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Clean Starts

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Two words are driving regional economic development: clean and green.

Today’s Sacramento may not be the land of milk and honey for mortgage and home construction companies, but leaders at the Sacramento Area Commerce and Trade Organization, the region’s leading economic development organization, say the housing slump hasn’t hurt their ability to sell Sacramento. If anything, it has helped.

For starters, there’s basic supply and demand economics: More houses on the market equals lower prices equals a region that’s a more attractive market to employers. That’s a good spin on what is definitely an unpleasant situation, but frankly it’s not one SACTO needs to employ much. The companies they’ve been wooing barely have housing issues on the radar.

“The companies we’re talking to are interested in this region for some very specific reasons, and those needs outweigh housing and most other cost issues significantly,” says Bob Burris, SACTO’s deputy director. “Considering how much the national media has focused on our region as being hardest hit by the housing situation, we’ve done pretty well.”

Burris says the bigger questions companies are asking concern issues like the overall health of the regional economy, a skilled work force and access to decision makers, capital and customers. Sacramento has a competitive edge in all those areas, but we have one more key thing going for us: We’re at the nexus of discussions about climate change, energy efficiency and reducing dependence on foreign oil.

Say what you will about the science behind those issues, the policy decisions emanating from them have sparked the great California “Green Rush” and set the stage for a whole new class of economic drivers.

“What’s happening in the clean-technology sector today represents one of the biggest opportunities our region has ever had,” Burris says.

Burris points to the California Solar Initiative (SB 1) and the California Global Warming Solutions Act (AB 32) as trigger points for several companies that had been considering Sacramento. Our region has become a national policy hub on these issues, and companies want that kind of access. That’s why “cleantech” (clean technology, green technology and energy-efficient technology) has been SACTO’s primary focus in promoting the region.

Nearly six out of every 10 companies SACTO is talking to operate in this sector, and recruiting cleantech companies has been the impetus behind two trade missions to Europe. 

It’s the right strategy at the right time, and its yielding big results. In the past 24 months, companies such as SunTechnics Energy Systems and Ecostream have joined a growing list of European-based cleantech businesses that have set up headquarters operations in the region.

“California has 70 percent of all the solar business in the United States, and all of our major utilities are making serious moves into renewable energy,” Burris says. “Statistics like that are why most of the renewable technology companies in Europe believe the wave of American cleantech commerce is starting in Sacramento.”

Together with domestic cleantech companies such as Pacific Ethanol and more traditional sector companies that have expanded and/or located here in the past year, SACTO’s efforts helped bring 1,600 jobs, $15 million in state and local taxes, and $208 million in output to the region last year, according to SACTO’s 2006–2007 annual report. Not a bad year for a place that’s bearing the brunt of the housing slump.

The reality is the business landscape of the Sacramento region is about to change dramatically. It’s poised to become a primary cleantech hub in the nation, where even the companies not involved in producing clean technology understand the PR value in employing it. As cases in point, here’s a look at just a few of the companies SACTO brought to the party in 2007.

Ecostream

A “sustainable energy supply for everyone”—it’s not a Utopian fantasy; it’s Ecostream’s mission.

The company, which specializes in ready-to-use sustainable-energy systems for commercial and utility-scale applications, this year selected West Sacramento as the home for its United States headquarters and its first American office.

“California is the most progressive state in the nation on new and renewable energy, and it is the place to be for solar energy,” says Faried Muscati, who left a position in Ecostream’s Cologne, Germany, office to become CEO of the U.S. office.

Muscati says the Sacramento region was chosen for its affordability, good infrastructure, reasonable traffic,
centralized location, proximity to policy makers and, of course, a healthy market of potential customers.

The company ended 2007 with a staff of 11 engineering, marketing and management positions. It’s a modest beginning to be sure, but precisely on par with the company’s overall goals, which, if accomplished, offer tremendous promise for the region.

From a business-to-business perspective, Ecostream is poised to help customers make use of technologies and systems to improve their overall energy efficiency, and then employ solar technologies to help make up some or all of the customer’s remaining energy needs.

The cost-saving potential associated with more efficient and cheaper energy is enough on its own to suggest the company will be a big player in the long term, but the optimism also is supported by two reliable pillars: a track record of success and a powerful corporate parent.

Ecostream, with revenues of more than $100 million in 2006, already has offices in Germany, Spain, Italy, France, Belgium, Switzerland, the Netherlands and China. Its parent company, Econcern, is one of Europe’s 500 fastest-growing companies and is the holding company for Ecofys, Evelop and Ecoventures as well as Ecostream.

Ecostream’s arrival in West Sacramento establishes something of a beachhead for the larger Econcern group, which is active in all areas of energy efficiency and renewable energy.

“At Ecostream, we focus on the solar aspect of the energy equation, but we are a starting point for the Econcern group to have a greater presence in the U.S.,” Muscati says. “Eventually, we’ll create considerable employment here, and I’m looking forward to being more involved in the community. One way we’re planning to do that in the future is to help social institutions develop useful renewable and energy-efficiency solutions.”

Pacific Ethanol, Inc.

As the cleantech industry gains momentum, it doesn’t hurt to have the national headquarters of the company that wants to become “the largest producer and marketer of renewable fuels in the western U.S.” right in downtown Sacramento.

Pacific Ethanol, Inc. was launched in 2005 by former California Secretary of State Bill Jones and Neil Koehler, a 25-year veteran of the ethanol industry. By the end of 2007, it had ethanol plants operating in California, Oregon and Colorado, with two more under construction.

Koehler, who serves as president and CEO, says Sacramento was the natural choice for the company headquarters, which currently supports a staff of 50 in senior management, investor relations and human resources.

“The growth of the biofuels industry in California represents the kind of business development and growth potential the likes of which we haven’t seen since the high-tech boom in the 1990s,” he says. “Sacramento is the political and regulatory heart of California; to be here, where the decisions are made that affect our business, is a huge value.”

Even though he’s worked in the same industry for a quarter-century, Koehler’s excitement for what he does is obvious within just a few seconds of talking with him, and for good reason. It’s hard not to see the potential for a process that starts with corn and ends with fuel in one hand and dairy feed in the other, and recycles 100 percent of its water along the way. All Koehler needs are dairy cows and demand for automobiles, and he’s got a customer base.

That explains why, in addition to the Sacramento headquarters, Pacific Ethanol has plants in Madera and (soon) Stockton. The Central Valley is a major transportation corridor and, according to Koehler, it has the single largest concentration of dairy cows in the world. Anyone who’s ever driven south along Interstate 5 in July would certainly vouch for that.

Business potential aside, however, Koehler keeps his eyes on the bigger picture.

“We’re here providing safe jobs for our workers and contributing to the economy, but more than that, we’re helping solve what many consider to be a serious global problem,” he says. “We take a lot of pride in that.” 

Andersen Corporation

As further testament to our region’s desirability, housing slump or no, Andersen Corporation, the largest window and door manufacturer in North America, recently announced plans for a 72,000-square-foot distribution facility in Sacramento, the company’s first logistics facility in California. “The western United States presents a great opportunity for growth for our company, and the Sacramento region is the hub of a high growth area with a very receptive business climate,” says Maureen McDonough, director of corporate communications for Andersen Corporation. “A distribution center in Sacramento also brings us much closer to our customers in Northern California and western Nevada.”

Andersen employs nearly 14,000 people in North America. The new Sacramento facility will employ between 20 and 30 people, continuing a long-running wave of relocation and expansion activity of building-materials manufacturing and distribution firms in the region.

As a distribution facility, Andersen’s new Sacramento operations may not produce clean technology, but the company is no stranger to environmental stewardship. It is the only window, door and skylight company with products that are certified “green” by Green Seal, Inc., a national nonprofit ecolabelling organization. It’s also one of the first window companies in the nation to meet the performance requirements of the Energy Star program, a joint program of the U.S. Environmental Protection Agency and the Department of Energy focused on energy-efficient products and practices, in every geographic region where it operates.

Based on that track record, the Sacramento distribution center is not likely to be a break from tradition.

“We support four environmental goals for all our facilities,” McDonough says. “We try to minimize pollution at the source, conserve natural resources, promote energy conservation and have a minimal adverse effect on the environment. We’re looking forward to taking our place in the Sacramento community.”        

A Salute to New Industry

Of course, SACTO’s successes in 2007 go beyond three new companies. Additional relocations and expansions in the past year include Air Canada, The Art Institute of California, ExpressJet, Hunter Douglas, Kitchen Academy and RagingWire Enterprise Solutions, Inc.

In the corporate version of a debutante ball, SACTO will proudly present them all to the community at its annual Salute to New Industry luncheon on March 12.

“In part, this is our way of officially welcoming these companies to the region and giving them a little exposure to the community as a whole,” says Bob Burris, SACTO’s deputy director.

Official details on the event weren’t available at press time, but current information is available on SACTO’s website, sactoedc.org.