Texas Trip Confirms: California Needs a Plan to Create Jobs

Posted by Jack Stewart, President on April 19, 2011

California has an unemployment rate of 12 percent, lost 11,600 jobs last month and has no plan for creating jobs for the more than two million California workers who are looking for work. Texas has an unemployment rate of 8.1 percent, created 37,200 jobs last month and has an aggressive plan for investment and job creation.

Last week provided an eye-opening look at some of the important differences between California and Texas for a delegation of California legislators, Lt. Governor Gavin Newsom and business association leaders who traveled to Austin, Texas on an economic development fact finding mission.

The mission was conceived by Assemblyman Dan Logue who arranged for ten legislators to spend two days in Austin talking to California companies who had recently moved or expanded operations in Texas. The group also met with Governor Rick Perry, officials from his administration and members of the Texas Legislature.

The big take-away from the two days in Austin was the commitment Texas has to providing a positive business climate for its employers and to creating job opportunities for its workers. That commitment appears to start with Governor Rick Perry, who prides himself in saying, “creating and growing employers is his number one job – with a healthy, growing economy other problems become less daunting.”

There is no question that Governor Perry is the quarterback of Texas’ economic development team. His enthusiasm and commitment permeates a state bureaucracy where government agencies are sensitive to employers who are willing to invest in Texas. Governor Perry leads regular economic development missions to California, New York and other states and nations to recruit employers who bring jobs to his state.

The Texas economic development strategy was born out of the 2003 recession when state revenues dropped, creating a massive budget deficit. To address the 2003 crisis, Perry made two decisive moves: 1. to aggressively promote Texas’ affordable business climate to grow revenues to the state through economic expansion; 2. move the state to a zero-base budget process to control the growth in government spending.

His plan appears to be working. While it’s difficult to understand all aspects of the Texas business climate in just a few days, the U.S. Bureau of Labor Statistics shows solid job growth in Texas over the past decade, while California’s job numbers are far below its 2001 levels.

This is not to say Texas has all the answers or that California doesn’t have its own set of attributes, but the fact is California’s business climate is very unpredictable and investors shy away from unpredictability. Texas places a high premium on a predictable business climate and investors seem to agree.

Over the past few months, I‘ve often greeted California legislators by saying, “Without having heard one of your campaign speeches or read a single piece of your campaign literature, I’m certain your number one campaign pledge was to create jobs.” The response is always a big smile and an affirmation that my guess was correct. My following comment is, “Now that you’re here, you have no idea how you’re going to fulfill that promise.” I typically get a very sober response, confirming that my second observation is also correct.

California hasn’t had an economic development strategy for more than a decade. We’ve been resting on our laurels while other states and nations aggressively recruit our brightest and best entrepreneurs and innovators. It doesn’t have to be this way. California can become competitive for investors if we put our economic house and business climate in order.

For the past ten years, our Governors and Legislatures have focused on spending cuts and tax increases as the solution to our state’s economic woes. There is a third leg to that stool, an aggressive plan for economic growth. If job creation is truly our highest priority, then let’s create a plan to grow jobs. Look to the future as Governor Perry did in 2003, set job creation goals for the next 15 years and develop a strategy to achieve those goals. It’s simple, but it won’t be easy.

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Why not California #15 - More solar manufacturing losses

Posted by Gino DiCaro, Vice President, Communications on Jan. 6, 2011

Add another big loss to the mounting list of solar start-ups that opt to manufacture their product outside of California.

This week, Stion Solar Panels announced it would build it's manufacturing plant in Hattiesburg, Mississippi after getting a $75 million loan from the state and citing lower wages and a more trainable workforce. (CORRECTION: This sentence reads as if California provided the $75 million loan. It was Mississippi that provided the loan.)

California's inability to manufacture it's home grown innovations continues to play out against its own economy and workers. Let's face it, without manufacturing, innovation is just a good idea. California has a tremendous market and we have cutting-edge research & development. We don't, however, have a competitive environment to make our products and employ thousands of workers. And it seems to be getting worse, not better.

The approximate 200 to 300 high-wage jobs that the Mississippi solar plant will produce in 2011 (1,000 by 2017) would have been a blessing to some of the 2.2 million unemployed Californians and a boon to state revenues.

More intriguing is the announcement from many states this month that they should and would more actively recruit companies from California, citing the difficult business climate. Add Mississipi to the list of states taking advantage of California's woes.

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Why Not California #14

Posted by Gino DiCaro, Vice President, Communications on Dec. 1, 2010

As we approach 2011, we took a quick look back at manufacturing growth and decline in the two biggest states in the west in 2010. Looks like Texas grabbed new high wage manufacturing jobs at a clip of 1,100 per one million of its citizens, while California LOST approximately 32 jobs per one million of its own hard workers. Ouch.

These 2010 numbers, combined with California's 34% manufacturing decline over the last decade, and statements like the following in a recent Reuters article should be "ground zero" for the state's new Legislature and Governor in 2011.

"The first order of business for rookie Republican governors taking office in the coming weeks will be to make their states more 'business friendly' by cutting taxes and regulations.
The second order of business: Grab California companies disaffected with the state's business climate."

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