California manufacturing still losing its fair share of growth

Posted by Gino DiCaro, Vice President, Communications on Oct. 25, 2012

After California's manufacturing sector lost another 5,900 jobs in September, we thought we'd update and get a fresh look at how California is stacking up against the rest of the nation. Here are the updated numbers and charts.

34% of industrial base
lost since 2001

U.S. 4.22% growth
vs. CA -0.29

9th worst industrial
state since 2010

Not getting fair share
of investment

0.5% of U.S. expansions
since 2011

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California lagging industrial states in manufacturing growth

Posted by Gino DiCaro, Vice President, Communications on Aug. 21, 2012

California lost 3,100 more manufacturing jobs in the month of July, according to last week's Labor Market Information Department report. Since 2010 California has continually lagged the rest of the country and other industrial states in critical high wage manufacturing job growth. Comparatively, California has been stagnant while the country grew at more than four percent and industrial states averaged about 5.8 percent growth.

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California trailing industrial states in recent manufacturing job growth

Posted by Gino DiCaro, Vice President, Communications on June 5, 2012

Since 2010 California has been stagnant in critical manufacturing job growth while other industrial states have found ways to grow the sector, which always translates to high paying middle class work, new government revenues and economic upswings in the rest of the economy. (Credit caveat: These numbers were researched by CMTA President Jack Stewart. He never stops.)

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Manufacturing growth: CA and Los Angeles lagging far behind the U.S.

Posted by Gino DiCaro, Vice President, Communications on May 22, 2012

CMTA looked at the growing lag of manufacturing growth in California after the California Labor Market Information Department's numbers last week showed a loss of 4,100 California manufacturing jobs in April. You'll see in the chart below that, for the past two years, the U.S. has attracted 4.3 percent growth in the critical sector and outpaced a stagnant California. The largest manufacturing county (MSA), Los Angeles, actually suffered a 3.7 percent loss.

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Manufacturing job creation IS a state issue

Posted by Jack Stewart, President on Feb. 3, 2012

Cross-posted at Fox and Hounds

A few days ago, Governor Jerry Brown made the surprising statement that our state’s massive loss of manufacturing jobs is not a unique California problem because we have “lost manufacturing at about the same rate as the rest of America.”

While it is true that both the US and California have suffered manufacturing job losses, California’s industrial job loss rate was nearly ten percent higher than the U.S. loss rate. In real numbers, we’ve lost a staggering 626,000 manufacturing jobs in the past decade. If California had tracked with the national manufacturing job loss percentage, we would have 55,000 more Californians receiving paychecks than we do today.

More significantly, economists are proclaiming manufacturing growth is leading the national recovery. Bloomberg notes, ”Manufacturing accounts for about 12 percent of the economy and was at the forefront of the recovery that began in June 2009.” Contrary to this national trend, California manufacturing is moving in reverse. During 2011, the U.S. created 227,000 new manufacturing jobs, while California lost an additional 4,000 manufacturing jobs. These are the middle class jobs that our elected leaders say they covet, but do very little to encourage and protect.

State policy has a tremendous impact on manufacturing job growth. States with a positive business climate (competitive operating costs, a trained workforce and a predictable regulatory climate) outpace states with negative business indicators. California’s 34 percent manufacturing job loss compares with Texas at 21 percent, Indiana at 29 percent and Louisiana at 19 percent.

Business climate issues also have a direct impact on new investment. From 1977 to 2000, California received 5.6 percent of the nation’s new and expanded industrial facilities. Since 2001, California’s share of those facilities has plummeted to 1.9 percent. Industrial investors plan on a 10 to 15 year time horizon when making large investments in land, buildings and equipment. States with long-term budget deficits, excessive infrastructure needs and aggressive regulatory agendas seldom make the short list of corporate planners.

It’s true that California continues to be the innovation state – we receive a large share of investment capital. But in the past decade, we have lost our ability to both innovate and manufacture new products here. From 2005 to 2009, California received 48 percent of U.S. venture capital investment, but only 1.3 percent of U.S. industrial investment.

The current model is to innovate in California, manufacture in a more cost-competitive state or country, and market back to California consumers. Under this scenario, California gets the jobs advantage of small, start-up research and development firms, but loses the enormous jobs benefit when those new products move to the production stage.

California’s modern government grew up of an era of rapid industrial expansion. During the 1950s, 60s and 70s, California led the nation in industrial growth, becoming the top manufacturing state in 1977. With that growth came a flood of new tax revenues allowing California to invest in infrastructure, education and new social programs. California became dependent on the largess of a robust industrial economy.

During the ensuing 40 years, California found pride in implementing “first in the nation” environmental regulations. Clean air, land and water are laudable goals, but the associated regulatory costs have had an impact. Four decades of accelerating environmental activism have taken a toll on our ability to attract new investment and jobs.

We’re told by financial analysts that American corporations have $3 to $5 trillion available for investment when the current recession ends and that more and more U.S. manufacturers are re-shoring their overseas operations. The question is: will California attract a fair share of manufacturing investment, or will investors look for states with a more favorable business climate? Our efforts should be to prove that California is serious about rebuilding a manufacturing economy by acknowledging where we must make improvements, not resting on an assumption that this is simply a national problem.

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