| FREMONT'S ECONOMY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Evolution of Fremont’s economy If the combination of Land, Location, and Luck can be said to be a formula for success, then the city of Fremont hit the jackpot. In less than 50 years of existence as a municipality, the city has evolved to become one of the hottest local economies in the Bay Area. The city’s early economy, at the time of its 1956 incorporation, was primarily based on agriculture. Fremont’s population in 1957, inhabiting a land area that was then the third largest of any municipality in the entire state, was only 26,787. Main activities and commodities were cattle, grain, fruit (apricots, cherries, pears, walnuts, small fruits), vegetables (cauliflower, tomatoes, peas, lettuce), and dairies (Bartels 1956). In fact, of the five original councilmembers elected at the time of the city’s founding, three of them were ranchers, which should be telling of the dominance of the local ranching industry and of the agricultural economy in general. Fremont was pieced together in the 1950s from five small unincorporated towns, each of which had its own micro-economy. The town of Niles was formed around an old flour mill operation, and in addition had a small railroad center with a Southern Pacific Railroad switching yard and was the home of the California Nursery and a large poultry farm named Kimber Farms. The economy of Niles was also supported by some fruit packing operations and some sand and gravel excavation (Bartels 1956) (the old quarries still exist today as the city’s Quarry Lakes "land bank"). Centerville was the vegetable shipping center for Washington Township which was the much larger unincorporated area within which these five towns lay. There were also several dairies. In addition, Centerville was "the commercial center" of Washington Township, and some of the earliest 1950s strip commercial developments were located along the old highway between the towns of Centerville and Irvington. Centerville held great promise as the area’s hub: "It is destined to be a real city" claimed a 1950 report by the Country Club of Washington Township Research Committee (Bartels 1956)
The town of Irvington was the center for vegetable growing in the region and also had several dairies. A large P.G. & E substation was located in Irvington as well. Distinguishing this town from the other four comprising early Fremont, Irvington also had the largest residential concentration in all of Washington Township (source = Bartels) Lastly, the town of Warm Springs, at one time in its history a retreat for those wanting to take advantage of its naturally warm spring-fed pools (like Calistoga and other North Bay retreats today) was similarly supported mostly by vineyards as well as orchards along with some cattle grazing (Bartels 1956) Fremont’s economy seems to have relied heavily on these agricultural roots for many of its early years. However, in 1964 General Motors opened an auto assembly plant in the city (in 1983 to become New United Motors Manufacturing Inc (NUMMI) in joint venture with Toyota). It was one of the first major industrial uses in the city, along with a couple of other pioneer companies named Borden Chemical and Trailmobile. One story has it that GM was originally intending to build its plant in Sunnyvale, but that project become difficult because of the multiple municipalities the company would need to contend with as well as the rapid development taking place in the Sunnyvale area that would soon hem in the industrial operation on all sides. GM needed lots of room to grow and to avoid conflicts with pesky new residential neighbors. As a result, GM began looking across the Bay at the city of Fremont which had abundant industrial land well separated from the residential growth areas of the city (Mission Peak Heritage Foundation 1989) Nevertheless, the arrival of General Motors did not create a tidal wave of new industrial growth. As the city’s General Plan puts it: "The slow growth of other traditional industries in the Bay Area (and nation wide) left much of Fremont’s industrial land supply vacant until the early 1980s when a new type of industry arrived." It was, after all, the post-war period of de-industrialization. So, until technology-based industries began to flourish in the 1980s, the growth of Fremont’s non-agricultural economy, aside from retail uses, was rather modest. The NUMMI plant was (and still is!) the city’s largest employer. During the 1970s most of Fremont’s growth was in housing construction to accommodate the demand generated by major job growth in Silicon Valley. Construction of BART during that period also helped better connect Fremont with other major nodes along the East Bay and with San Francisco, further increasing the demand for housing to accommodate a growing commuter population. Fremont was essentially becoming a "bedroom community" for the big employment hubs around the Bay – Silicon Valley, San Francisco, and Oakland/Berkeley. Or, as one historical source puts it, "Fremont was moving away from its old image of an isolated rural town and forging a new identity as a partner in a larger community of cities" (Mission Peak Heritage Foundation 1989, p.102) Fremont’s relative sleepiness began to change in the 1980s, however, as industrial growth spread out of Silicon Valley and across to the East Bay. Evidently a 1988 survey showed Fremont as the fastest growing area in the region for new high tech firms. In addition, branch offices for some San Francisco and Oakland-based companies also opened in the central business district of Fremont during this boom period. Another important development trend was the growth of warehousing and distribution operations in Fremont, which were taking advantage of the city’s large available land areas and its centrality to many Bay Area markets (General Plan). Not surprisingly, local politics played a significant role in the city’s 1980s economic growth. In 1980, city council elections brought a new majority that changed the politics of the city from a previous focus on conformance with the General Plan to one that promoted development, or as the new city manager, hired in 1981, recalled: "the City Council was primarily concerned with limiting the regulatory functions of the city. This was seen in terms of not being so restrictive on building inspection, plan checking, subdivision maps, and those kinds of things" (Mission Peak Heritage Foundation 1989, p.116). In other words, a developer’s utopia! Consequently, this new laissez-faire policy encouraged a major building boom in the city through much of the 1980s: while the average value of building construction through the 1970s was $81 million annually, the 1980s average was $196 million, the highest year coming in 1985 with $302 million in construction undertaken in the city (Mission Peak Heritage Foundation 1989). While the majority of this activity was for residential construction, an increasing portion was for commercial and industrial development as high tech firms began expanding out of Silicon Valley and locating in Fremont. And from there the story of Fremont is one of high tech, development, population growth, money and monster homes. Land, Location and Luck paid off! Sources: Bartels, Ronald Earl, 1956, "The Incorporation of the City of Fremont, California: an Experiment in Municipal Government," M.A. Thesis, University California, Berkeley |
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| Post-industrial trends and the influence of Silicon Valley Fremont has emerged as a "New Economy" industrial cluster in the Bay Area, along with the cities of San Ramon, Walnut Creek, Oakland, and Pleasanton (Munroe Consulting 2000). That industry cluster, comprised of businesses engaged in semiconductors and computers, Internet, multimedia, software, bioscience, communications and high tech manufacturing services, accounts for 26 percent of the total employment in Fremont. Which is evidently a substantially high portion of the city’s workforce. For example, that compares with 20 percent of the workforce in the city of Austin,TX and 16 percent in Seattle, WA, and with 38.5 percent of the workforce in the entire Silicon Valley – in other words, it is probably fair for the city to claim: "Fremont is a high tech community" (City of Fremont 1999, p.5) Indeed, Fremont is part of what is referred to as the "Silicon Valley Crescent," an area that wraps the bottom end of San Francisco Bay from Redwood City to Fremont. Silicon Valley proper long ago began expanding out of Santa Clara County. And as the city’s mayor puts it: "We were sitting here with lots of vacant industrial land at the time that Silicon Valley caught fire." The 1980s city manager adds: "We are the beneficiaries of the whole high-tech revolution" (Mission Peak Heritage Foundation 1989). Yet another exciting quote was recently given by the city’s director of economic development: "The natural migration of Silicon Valley is to the north and east. We happened to be in the path" (Krieger, Mercury News 2000). And the best quote for last: "Geographically speaking, this is the center," commented an executive with a major high tech firm in Fremont (Akizuki, Mercury News 1999). Over 3,300 high tech firms with at least 129,000 employees are located in the East Bay counties of Alameda and Contra Costa. Just since the early 1990s, 1,200 high tech companies have located in Fremont alone (Johnson, SF Chronicle 2000). The city has consciously put its emphasis on these so-called "knowledge-based industries." Meanwhile, manufacturing services are growing at a slow rate compared to technology-related industries – other than NUMMI, Fremont’s major "manufacturing" is of computer-related equipment (General Plan). In the current post-industrial context of an expanding Silicon Valley, high tech has replaced NUMMI as the city’s main economic engine even though the auto plant is still the city’s largest single employer. As a San Francisco Chronicle reporter put it, Fremont is transforming "from a blue-collar bedroom community to a Silicon Valley hub" (Johnson 2000) As important to the city’s "new economy" focus as are computer-technology enterprises, biotechnology companies are also expanding rapidly in Fremont. The city is becoming "the Bay Area’s new bio-burg" (Krieger, Mercury News 2000), much of it concentrated in an industrial park called Ardenwood in the southwest corner of the city’s sprawling land area, near the Dunbarton Bridge. According to a May 2000 SF Business Times report, Fremont has 13 of the 100 fastest growing companies in the Bay Area, second only to San Francisco (City of Fremont 2000). Those companies are: Asyst Technologies, Avanti!, Digital Power, Erox, ESS Technology, HMT Technology, Mattson Technology, Mylex, Premisys Communications, Smart Modular Technologies, Versant Object Technologies, Vidamed, Visioneer. All of them are technology-related enterprises. The key locational advantage of the Dunbarton Bridge should not be underemphasized, as it allows easy connections back to the venture capital, accountants, patent lawyers and other specialty services located in the heart of Silicon Valley on the penninsula (Krieger, Mercury News 2000). And the pace and direction of this technology-oriented economic growth looks like it will continue: "The pattern of rapid high technology development in the East Bay will continue as office space becomes increasingly difficult to locate in San Jose and San Francisco" (Munroe Consulting 2000). As suggested by the city mayor’s quote in the SF Chronicle, luck seems to have had as much to do with Fremont’s incredible economic boom as did its abundance of land and its advantageous location: "A long time ago we anticipated this was going to happened, but no one expected it to be this strong" (Krieger, SF Chronicle 2000). Sources: Akizuki, Dennis, 1999, "Taiwanese Transform Fremont, Calif. Economy," San Jose Mercury News, 8/1/1999 |
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| Businesses/employers in Fremont Of the dozens of employers in Fremont with at least 100 employees, the biggest major manufacturing and industrial employers are listed below: (City of Fremont 1999; EDAB 2000)
It is apparent from the list above that with the exception of the NUMMI auto assembly plant and the Sysco Food Services processing and distribution facilities, all of the largest employers in the city are in the technology and biotechnology sectors. And much of the city’s employment is in such large companies – in general, more than 50 percent of Fremont’s total employment is in firms with 100 or more employees, and 20 percent of the city’s employment is in firms of 1000+ employees. (City of Fremont 1999) As mentioned previously, Fremont is also becoming a biotech hub – 22 of the East Bay’s biotech companies are located in Fremont, by far the largest cluster outside of Silicon Valley proper (Krieger, Mercury News 2000). And besides high tech and biotech growth, Fremont has also emerged as a major warehousing and distribution center, and is expected to continue growing. The city has locational advantages with the proximity of its industrial areas to I-880 (to San Jose and Oakland/Berkeley), I-680 (to the Tri-Valley area) and the Dunbarton Bridge (to Penninsula and SF).
In total, more than 20,000 jobs in the city fall in the category of "manufacturing," consisting of both traditional and technology-related operations, second only to the largest general employment category of "services" which is a much broader category and includes everything from lawyers to beauty parlors (City of Fremont 1999)
The City of Fremont claims itself as "a pro-business city government" and is "committed to serve the needs of business." Some things appear not to have changed much since the pro-development political shift that began in the 1980s. To facilitate its attractiveness to business interests, the city has evidently established an appointed "Industrial and Commercial Commission" to advise the City Council on business issues (City of Fremont brochure). Sources: City of Fremont, "Designed for Business and Living," brochure produced by City of Fremont Krieger, Lisa M., 2000, "Fremont is New Hot Spot for Biotechnology in California’s Silicon Valley," San Jose Mercury News, 7/14/2000 |
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| Fremont’s labor force Fremont is the second largest city in the East Bay (with a population of almost 204,000), second only to Oakland, and the fourth largest municipality in the entire Bay Area. The city’s population grew rapidly during the 1990s but is expected to grow more gradually through the first decade of the 2000s and begin to slow dramatically after 2010 (EDAB 2000(2)). And the rapid growth of high technology over more than a decade has changed the character of Fremont’s workforce as well – "This has meant we are getting an entirely different type of company, manager, and employee coming into the area than we originally envisioned," noted the 1980s director of the Fremont Chamber of Commerce (Mission Peak Heritage Foundation). Fremont adults have roughly average education levels for Alameda County (19% w/Bachelor’s Degree and 9% w/Master’s Degree vs. 17% and 10% for countywide), but significantly higher education levels than the U.S. average of 12% w/Bachelor’s Degrees and 8% w/Master’s Degrees (EDAB 2000(2)). This relatively educated workforce makes relatively high wages as well – the year 2000 mean household income is $81,400 (EDAB 2000(1)). The average salary for high tech jobs is $58,000 and the annual salary for biotech jobs is $64,000 (Krieger, Mercury News). From 1980 to 1990 the city saw a 200 percent increase in manufacturing and wholesaling jobs, much of it related to high tech growth and new distribution businesses. The General Plan projected an additional 143 percent job growth in the same economic sector from 1990 to 2005. Clearly the city’s workforce has grown substantially over the past two decades and the city looks to continue to grow new jobs through the coming years. But…the city cautiously cites two "key variables" that create "uncertainties" about these projections: the availability of housing for new workers and the health of various high tech industries. With technology stocks dipping in recent months and news of some layoffs, as well as the continually rising cost of housing in an inflated real estate market, the question is whether the city’s resident workforce will continue to grow or stay relatively stable. Another interesting characteristic of Fremont is that much of its resident labor force growth and much of the capital investments since the mid-1980s have evidently been Taiwanese – there are currently an estimated 100 high-tech firms with Taiwanese connections, whether branches of Taiwanese companies or companies started here by Taiwanese-Americans. Moreover, there is anticipation of even newer growth of businesses and immigrants from mainland China (Akizuki, Mercury News). This concentration of Taiwan capital and Taiwanese residents is obviously creating a variety of Asian business networks and migration chains to Fremont. Yet, what is even more notable about this particular pattern is, as the San Jose Mercury News reports, "All of this has occurred even though the city has made little effort to attract investment from Asia" (Akizuki). For much of its history Fremont has grown a larger resident population than it has a job base, thereby creating a large city of commuters who travel to employment centers outside of the city. However, the city is moving closer to a jobs-housing balance with the recent acceleration of job growth and a relative slowing of housing growth compared to the 1970s and 80s. For instance, in 1990, two-thirds of Fremont’s employed residents commuted to work outside the city (General Plan), but that number is projected to be reduced as Silicon Valley jobs continue to move in to Fremont – by 2005 the city expects to have 1.24 resident employees for every job in Fremont, compared to the 1.74 ratio reported in the 1991 General Plan. In fact, Fremont’s growth as a job center within the Silicon Valley Crescent has meant that reverse commuting is now becoming more common. Fremont companies are able to attract workers who reside across the Bay on the Penninsula because the commute is easier in the opposite direction of traffic. And some of those reverse commuters to Fremont have evidently decided to call Fremont home as housing is relatively cheaper than it is in many other parts of Silicon Valley (Krieger, Mercury News). Sources: Akizuki, Dennis, 1999, "Taiwanese Transform Fremont, Calif. Economy," San Jose Mercury News, 8/1/1999 City of Fremont, 1991, Fremont General Plan, May 7, 1991, amended 2/14/1995 |
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| City revenues Fremont derives the majority of its revenues from property taxes (36% in 1990), but a growing portion comes from sales tax (28% in 1990). Property tax revenues are constrained by Prop 13, but retail sales taxes increase as inflation increases, thus the city has consciously sought to enlarge its retail activities as the best source for increasing monies to its coffers for civic projects (General Plan). And generating more revenues is a potential pressing need for the city as it faces the future problem of aging city infrastructure which will need increased maintenance and thus require more of the city’s budget. Because of the property tax limitations, the city will depend on expanding its retail base and become even more reliant on sales tax revenues (General Plan). This need to expand its retail tax base has evidently become one incentive for strategically developing Fremont’s CBD as a major downtown hub for shopping, entertainment, etc. Source: City of Fremont, 1991, Fremont General Plan, May 7, 1991, amended 2/14/1995 |
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