Viewing blog posts written by Dorothy Rothrock


Paying attention to manufacturing in California

Posted by Dorothy Rothrock, President on July 5, 2013

It’s about time manufacturing got a little love in the Golden State.  You would think that creating high-wage jobs, making multi-million dollar investments for innovative new products and providing huge multiplier effects in the broader economy would have justified a sales tax exemption on manufacturing equipment before now.  Nearly every other state has this.  For more than a decade CMTA has argued that manufacturing investment is the engine of the economy – and letting the manufacturing investment tax credit lapse in 2003 was a big mistake.  Yet a dozen bills introduced since 2003 failed to reinstate the credit.  California has suffered declining investments and manufacturing jobs as a result.   
 
This week, at long last, lawmakers passed a bill package including a sales tax exemption for manufacturing equipment.  Did they suddenly come to their senses on the importance of manufacturing and agree that this and perhaps other policies should be adopted to help manufacturers?  It is a nice thought, but we shouldn’t count on it. We must keep educating legislators and pushing for improvements to make California a better place for manufacturing.  There is much more work to be done. 
 
Let’s make this the first of many positive changes to turn California into a powerhouse for manufacturing investment and job growth.  Every manufacturer should start by thanking your local legislators for the vote last week.  Let them know that the exemption will help, but remind them about your many other challenges in the state.  Invite them to visit your facilities to meet your employees and tell them about your contributions to the community.  CMTA will continue to be a resource to you and champion for your interests in Sacramento. 





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A look at California's manufacturing scale ups by Senate District

Posted by Gino DiCaro, VP, Communications on June 14, 2013

Have a look at last year's California manufacturing facility investments by Senate District.  We received just under one percent of the country's investments but a few Senators can tout manufacturing scale ups in their districts.

 

Investment by Senate District map

 

(Data source: Conway Data, Site Selection Magazine)





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California awarded prize for economic development

Posted by Gino DiCaro, VP, Communications on May 30, 2013

 

Today, California won the "Silver Shovel" award from Area Development Magazine for remarkable success in growing high-wage jobs in recent years.  The Governor's Senior Advisor for Jobs and Business Development, Mike Rossi, and the Director of Governor Brown's Office of Business and Economic Development (Go Biz), Kish Rajan, deserve a lot of credit for beating the pavement and bringing lucrative investments to California.  

We know economic development doesn't just happen.  It takes a lot of work to make a region competitive so a company will invest large amounts of money to site a facility and hire employees.  California can be a good place to do business with the right combination of policies and recruitment savvy from local and state government experts.  

The projects that earned the "Silver Shovel" award were a $300 million Samsung research and development center planned in San Jose and an Amazon decision to build fulfillment centers in Patterson and San Bernardino.  Together they represent an investment of about $250 million and the creation of nearly 1,100 jobs.

These are substantial projects that will employ both middle class and professional workers which will expand government tax revenues. We hope manufacturing will be included in the next round of firms choosing California.  The state received only one percent of the country's manufacturing investments in 2012 -- 25 new or expanded facilities out of 3060 nationwide.   Manufacturers are sensitive to high operating costs and regulatory burdens, so Rossi and Rajan will need more tools to attract these valuable companies. A statewide sales tax exemption for the purchase of manufacturing equipment would be a good start. 

We congratulate Go Biz and hope that the state provides them more resources to bring home the critical manufacturing investments we need.  Next year, maybe the "Golden shovel"!





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Manufacturing sales tax exemption bills move forward

Posted by Gino DiCaro, VP, Communications on April 25, 2013

This is a follow-up to last week's 'Tipping Point' piece on CMTA's proposed sales tax exemption on manufacturing equipment purchases.

Both tax exemption proposals were heard in committee this week, receiving positive comments from legislators.  SB 376 by Sen Lou Correa received a unanimous 7-0 vote in the Senate Governance and Finance Committee and Assemblyman Kevin Mullin's AB 486 received an affirming hearing but we won't know the bill's fate until the Assembly Revenue and Taxation Committee votes on it in its 'suspense file' hearing next week.  

Both bills enjoyed wide support in testimony with the only opposition coming from California Tax Reform Association, a group funded by public employee interests.  In ten years, among at least 30 proposals, only one ever made it past its first hearing,

CMTA stepped up its game this week to show the job impact from the manufacturers investment credit back when it was originally implemented in the state in 1993 for a ten-year period.  See for yourself below.  We basically caught up to U.S. manufacturing in the first seven years and grew by seven percent with 131,000 new manufacturing jobs before the massive tech bust occurred.  
 
manufacturing during the MIC
 
 
California manufacturers can overcome big challenges with the support of state and local government.  Most manufacturers realize there is a premium to pay to operate in the state, but the total valuation of California costs makes it almost impossible to compete.  Bringing back the sales tax exemption on manufacturing investments is one way to get back in line with most other states and position the state to compete for manufacturing scale-ups.
 
 




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Tipping point for California manufacturing investment

Posted by Gino DiCaro, VP, Communications on April 18, 2013

These days, it seems like states are figuring out how important manufacturing is to healthy economies.  The competition is picking up, as states move to reduce costs or create incentives for manufacturers.  After all, companies put investment capital in locations with the most attractive business climates.

This could be good news for California.  We have state-of-the-art advanced manufacturing facilities employing thousands of California workers. These companies could grow here if conditions are favorable. But there is one key issue that needs to be fixed if California is going to compete for its share of manufacturing growth.

A sales tax exemption on the purchase of manufacturing equipment is a policy most other states have adopted. This gives them a competitive advantage for their campaigns to grow high-wage manufacturing jobs. California had a similar tax rule, but it expired in 2003.  We could catch up by reinstating the exemption, which would put California back on so many lists for future investment and growth.  For many manufacturers, the sales tax exemption could be the 'tipping point' for a decision to invest in California.  

STE
sales tax exemption
one-pager

In the 1990's, when the tax credit was in place, California attracted on average almost 6 percent of the country's manufacturing investment dollars.   Manufacturing investment in California has now slowed to an average 1.9 percent of the country's, since that credit expired.

The credit helped Intel grow its wafer fabrication plant in Santa Clara and it helped Northrop Grumman grow in part  to more than 27,000 employees.  Because the exemption still exists in specific enterprise zones, it helped Fontana-based California Steel recently pay for a $100 million expansion.  Imagine if this powerful tool were available to every manufacturer again in California.

CMTA had its lobby day this week on the issue to start informing the legislature of the tremendous economic benefits, including new net revenues to the state.  Large employers, Intel, California Steel, Kimberly-Clark, International Paper, and Northrop Grumman joined to educate legislators why it is important to eliminate the tax on manufacturing investments.  

Economist, Bill Watkins put it perfectly last week when he urged the state Legislature to "Create an opportunity economy."  This manufacturing sales tax exemption would do exactly that and create the particular opportunity that California so badly needs.

 

(There are two sales tax exemption bills.  Assm. Kevin Mullin's AB 486 will be heard in Assm. Revenue and Taxation Committee on Monday, April 22 and Sen. Lou Correa's SB 376 will be heard in Sen. Governance and Finance Committee on Wednesday, April 24)

STE one pager |  Coalition letter in support

 

 

STE DAY pic

 





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