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We should attract more manufacturing investments to California - 1.5% is not enough

Posted by Gino DiCaro, Vice President, Communications on May 20, 2016

In 2015, according to new data on U.S. manufacturing investments, the country’s south and midwest regions gained the most manufacturing investments.  California was dead last among the 50 states with 1.07 manufacturing investments for every one million people, equating to only 1.5 percent of total investments. 

Sadly, this is the continuation of a trend. Since the recession ended in 2010, each year California has failed to attract more than two percent of the country’s new manufacturing facilities. Manufacturing employment has also lagged the US, with a 3.3 percent growth in California compared to 7.3 percent nationally.   

If California kept pace with the national manufacturing job growth rate, we would have 50,000 more high paying manufacturing jobs today.

Kentucky has been the country’s manufacturing leader for the last two years. In 2015 they enjoyed:

  • 39 manufacturing investments per one million people
  • 7 percent of the total U.S. manufacturing investment pie with only 1.3 percent of the US population
  • 17 percent growth in manufacturing jobs since the recession

“These disappointing numbers should be a wake-up call to state leaders.  Manufacturing investments support modernization, new product development, job retention and job growth that we need,” said CMTA’s Dorothy Rothrock. “We should find ways to improve the manufacturing business climate and attract our fair share of investments.”

manufacturing investments by state 2015
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manufacturing jobs ca vs us 2010 to 2015
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Innovation in manufacturing can improve sustainability

Posted by Gino DiCaro, Vice President, Communications on May 6, 2016

A blog cross posted from the National Association of Manufacturers and Mallory Micetich:

Here’s a great example of how innovation in manufacturing can improve sustainability and our world. Exxon Mobil is investing in FuelCell Energy, a company developing technology that could reduce carbon dioxide emissions from power plants. As the New York Times reports, Exxon Mobil hopes that their relationship with FuelCell will allow them to take a promising new approach to carbon capture and sequestration “from the lab to the market.” This technology could potentially mean that power plants could “isolate and compress” CO2 “while producing enough power to more than make up for the energy cost of capturing the carbon.”

Read more about how FuelCell and Exxon Mobil’s partnership could help power plants reduce emissions.





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More pieces of the California manufacturing jobs story

Posted by Gino DiCaro, Vice President, Communications on April 15, 2016

There were some independent items worth noting in the California manufacturing employment narrative this week.

First the California Labor Market Information Department, in its monthly report this week, announced the loss of 1,600 manufacturing jobs in March. This decline brings California’s manufacturing jobs growth to 3.4 percent since the recession, while the U.S. grew its manufacturing base by 7.4 percent.

In the same week came an announcement from a southern California manufacturer, General Magnaplate, who said they would be shutting down their manufacturing facility in Ventura because of a difficult business climate and an unwarranted stormwater lawsuit against them. Magnaplate is a small manufacturer with only around 25 workers in their Ventura facility, but that means nothing to their employees who are left looking for work. The good news is that families in Texas and New Jersey will likely gain employment because the company’s facilities in those locations will pick up production. Just one example of the drips of manufacturing loss accumulating over the years in California.

With some of this bad news came good news, at least you’d think. The Advanced Energy Economy (AEE) Institute released a report this week indicating that the “Advanced energy” sector generated jobs at six times the rate of the overall California economy last year. The good news stops there. The problem is that often those jobs are coming at the expense of reduced job growth and investment in other areas of the economy.  If we are spending too much for those jobs then we incur even greater losses in the rest of the economy. The report even admits it on page 6: “California’s advanced Fuel Sector was the only segment of Advanced Energy that did not create additional jobs in 2015.  Challenged by several factors including persistently low gasoline prices, Advanced Fuels saw employment decline more than 50 percent from 2014, resulting in a loss of about 8,300 jobs.

Basically the AEE report tells us that if you raise prices on something you can get more people working on ways to reduce consumption. That is of course not a surprise. But when it comes to the entire economy, our collective data is telling us that our state is still lagging the country in manufacturing jobs and investment growth.





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The manufacturing value chain is bigger than we thought

Posted by Gino DiCaro, Vice President, Communications on March 24, 2016

Manufactured goods are ubiquitous for our ultra consumer society but the narrow definition of manufacturing industries in national statistics often has the industry accounting for only 11 percent of gross domestic product (GDP) and about nine percent of full-time employment. Those numbers are only the tip of the iceberg though. A recent study by the economic think tank MAPI shows much larger impacts from downstream and upstream activities related to manufacturing that include research and development, corporate management, logistics operations, marketing, and others.

All manufacturing plant activities lie at a hub of a large and complex value chain that is composed of an upstream supply chain that gathers materials and services and a downstream sales chain that moves goods to market and sells and services goods. Manufactured goods are also intermediate inputs in non-manufacturing industries’ supply chains.

The MAPI Foundation's report "The Manufacturing Value Chain is Much Bigger than You Think" accounted for all of these economic activities.  Their results showed that the industry is actually responsible for 33 percent of our country's GDP, basically triple what is traditionally reported. This and other findings eclipse even our own numbers here at CMTA. More reasons for California policymakers to always account for manufacturing impacts in new legislation.

Below are a few of MAPI's key additional findings:

  • The manufactured goods value chain plus manufacturing for other industries’ supply chains accounts for about one-third of GDP and employment in the United States.
  • The domestic manufacturing value-added multiplier is 3.6, which is much higher than conventional calculations. For every dollar of domestic manufacturing value-added destined for manufactured goods for final demand, another $3.60 of value-added is generated elsewhere.
  • For each full-time equivalent job in manufacturing dedicated to producing value for final demand, there are 3.4 full-time equivalent jobs created in nonmanufacturing industries.
  • Most (54 percent) of the value-added in manufactured goods destined for final demand is from the downstream sales chain; the upstream supply chain accounts for the remaining 46 percent.
  • Domestic manufacturing accounts for only 22 percent of the value chain of manufactured goods for final demand. Non-manufacturing value-added is 53 percent and imports are another 25 percent.
  • 60 percent of manufacturing imports ($1,024 billion) are final goods; these directly enter the downstream sales chain. The other $694 billion of manufacturing imports enter the value stream in the upstream supply chain of domestic manufacturing.
  • Relative to other industries, manufacturing is efficient in delivering value-added. It takes about 5.8 full-time equivalent manufacturing jobs to achieve $1 million in value-added, compared with 7.7 for both transportation and services and 16.9 for retail trade.

 





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Maker spaces & 'boot camps' are California's new feeders for technical skills

Posted by Gino DiCaro, Vice President, Communications on March 17, 2016

Maker and co-working spaces, sometimes known as "boot camps", are becoming key intersections between regional manufacturers' needs and local students' skills development. They create the ability for students to learn quickly the skills they need to get a high wage opportunity with a regional manufacturer who needs technical workers.

A recent example got our attention. Tyler Hill, a Sierra College Electro Mechanical Engineering major from Lincoln, California, recently got a job working for a consumer transaction technology manufacturer, NCR Corporation, in part because of his participation in a maker space "boot camp" for entrepreneurs in the northern California area. 

The camp known as Hacker Lab / Startup Hustle partnered with Sierra College and the Center for Applied Competitive Technologies in a private public partnership to improve students’ employability.

Hill had joined Hacker Lab to access the CNC and laser cutting tools, and then applied to participate in Startup Hustle to work on the home automation system he developed with another student. “Putting this experience on my resume helped me stand out and get a job as an ATM Engineer,” said Hill.  “I enjoy the work and am even more confident in my plan to transfer to a California State University engineering program.”

“Employers are seeking innovators who will develop better products to meet customers’ needs and contribute to business growth,” said Willy Duncan, Superintendent/President, Sierra College Joint Community College District. “At Hacker Lab, Sierra College students work alongside a diverse group of experts and artisans to test and hone skills learned in their college classes. As a result, students add practical experience and cutting edge skills in coding, virtual reality and 3D printing to their resumes.”

Hill explained that he developed new skills to create a prototype product at Hacker Lab. “I had no idea how to make a printed circuit board,” said Hill. “But after three weeks of practice at Hacker Lab, I could make a perfect board from scratch.”

Carol Pepper-Kittredge, Director, Center for Applied Competitive Technologies, Sierra College, helped plan the Hacker Lab Powered by Sierra College in Rocklin. “To attract students to Advanced Manufacturing careers and provide businesses access to technology and training, Sierra College equipped the maker space with electronics, 3D printers, laser cutter and CNC router,” said Pepper-Kittredge.

Startup Hustle teams attend weekly online and in-person training sessions led by successful founders of businesses. In addition, industry mentors coach the teams. “The mentors were genius,” said Hill. “They were more than technical experts; they collaborated with us to think through sales and marketing.”

In just one year, Sacramento-based Hacker Lab worked with Sierra College to find an off-campus location in Rocklin, California, fill it with equipment, attract 140 members (50 percent students) and offer education events attended by over 1,000 people.

These non-traditional boot camps increasingly feed specific technically skilled workers to regional manufacturers and create tremendous opportunities for growth for students.

CMTA is learning more about how we can help foster more of these partnerships to grow the next generation of California manufacturers.

Here are some other stories about Startup Hustle participants.





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