Illumina, Inc.: Wealth Creation – San Diego Style

by on August 30, 2016 · 5 comments

in Economy, History, Politics, San Diego

By Anna Daniels / San Diego Free Press

black-hole-money1Around this time last year, the city of San Diego signed an Economic Development Assistance Agreement with Illumina, Inc.

It was approved on August 7th, 2015 as a “Consent Item” without pre-hearing noticing. The ten year deal included a promise to rebate $1.5 million in sales and use taxes in return for retaining “over 100 middle-wage manufacturing job opportunities” in San Diego.

SDFP editor Doug Porter wrote at the time:

Illumina is in the genomics business, and it is exactly the kind of company the city should be encouraging to put down roots and prosper here. This deal made by the Faulconer administration, however, is exactly the kind of governance the city doesn’t need.

So how is Illumina doing one year later? What has the public received in return for its largess?

Life is very, very good for Illumina CEO Jay T. Flatley

If CEO pay is an indication of how well a company is doing, Flatley’s $128,848,075 annual compensation blows every other San Diego CEO out of the water, according to the July 5th U-T article “San Diego’s Top Paid CEOs.” Nuvasive CEO Alexis Lukianov is a distant runner up with only $40 million.

Illumina’s revenue last year was over $2.2 billion. As Freeman and Wheaton note in what can only be read as droll understatement Executives aren’t paid like most Americans, who earn wages and perhaps commissions or bonuses.

Is Illumina very, very good for San Diego?

The controversy last year over the rebate centered around the lack of transparency surrounding the Economic Development Assistance Agreement. The unsourced media spin that Illumina was considering a move to either Poway or Memphis was equally problematic. The message was clear. If we didn’t open the public coffers to Illumina, San Diego would lose hundreds of good paying jobs. We have heard this before–give us your wallet or we shoot your puppy.

Good paying jobs and the H1-B visa

The July 10news article “San Diegans may be locked out of thousands of high-paying jobs” examines the use of H1-B visas in San Diego. These are non-immigrant visas that enable US businesses to employ foreign workers in specialty fields for a lower salary. Which San Diego companies use these lower paid employees?

Companies are only supposed to use what are called H1-B visas when they can’t find qualified workers in the U.S. Last year, about 4,300 jobs in San Diego County were filled by the visas at employers like Qualcomm, Illumina and Intel. [Emphasis added]

SDFP contributor John Lawrence did a deep dive into the transference of wealth upward last year in “The Fishiness of Mayor Kevin’s Tax Giveaway to Illumina Corporation.” He concludes with

The Illumina rebate is just the beginning, the advent of a new era in San Diego politics, the signal that more is yet to come. The Mayor is sending a message to business. C’mon y’all, line up for your free tax giveaways. Mayor Kevin is open for business!

Yes, the rebate was just the beginning. While no one was watching, citizens not only lost their wallet but the puppy got it in the head.

{ 5 comments… read them below or add one }

Avatar E Blackwood August 30, 2016 at 12:00 pm

One quick correction, the CEO of Nuvasive is Greg Lucier (former CEO of LifeTech). Alexis got into some hot water about 16 months ago over some non-compliance issues and was forced to resign.

That aside, nice article about Illumina. They truly are revolutionizing the genomics space and are a great asset to San Diego. As their technology grows and NGS becomes more accessible and clinically relevant, their value will continue to skyrocket.

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Avatar Geeta August 30, 2016 at 4:05 pm

Poor Illumina. No qualified American workers could they find in all of California (sarcasm alert)….I wonder what the pay differential is, and what country the H1-B workers they hired are from. And what sort of documentation the companies must use to be able to hire H1-B workers over Americans.

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Avatar raj August 30, 2016 at 5:33 pm

Illumina, Qualcomm, Intel, CareFusion et all can’t find US Citizens that are willing to be indentured servants for $70k (i.e. what H1B Visa people get).

H1B visa workers get to come here and get the privilege to work for a company at 25% reduced salary, no leverage to leave elsewhere and are usually from India/China.
The aforementioned companies love cheap labor, even if it’s substandard quality because they can get them to work 60hr workweeks and never hear a peep from from in regards to salary demands.

The H1B system is a scam, there are a ton of qualified local engineers/scientists – but companies love nothing more than to lower all salaries by throwing H1B visas into the pool to muddy the waters and reduce leverage from local American talent.

This is no way my attempt to disparage overseas talent….I’m Indian, and came here as an H1B sponsored engineer 12 years ago and have since married and got full citizenship, and it was very evident what was going on.

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Avatar Anna Daniels August 30, 2016 at 7:03 pm

Raj- thanks for providing the perspective of someone who was an H1B worker. We hear from companies and members of local workforce but without the voice of H1B workers too, we don’t get a complete picture.

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Avatar C September 1, 2016 at 4:33 pm

I have worked (for many years, but have since moved on) at one of the 3 mentioned companies mentioned regarding H1B visas. We never sought out folks with H1B. In fact, we tried to avoid it because it is extra work and money dealing with the sponsorship part! Were there people in my department on H1B? Yes, of course. It has to do with the pool of candidates available (for example, software engineers in San Diego are a hot commodity – there is a definitive shortage of good talent). Sometimes, the best candidate we could find for the job required H1B sponsorship.

I just want to put that fact out there because it seems like we are only hearing one side of that story.

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