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Why not California?

Posted by Gino DiCaro, VP, Communications on Nov. 8, 2007

The following are two recent examples of growth and expansion that California could benefit from if the State were to offer competitive incentive packages:
  • Toyota's new car seat supplier in Indiana:  A recent Indianapolis Star article pointed to a 275-job Toyota car seat supplier (partly owned by Toyota) that capitalized on a $2.5 million economic development package, including $1.8 million in tax credits, to build their facility in southwest Indiana.  They also noted the importance of building so close to a Toyota truck-building facility, further indicating the extreme economic and job multiplying effect one manufacturing operation has on a region.  Article:  http://www.indystar.com/apps/pbcs.dll/article?AID=/20071016/BUSINESS/710160335
  • 3 new solar manufacturers in Oregon:  A recent Sacramento Business Journal article uncovered the decisions of three solar manufacturing firms to build in Oregon because of tax incentives, low energy costs, and trained workforce, even though most of the company's supply will go to California.  "Bad business climate" was mentioned in various ways as a reason not to produce here.  One very telling factoid from the article:  Each megawatt of solar photovoltaics installed creates 20 manufacturing and 13 installation or maintenance job-years, which means a single person employed full-time for a year, according to a 2004 University of California Berkeley study. In the same article, incentives and available workforce were credited for a recent announcement by Santa Clara based Solaix, a silicon wafer fabricator, to develop in Oregon.   Article: http://sacramento.bizjournals.com/sacramento/stories/2007/11/05/story16.html

It is well documented that California has dropped from 2 million manufacturing workers to 1.5 million  over the last decade -- a decline that does not appear to be correcting itself.   Industries ebb and flow and California has always relied upon new and old industry expansions from elsewhere to fill-in lost jobs (i.e. the aerospace industry in the 80's and the technology sector in the 90's).  More and more, companies are looking to expand or site somewhere in the country and choosing to ensure their success in a commonwealth other than the Golden State.  Governments such as Oregon's, Nevada's, Indianapolis' and others are offering incentives to attract high-wage, economy-boosting and cutting edge facilities to grab a piece of the highly-coveted manufacturing industry. 

Inexplicably California is not attracting important new high-wage growth and losing out to other states.  With looming revenue loss, Gov. Schwarzenegger has asked state agencies to cut their budgets by 10 percent next tear.  Dynamic modeling shows that tax incentives and credits -- especially ones in a state that is so expensive to operate within -- will more than pay for themselves and bring in new revenues from increased economic activity and jobs.  Attracting new firms to California must be a priority now ... in the immortal words of John Belushi, "Who's with me!!?"





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