Chapter 5. The Pebble and the Pond
Oakland's Waterfront is one of the world's premier
transportation centers. The intermodal Gateway has a highly efficient
harbor with excellent truck and intercontinental rail connections. These
civilian facilities are mirrored by Pacific Basin military logistical
centers at the Naval Supply Depot and the Oakland Army Base. The Airport
Complex provides commercial and general aviation services from two
airports and serves as an important cargo hub.
These facilities are critical to the economic
vitality of the Bay Area and the Central Valley. The Port of Oakland
estimates that the marine terminals and airport directly or indirectly
account for more than 300,000 jobs.
With such an impressive economic powerhouse in
Oakland we assume that it naturally produces spin-off jobs and business
in the local economy. By merely relying on this assumption, though,
Oakland may be missing some important opportunities.
The economic impact of these facilities is much like
dropping a pebble into a pond. Just as a pebble's impact is measured by
the ripples that roll outward across the pond, the economic effects of
Oakland's transportation facilities spread across a vast region. This
leads to two critical questions:
What is the impact of Oakland's transportation
centers on the local, as distinct from the regional, economy?
How can Oakland take lull advantage of these
transportation centers in its economic development?
This chapter analyzes the economic impact of the
Waterfront and explores ways of increasing its impact on the local
economy. It focuses on transportation because the marine terminals and
airport have such a major presence on the Waterfront and because they
give Oakland a competitive advantage over other cities. Other types of
commercial opportunities, particularly in the Estuary Shore area
(between Jack London Square and the Coliseum), are discussed in chapter
How Big is The Splash? How Wide are the Ripples?
Recently the Port of Oakland commissioned studies of
the economic impacts of the marine terminal and airport facilities. As
shown in Table I, these studies found that the facilities generated four
different types of jobs:
Direct employment is the number of
persons directly involved in the operation of the transportation
facilities; such as cargo handlers, crane operators and customs
Induced employment is created in
non-transportation industries as the immediate result of direct
employees spending their wages on goods and services, such as food
Related employment is in firms which rely
to some degree upon the transportation facilities. This category
includes manufacturers and farms which ship or receive goods through
the Port, as well as suppliers and repair shops which support
Visitor industry employment is in
businesses used by people who travel through the Oakland
International Airport. These include hotels, restaurants,
entertainment and convention-related businesses.
Employment Impacts of
Marine Terminal and Airport Operations
Direct (Bay Area)
Induced (Bay Area)
Related (Bay Area/State)
Visitor industry (Bay Area/State)
Table 1 does not show where the jobs are located.
Because direct jobs are involved in the operation of the
terminals, most of these are probably within Oakland. Jobs in the other
three categories are dispersed across a much wider area. Induced
employment is created wherever a direct employee spends
income. Related jobs range from local industries, such as the
NUMMI plant in Fremont, which must be near transportation facilities, to
remote users such as farms in the Central Valley. Visitor industry
jobs, while not as wide-ranging as related jobs, occur throughout the
Bay Area, not. just within Oakland.
Because of the distinctive character of direct and
indirect jobs, different strategies are needed to maximize the direct
and the indirect effects of the transportation facilities in the local
Increasing the Splash: The Direct Effects
Most direct jobs are within the marine and
airport terminal areas, and so they have a visible impact on the local
economy. Tables 2 and 3 show the job categories which comprise direct
employment at the two facilities.
Direct Jobs - Marine
Rail and truck transportation
Marine terminal operation
Port of Oakland
Port dependent exporters/importers
Direct Jobs - Airport
Freight transportation (FeEx, USPS,
Port of Oakland
Ground transportation (taxi/rental cars)
There are two principal ways to increase the direct
impact of the transportation facilities on the local economy:
Increase the volume of cargo and passengers
passing through the facilities:
The Port of Oakland estimates that 7.8 direct jobs are created for
every one thousand dry cargo containers which pass through the
marine terminals. Increases in passenger and cargo traffic in the
Airport Complex also create new direct jobs, additional visitor
industry and related jobs in associated industries such as hotels,
restaurants and suppliers.
Consequently, the Port of Oakland has placed significant emphasis on
maintaining the competitive position of the transportation
facilities. Recent proposals to deepen the harbor channel and
realign dockside land connections are linked to the goal of
increasing direct employment at the terminals.
Maximize immediate effects on the local
Some aspects of marine terminal and airport operation can be
targeted so as to maximize their impact on the local economy.
One such target is the hiring of residents for direct jobs. As
Tables 2 and 3 indicate, nearly all of the direct jobs are in
private companies, with the Port of Oakland accounting for only
about five hundred direct jobs. As discussed below, the Port of
Oakland has recently undertaken efforts to encourage its tenants to
train and hire local residents. Targeted training programs in public
schools and community colleges can also help increase the degree of
Local impacts can also be increased by encouraging the use of local
support businesses, such as parts suppliers and repair firms. Some
direct business opportunities are available, such as airport
concessions, which can be used to create opportunities for local
Despite the number of direct jobs, this
impact comes at a high price. If we assume that all the direct
jobs in Table 2 are actually in the marine terminal area, this facility
would produce an average of six jobs per acre - less than the
residential density of Walnut Creek and less intensive than many
The marine terminals and airport are vast, highly
mechanized facilities. Therefore, the challenge is not simply to
increase utilization of the facilities - the splash - but to capture a
greater share of the ripples which they generate:
Capturing the Ripples: The Secondary Impacts
How can Oakland capture a greater share of the
secondary effects of its outstanding land, air and sea connections? The
answer lies in defining the competitive advantage which these facilities
The relationship between competitive advantage and
the creation of spin-off business opportunities can be seen in the
Airport Complex. The Oakland International Airport is centrally located
on the West Coast, is conveniently linked to ground transportation and
has vacant land adjacent to it. This combination of assets has attracted
three types of related commerce:
Airline maintenance: Alaska Airlines,
United Airlines, and National Airmotive have maintenance operations
in the Airport Complex, accounting for more than one thousand jobs
(Classified as direct jobs in Table 3). In addition, a variety of
smaller scale repair and parts supply businesses are located at
North Field. Metal working shops in East Oakland also benefit from
these airline maintenance operations.
Distribution: Federal Express and the
United States Postal Service are also major employers in the Airport
Complex, accounting for more than me thousand jobs (Classified as
direct jobs in Table 3).
Traveler Services: Hotels, restaurants
and car rental companies are located on Port of Oakland land at the
airport and along Hegenberger Road. The amount of local visitor
industry employment depends upon both the volume of passengers using
the Oakland International Airport and passengers' selection of
Oakland services, rather than those in neighboring cities.
Although the competitive advantage of the airport is
relatively well defined, the Port has encountered difficulty in
expanding airport-related enterprise. About twenty years ago the Port
developed the Airport Business Park north of the junction of the Nimitz
Freeway and Hegenberger Road. Originally envisioned as an ideal site for
businesses which require convenient land and air connections, today few
of its occupants are airport-related.
The competitive advantage offered by the marine
terminals is less apparent. Possibly due to the lack of vacant land,
there are few warehouse, distribution and related manufacturing or
commercial operations near the marine terminals. While there are several
types of local businesses which are closely associated with the marine
terminals, such as container repair and trucking firms, the secondary
impacts of this facility on the Oakland economy is poorly defined.
Moreover, it is not. clear what types of new businesses and industries
Oakland might seek to attract based upon its superb land/sea/air
A possible secondary impact of the marine terminals
is the recent location in Oakland of the corporate headquarters of
American President Lines, NOL and Crowley Maritime Corporation.
Undoubtedly, the ocean terminal gives Oakland prestige which can be used
in marketing the city generally.
A Responsibility Vacuum?
Cooperation among a variety of local agencies is the
key to tapping the economic potential of the Waterfront. This
cooperation comes into play in three major areas:
Creating employment and training opportunities.
Maximizing local business opportunities.
Attracting and retaining businesses which rely
on service the transportation facilities.
The Port of Oakland is a key player in each of these
areas because it is responsible for operating the airport and marine
terminals. However, the Port has traditionally taken a narrow view of
its role in creating spin-off economic effects and has limited its
mission to expanding the use of its facilities. This can increase the
number of direct jobs, but neglects the larger potential offered by
The broader goal of economic development -
employment and training opportunities, small business development and
the attraction and retention of related businesses - has been left
primarily to the City of Oakland. However, the City has tended to defer
to the Port's exclusive jurisdiction over the tidelands. Consequently,
neither agency has systematically defined Oakland's competitive
advantage in transportation, nor aggressively sought to maximize local
benefits from these operations.
During the past year the City and Port began several
joint efforts to increase local economic benefits from the
transportation facilities. Significantly, these initiatives include
other essential players, including high schools and community colleges,
the Private Industry Council and business and labor organizations. These
Aviation Academy: The Oakland Unified School
District, the Port and several business and training organizations
are pursuing establishment of an aviation maintenance training
program at Castlemont High School. This program would be aimed at
providing high school graduates with the skills and certificates
necessary for employment in the aircraft maintenance industry. The
Peralta Community College District has also been involved in this
project to provide related training beyond high school.
Direct jobs and business opportunities: The
Port's Equal Opportunity Division has expanded efforts to encourage
affirmative action in hiring and contracting by the Port and Port
tenants. In addition, the Employment Resources Program assists
Oakland's unemployed and underemployed residents in finding
employment with Port tenants.
Education and training: Several collaborative
efforts, involving City and County governments, educational
institutions and business and labor organizations have sought to
improve the projection of labor market trends. While not aimed
exclusively at transportation-related employment, these efforts can
improve our ability to target education and training programs at job
categories needed by local industries, including those related to
the air and marine terminals.
Port Customer Council: Last year an organization
consisting of Port tenants and directly associated businesses was
formed. Its purpose includes increasing involvement of its members
in the Oakland business community.
Port/neighbor relationships: The Port has a
special need to develop partnerships within areas, such as the
Coliseum area and West Oakland, which are adjacent to its
operations. Currently, the Port is involved in community efforts
affecting its jurisdiction and surrounding properties. These include
the possible formation of the Coliseum Redevelopment Area, planning
of the replacement of the Cypress section of Highway 880, and
solving difficult problems such as toxic contamination and truck
parking in areas adjacent to the Port.
Catching the Wave
By all appearances Oakland's Waterfront is an
economic powerhouse. Few cities are endowed with such efficient air, sea
and land transportation facilities, centered in an economy as rich as
California. However, the benefits of these facilities are spread
throughout a wide region.
Oakland derives important direct effects from these
facilities. To obtain the lucrative secondary effects, though, requires
an accurate understanding the comparative advantage that these
facilities offer and collaboration among a variety of local governmental
agencies and the business and labor communities to tap that potential.
We have seen the beginning of this collaboration.
Its ultimate success will determine how many of the ripples from these
important regional facilities will be felt in Oakland's economy.
<Previous Chapter |
Table of Contents
| Next Chapter >