agriculture, San Jose now finds high-tech companies, not trees, bearing the most fruit. With a manufacturing gross metropolitan product per employee of $119,470 in 1997, the most recent year for which data are available, San Jose employs some of the most productive workers in the world. Proximity to the Pacific Ocean and a Mediterranean-like climate certainly contribute to its allure, but it is the area's wealth of brainpower and venture capital that continue to draw the world's leading high-tech firms. According to Joe Hedges, an international program officer with the San Jose Office of Economic Development, Silicon Valley received $4.7 billion, or about one-third of all venture capital in the U.S., in 1998. In the first three quarters of 1999, venture capital investment in the area was on pace to double to more than $9 billion by the end of the year. "Internet and software firms are receiving the largest share of funding," says Hedges. "There's such a fever of success that all of the funds have a presence here," says Tim Steele, manager of corporate outreach for the San Jose Office of Economic Development. "This is the melting pot of innovation. You have to be here before you go anywhere else." Companies leading development in the area include Cisco Systems Inc., Microsoft Corp., Adobe Systems Inc., and eBay Inc., the online trading company. Cisco, which already has 7 million sq ft of space in San Jose, is considering doubling that. In nearby Mountain View, Microsoft is building a 500,000-sq-ft facility. An incubator program in downtown San Jose helps start-up software firms. Since the program began five years ago, $250 million has been invested and 1,000 new jobs have been created. More than 30 international firms are in the incubator program. Marty Woodworth, assistant director of economic development, San Jose Office of Economic Development, says there is funding assistance available not only on a local level, but also through the state's enterprise zone program and a trade zone program sponsored by the U.S. government. While Silicon Valley's labor supply falls short of high-tech companies' needs, firms continue to locate there, increasingly relying on commuters and outside recruits. In 1999, according to Joint Venture: Silicon Valley Network, an economic-development group, the area realized a net increase of an estimated 21,200 jobs, a 1.7% annual growth rate. Since 1992 Silicon Valley has seen a net increase of more than 275,000 new jobs. Silicon Valley's average wage increased by 5.1% after inflation in 1999, from $51,000 to $53,700. That's about 59% higher than the U.S. average of $33,700.