The myth of industrial preservation

In this week’s Oakland Globe, Clinton Killian offers a sweeping condemnation of Ron Dellums’s Chief of Economic Development Dan Lindheim and his efforts to quash development around the city:

Mr. Lindheim is referred to at City Hall as “Dr. No” because he has become a project killer of the types that the mayor supports and would benefit Oakland. He has consistently contradicted staff’s positive support for projects and placed his Dick Cheneylike red “NO” on them, forcing staff to rewrite their recommendations. This is done even though the projects conform to the city’s stated policies and have been supported by the majority of Oakland citizens.

There’s a lot that gets lost in the vague dialogue of industrial preservation. If you listened to Nancy Nadel, Dan Lindheim, or Cecily Burt, you might feel fairly certain of what’s going on: This is a choice between preserving high-paying industrial jobs in Oakland or pushing them out to build housing for the wealthy. If only the reality were so simple! One problem is that the term “industrial preservation” implies that there is something there to preserve – that someone other than the security guard is working at the American Steel factory. Rhetoric of industrial preservation is being used to fight the Gateway Community Development Project, a transit-oriented development which would create 810 units of workforce housing and provide 30,000 sf of commercial space on land that is currently being used as a self-storage facility. dto510 has discussed these deceptions in the past.

I have a hard time believing that Nancy Nadel is so naive and uninformed as to actually think what she’s implying is true, but that only leaves me with the option that she’s being intentionally deceptive. Neither is an attractive position from my Councilmember. Take a look at her comments about the Pacific Pipe factory on the site of the proposed Mandela Grand project:

The land parcel where Pacific Pipe sits is owned by housing developer Peter Sullivan. Sullivan owns a number of land parcels in Oakland. Sullivan has been telling the Oakland city council that there are no industries interested in the land. But Nancy Nadel explained that she has personally sent interested industry to Sullivan. One such group was Semifreddi’s Bakery, but Sullivan would only agree to a five-year contract. The housing proposal at Pacific Pipe does not include a single affordable housing unit. Nadel also explained that the housing proposal does nothing to address the need for jobs in West Oakland.

Of course the idea that it “does nothing to address the need for jobs in West Oakland” is an out and out lie. The Mandela Grand proposal (PDF!) included over 300,000 sf of custom light industrial, commercial, and retail space that would accommodate 650 new jobs on two floors below high density residential units.

Furthermore, her comments completely ignore the realities of the market. 5 year leases are standard, 10 year leases are also common. Over the year and a half I did market research for an industrial real estate brokerage, I don’t think I once recorded a comp on a less than 5 year lease or a more than 10 year lease. Sullivan asking for the industry norm is her idea of him being unreasonable?

Semifreddi’s advertises baker positions at $9.00/hr. Delivery driver jobs are advertised at $12/hr. I’m not trying to pick on Semifreddi’s – I hear they’re a good employer. They provide health benefits, paid sick time, and 401(k)s. But when Nancy Nadel and the industrial preservation crowd crow out “industrial jobs,” they’re using language specifically crafted to call to mind union manufacturing jobs that provide middle class wages and pensions, the kind of jobs that for the most part, simply don’t exist around here anymore. They complain that they don’t want to create “low-paying” retail and service industry jobs. Then when asked to provide examples of potential industrial occupants, the only examples they can come up with pay retail-like or sub-retail wages. Right now, I make $9.00/hour as a cook in a local restaurant. The front of the house staff brings home a lot more. So why is my job less valuable than the Semifreddi’s position?

Look, we aren’t going to bring back the types of jobs Nadel wants. It is not within Oakland’s power to reverse a decades long nationwide trend of manufacturing jobs moving overseas. But we do have an obligation to try to provide jobs that someone can work and still live in this city. There are three approaches to this – one, encourage industries (like the logistics jobs created through Port activity, for example) that pay better than retail and do not require a great deal of skill or education. Second, train our workforce so that they are able to fill the type of light industrial positions that actually exist in the Bay Area. (I have some thoughts on this, but I’m going to have to wait to share them until after next week, when dto510 and I will be dedicating our blogs to a discussion affordable housing production). Third, we need to build spaces that will work for the industries we want to attract.

To understand this, we need to be clear about the distinctions between heavy industry and light industry. Heavy industry, which we’ve mostly lost, tends to be more capital than labor intensive, and light industry generally produces products more geared toward end users than other industrial users. Heavy industry generally produces more adverse environmental impacts. Light industry, since it pollutes less and isn’t so noisy, is compatible with proximity to residential. Light industrial can encompass higher skilled positions like biotech and R&D uses, and well as lower skilled manufacturing jobs in industries like furniture production, robotics, and food manufacturing.

Hayward and Fremont attract light industrial employment while we fail to do so in large part because of of our outdated building stock. These companies occupy spaces like the Warm Springs Business Center (PDF!) or the Hayward Bridge Industrial Park. Any “comprehensive plan” that will address attraction and retention of industrial jobs will have to involve building spaces that work for modern light industrial use. 800 series warehouses on the Army Base and enormous factories do not. These buildings are not in modern condition. They do not have HVAC systems. They do not meet current safety codes. The cost of the improving these substandard factories so that they will be usable for modern industry is often times greater than the cost of building an entirely new building.

Then there’s the issue of location. We cannot simply declare through zoning that there will be industry somewhere and expect it to happen. You can’t stick a research facility staffed with highly skilled workers out on Tidewater next to the gravel crushing plant. Nobody will go there. If we’re going to build light industrial business parks, they will have to be part of mixed-use developments that provide welcoming and pleasant work environment.

Killian concludes:

This obsessive “don’t lose an inch” of job-growth-killing industrial land is a short-sighted regressive policy, causing Oakland to lose out on what it needs the most. The progressive, movingforward ideal is to rebuild Oakland by converting underutilized, industrial land in and next to neighborhoods to more compatible residential, commercial uses.

A transformation to higher and better residential and commercial uses of our land is necessary. It is in Oakland’s best interest to bring more jobs, housing, revenues and improved quality of life to underused brownfields. Maybe it is time this projectkilling Dr. No is replaced by Mr./Ms. “Yes, let’s build a better Oakland” economic development director.

Well said.

One thought on “The myth of industrial preservation

  1. Moschops

    I know a local medium sized “light industrial” employer in District 3 – almost all, if not all, of his employees drive in from way the f*** out there – no where near District 3. I suspect the same is try of many of the other light industrial jobs in our area. It would actually benefit a lot of these employers to move out of the area if someone paid the upfront cost – there will be fewer complaints about noise, pollution and traffic from Brown’s 10k residents and more places for their employees to park. We’ve recently seen several disappear down to San Leandro near 880 – to me that is a shame, I like the mixed use neighborhood I live in – it makes sense since most of us are not here during the day and there is no retail around in District 3. However many just don’t see it that way. For those businesses that own their property It is only a matter of time before the value of it exceeds relocation costs and they will be gone taking their Oakland business taxes with them. I’m not saying that is good or bad – just not what I personally like, however it is definitely a change and Oakland needs to figure out what it wants to be when it grows up.