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Why not California #11 & #12 -- MiaSole and Facebook

Posted by Gino DiCaro, VP, Communications on Jan. 28, 2010

California took more employment and innovation bruises this month with two announcements from companies producing the state's favorite products - web technology and solar power.

Palo Alto based Facebook will build new facility in Oregon

Employing 200 people during construction and 35 full time employees upon completion

"The social media powerhouse confirmed Thursday that it has picked the economically depressed Central Oregon town for Facebook's first company-owned data center, drawn to the region by reliable and affordable power, a favorable climate and tax breaks."

Article link


Silicon Valley based MiaSole solar company will build manufacturing facility in Georgia
Employing potentially 1,000 workers

"A Silicon Valley-based company that makes low-cost, high-efficiency solar modules is planning a manufacturing plant in metro Atlanta that could employ up to 1,000.  While California remains a hub for solar startups, Oregon, Texas, Colorado and Arizona are becoming destinations as solar firms chase skilled labor and low operating costs, said Terry Peterson, a San Carlos, Calif.-based solar power consultant.  While Georgia’s cheap fossil-fueled electricity lowers manufacturing costs, it squelches local demand for solar power."

Article link


These announcements bring more pain to the state's economy and workers after California lost another 5,900 manufacturing jobs in December, bringing the total since 2001 to more than 607,000.

 

 

 





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California awakening

Posted by Gino DiCaro, VP, Communications on Nov. 19, 2009

State policymakers are beginning to understand -- or at least face the realities of -- a fundamental reason for California's job loss and now a 3-year $81 billion budget deficit.  Basically we pass laws and move on to new ones and call it success.  Texas on the other hand -- a state that congregates its legislature in only odd years and requires a 2/3rds majority on every bill -- created 70% of the new jobs in the United States in 2008 and has a $2 billion budget surplus this year. 

I offer the following 3-week timeline of completely independent events and tidbits -- a syllogism if you will -- as a picture of evolving realizations of California's problem, as well as some minimal-cost concepts that are gaining traction. 

October 22

    » Treasurer Bill Lockyer testifies that two thirds of California bills shouldn't see the light of day and begs the Legislature to recognize the severe degree of dysfunction as it pertains to California's dire situation.

October 30

    » Trends magazine contrasts California vs. Texas and predicts whirlwind backlash and decline in the Golden State

November 1

    » The Milken Institute 2009 index shows California is 42 percent more costly than Texas in business taxes (TX is actually 27 percent below national average).  There is also a large disparity between wage and electricity costs, and their index does not even take into account regulatory costs.


    » The Milken Institute also comes out with top-performing cities index that shows four Texas metropolitan areas in top 10.  California had none in Milken's top 25.

November 4 (blog date)

    » SMA solar manufacturing locates in Colorado.  (another lost "green" opportunity to help back-fill 590,000 lost manufacturing jobs in California).

November 12

    » Attorney General Jerry Brown pronounces that California is over-regulated.

November 16

    » Harvard Business School blogs that manufacturing drives innovation (important for a state intent on innovating and leading the "green" economy).

November 17 (Senate Labor & Industrial Relations Committee)

    » Cal Portland Cement CEO, Jim Repman, testifies on closing a 100-employee facility this Friday, November 20, as a result of regulations, costs and uncertainty.  Invites Sen. Mark DeSaulnier to come see one of the Cal Portland facilities.  Key Repman quote:  "A cement plant cannot be picked up and moved, but the next new plant probably won’t be built in California meaning more good, high paying manufacturing jobs will be lost to Nevada or China or somewhere." (download testimony)

    » Vulcan materials' Angela Driscoll testifies that duplicative regulations and uncertain future costs are hurting their ability to compete. (download testimony)

    » NFIB's Michael Shaw testifies on dire situation for small businesses and the importance of streamlining regulations so they can return to creating jobs and growing the California economy.

    » CMTA's Dorothy Rothrock testifies on opportunity lost for $5 billion in income tax revenue as a result of declining manufacturing base.   Then provides minimal-cost oversight options to address California problems.  Basically analyze existing regulations for economic impact along with some other thoughts.  (download testimony)

    » Rothrock also floats "80/20" concept.   80 percent of our time should be focused on existing law impacts on the economy and jobs.  20 percent on new laws.   (I bet Lockyer loves it! See video link in Oct. 22 item)

    » State Senator Mark DeSaulnier supports oversight concepts, promises to continue to address our dire job situation and tries to find time to join Repman this Friday when he has to close his Colton facility.


November 18

    » LAO says California is in another gaping $21 billion hole.

    » Senate President pro Tem Darrell Steinberg released the following statement in response to the Legislative Analyst Office’s fiscal outlook report: "The numbers cry loudly for California to focus on rebuilding our tax base. The only tried and true way to do so is to use our fiscal levers to increase the number of high wage jobs (editorial note: insert manufacturing). Putting more people to work earning decent wages will help overcome our deficit. We need to protect our schools and universities, so as we create high wage jobs (editorial note: insert manufacturing) we produce a workforce able to fill them."

 





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New wrinkle to environmentalism: Stop building, retain workers, make magic

Posted by Gino DiCaro, VP, Communications on July 14, 2009

Recently, Stephen Colbert opined humorously that "Corn plus magic equals gasoline!"   The Contra Costa County Superior Court and environmental plaintiff's quipped similarly last week on a Chevron upgrade and expansion, only it went something like this: "Shut down facility, retain workers, make magic."

A Chevron project that had hired approximately 1,000 temporary Contra Costa Building and Construction Trade workers was ordered to stop construction.  The facility was being upgraded for efficiency -- to make 7 percent more gasoline from the same amount of light to medium crude it was already taking in.  The shut down was absurd on its own, after a 3-year long permit approval process, but it got even more nonsensical when the environmental plaintiff's claimed that Chevron should keep the workers on payroll because the closure was not their fault.  What?  See paragraphs 11 and 13.

So the environmental plaintiffs are asking Chevron to stop a project with demonstrable emission reductions and new efficiencies, retain and pay 1,000 people not working while they go through another long permitting process, all while the city and California lose out on emission reductions and more gasoline.   Only in California.   It's becoming apparent that some just don't want Chevron, period.  That's scary considering the oil and natural gas sector employs 65,000 workers, supports the employment of nearly 305,000 Californians and generates $46 billion in economic output.  Chevron alone employs 10,000 workers and supports 70,000.

This particular upgrade and expansion would mean $50 to $75 million in income to workers and $61 million in community programs to the City of Richmond.  That's before doing the math on all the new net local and state government revenue.  Again this is a project that would have retrofitted an existing facility to use the same amount of crude oil to create more gasoline.  The approved permit explicitly mandated a reduction in baseline greenhouse gas emissions and no processing of heavier crude oil.  California and oil-dependent Richmond can't afford to shut down this project, and no company can pay 1,000 workers not to work.  It didn't work for General Motors in Detroit and it won't work for Chevron in Richmond. 

Everything in California is simply working against the private union workers and their employer.

A different but vaguely similar dynamic has been playing out in the AB 32 global warming policy arena.  California is rushing regulations in a manner that has not been proven to be cost effective for our businesses and consumers.  The regulations are hurried under the assumption that workers and expensive facilities will appear magically once the regs are implemented.  Never mind the inevitable closures, downsizing, re-location and cost increases.

Helping to prove that point this week, the National Federation of Independent Business released a report on Monday that claimed that new California-only global warming regulations will cost each small business $50,000 annually and the state $1.82 billion in output and 1.1 million jobs. 

California, as well as its local municipalities, must drop blatant disregard for real impacts on employers, their workers and our government's revenue streams.  Just do it right, that's all employers, private labor unions and rational environmentalists ask.

There is no "magic" for job creation under the aforementioned circumstances.  Economic reality must be our guide.  Everything is an economy and budget issue now.



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Prioritize BEFORE you tax, cut, spend and regulate

Posted by Gino DiCaro, VP, Communications on July 8, 2009

A friend recently gave me advice on Sacramento's mess and the California electorate's disposition. "People aren't worried about their taxes, they're worried about their jobs," he said. "The entire Legislature just doesn't get it."

My friend was making a deep-rooted comment on California's priorities.

The state's chaos stems from mis-prioritizing everything. Taxes, cuts, spending and regulations in California all currently arise out of the unaccountable expectations of a short-term legislative roster with no long-term strategy for private-sector jobs. Put simply, job growth incites rhetoric in press releases but it doesn't find its way into bills and analysis.

If I were a pollster, I would take six months to ask as many Californians as possible this question: "Would you accept a one-cent tax increase on all goods manufactured in California if it would guarantee high-wage private job growth in the state?" The chorus of "Yes" would undoubtedly follow. Try asking that question among your peers and see what happens.

This is a plea to discourage current policy makers from repeating the mistakes made during the past decade. (Note that California's decline did not start with the current worldwide recession.) It is a call to understand that policies must first seek to grow and retain high-wage private sector jobs. California's  competitiveness will unequivocally make or break our economy and state government over the next 10 years.  It must be a top priority going forward from California's current debacle.

California lost 564,000 manufacturing jobs as the consequence of eight years of neglect and abuse, so eight years of concentrated effort and TLC likely will be required to restore them.

California's economic rebirth, private-sector job security, "green" leadership, and bold, but paid-for, government will start only with the acknowledgement that the most active part of any successful economy is the manufacturing community.

Here are some recent and updated points to consider about high wage manufacturing and the economy:

California needs manufacturing
Milken Institute report:
  • Year 2000 levels of California manufacturing in 2008 would have resulted in approximately $75 billion more in wages and $5 billion more in income tax to the state
  • For every one manufacturing job, 2.5 more jobs are created
  • For every one high-tech manufacturing job, 15 jobs are created
  • California average manufacturing wage: $66,000

Americans want manufacturing
According to a Deloitte Touche study on manufacturing:
  • 71 percent of Americans view manufacturing as a national priority
  • 81 percent of Americans agree that manufacturing has a significant impact on their standard of living

California spending priorities evident





California losing higher-wage jobs







Largest manufacturing county in the

country has been cut in half
  • L.A. manufacturing jobs in 1990: 824,700
  • L.A. manufacturing jobs in 2009: 400,600

Media not helping to circulate the story



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Promote -- don't revoke -- economic recovery policies set for 2011

Posted by Gino DiCaro, VP, Communications on June 10, 2009

Senate Pro Tem Darrell Steinberg mentions eliminating "corporate tax breaks approved in past budget negotiations" in today's Sacramento Bee article, Senate Dems push to raid budget reserve. With that statement it can be concluded that the Net Operating Loss (NOL) carry-back and the elective Single Sales Apportionment Factor are being debated for elimination -- both will help drive California's economy (and state revenue) with high wage job growth and retention in the future.

Those "breaks" were intended to remove barriers to California’s economic growth and neutralize a portion of the more than $9 billion in tax hikes and revenue accelerations on the business community. Certainty and predictability are primary tipping points for businesses looking to grow, stay or site in a location. Revoking economic stimulus policies 6 months after they were passed sets a dangerous precedent and sends signals to high wage employers that the state can't be trusted.

The NOL and the single sales factor provisions do not apply until January of 2011 and their elimination would do nothing to infuse cash to the 2009-10 budget.

Watch how the Legislature treats and delineates these important job growth provisions in the budget debate.



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