CA among the worst in national manufacturing investment

Posted by Gino DiCaro, Vice President, Communications on March 16, 2012

California is still not receiving its fair share of national manufacturing growth.

Site Selection Magazine released its annual data last week for manufacturing facilities investment by state. We asked them for the dollar amounts and then normalized those numbers for population and combined them with the previous four years to provide a five-year per capita investment window. It shows that California is not at all prepared to receive and grow manufacturing investment for our hundreds of thousands of unemployed middle class workers.

The national average for per capita manufacturing investment was $2,073, while California only received $325 -- second lowest only to Connecticut. California even slipped from last yea's four-year ranking three places.

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CA manufacturing jobs take another hit in September

Posted by Gino DiCaro, Vice President, Communications on Oct. 21, 2011

California lost another 4,700 manufacturing jobs in September 2011, according to statistics released this week by the state's Economic Development Department. On the flip side, the state's unemployment rate also finally slipped below 12 percent, for the first time in a year, to 11.9 percent. Here's a quick look at the manufacturing employment trend over the last decade.

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California & Nevada: Financial crisis and sleep aids

Posted by Gino DiCaro, Vice President, Communications on Oct. 8, 2008

This week, Californians have heard that the leading economic indicator -- the national stock market -- has slid to under 10,000 for the first time since 2004 ... that a national $700 billion rescue package paid for by U.S. taxpayers might or might not work to bring the nation's heavily depended upon credit market back to something better than it is now (I digress for an anecdote: my colleague told me yesterday that his friend with an 800 credit score and $15,000 down on a $35,000 car couldn't even get an auto loan last week) ... that national manufacturing employment took the hardest hit last month -- 51,000 jobs -- in across-the-board overall employment losses (stay tuned for California's September employment numbers here) ... that the State's own Unemployment Insurance Fund will be out of cash in February .... that California's overall Budget deficit is now much worse than previously admitted ... that California might have no where else to turn for money after October 29 ... and that our only refuge from real life -- sports institutions -- will also feel the economic pinch. OK, now I'm worried.

During this national and state economic crisis, and perpetual 2:00 am 401K retirement angst, I suspect sales are still increasing for at least one product -- sleep aids. But one little item I saw this week brought comfort and firmly bolstered my trust in free market capitalism. That morsel was the announcement that the Nevada Secretary of State is getting ready to launch an economic development package and website titled "Why Nevada". I know, run to the presses.   It's never been done before! This is just crazy!   It IS important however, because of the litany of low tax climate incentives being used to recruit manufacturing and other industries when everyone else is looking to find immediate State and Federal revenues with taxes, rescue packages, loans, etc. Nevada understands they need to build an attractive and competitive market for the biggest revenue augmenter in the world -- a well paid job base -- and they know that competitive accommodations matter more, now. The "Low Tax Climate" items listed on the new site include:

    * No Business Income Tax
    * Income Tax is Prohibited
    * No Estate Tax
    * No Franchise Tax
    * No Gift Tax
    * No Inventory Tax
    * No Tax on Corporate Shares
    * Property Tax Increases are Limited

Cost implications always matter for manufacturing and other employers, but as entire consumer markets seek less product for less money and governments covet more money from fewer sources, most employers will absolutely require less expensive zip codes for the genesis and production of their products. My bet is that relief from the economic depression will come quicker to Nevada and perhaps other state's that foster large campaigns to dynamically improve their job base and, as a result, increase economic activity and gain more private and public revenue ... even if it means foregoing a few immediate revenues.

As California's own legislature and Governor contemplate Constitutional Conventions, special Legislative sessions, a possible budget re-do, unconventional loans, etc. they should look to Nevada for ideas for their very own "sleep aid" and discuss very seriously and quickly a major campaign with real cost reduction policies to retain and recruit what we need most.

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Why not California #2

Posted by Gino DiCaro, Vice President, Communications on Jan. 28, 2008

Last week, Intel announced that it will be closing the last semiconductor manufacturing facility in Santa Clara, California, affecting 500 jobs -- many of which carried salaries above $70,000. A large portion of the wafer fabrication plant's past growth was a direct result of the 1993 California Manufacturers Investment Credit - a credit that disappeared in 2003, leaving California as one of only four states that taxes capital manufacturing equipment.   Intel executives have argued for some time that it had become increasingly difficult to compete globally and manufacture in the State because of California’s tax and economic development policies and the resulting relatively high costs. Though challenging to manufacture domestically, nonetheless, Intel continues to do so in four other states, in part, due to their tax and economic development laws and policies.

Intel is now looking at a possible re-use of the Santa Clara facility as a wafer mask design shop, but at considerably less property tax value, and very likely less jobs.   Both bad signs for the State's economy, budget and working families.

The Pacific Policy Institute of California's (PPIC) job-migration report last November said there was "little cause for concern about California's business climate". According to the PPIC, California trends with the rest of the country in terms of actual loss and sees mostly internal job migration. However, they use data from 1992 to 2004 to come up with aggregate migration numbers for industries. Assuming this is the most current comprehensive data, there are two very important points: First, we need to look at the migration number from 2001 to 2007, a time period that yielded the precipitous decline of just under 400,000 manufacturing jobs with no apparent bounce back, and secondly, we need to understand the decisions we don't know about ... in other words, the growth and opportunity that could have been started in California but never got off the ground with decision makers. The first problem, for now, is an available data challenge and the second will always be an unknown, at least without installing cameras in every board room across the country.

We know this: It is costly for manufacturers to move production. If we struggle to keep Intel and others operating in the State, how can we expect to attract new facilities from elsewhere.   For corporate Boards to decide to stay in, move to, and grow within a certain region, they need to understand the certainty of their costs and know that they can compete with businesses in other states and countries. Apparently, for Intel, those two questions did not produce relatively favorable answers.

Wisconsin showed recently that it understands these dynamics by sending a virtual beacon to wavering manufacturing facilities by packaging up new and existing tax credits, totaling $85 million, for manufacturers that create jobs and train workers. Now that's how you attract new growth from the highest-wage sector of our economy.

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