Viewing blog posts written by Gino DiCaro

CA among the worst in national manufacturing investment

Posted by Gino DiCaro, VP, 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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Six of fourteen most unemployed regions are in California

Posted by Gino DiCaro, VP, Communications on Dec. 7, 2010

The Wall Street Journal published the unemployment rates by metropolitan area today. Six of the top fourteen were in California, including the worst region - Riverside/San Bernadino at 14.2%. The worst city was also in California - El Centro at 29.3%. 

More proof that the 2011 legislative session must focus on California's unfortunate leadership on joblessness.

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Still waiting for reasonable policies to launch long-term job creation

Posted by Gino DiCaro, VP, Communications on Aug. 6, 2010

In the closing weeks (or months) of California's 2010 legislative session, there are some easy decisions to make in a morass of tough budgetary ones.  Lawmakers can get control of the state's spiraling regulatory environment and reconsider simple concepts on economic analysis on new and existing regulations.

Dozens of bills died in the last few months that would demonstrate the state's commitment to improve government decision making and signal that California welcomes long-term job creation and economic growth.  What can possibly be wrong with arming a jobs-sensitive legislature with job-impact information so they can make informed decisions?

A flyer -- titled Still Waiting -- and a copy of a previous letter -- supported by more than 350 companies -- were distributed this week to the Legislature to reinforce that the employer community is still waiting for these very simple and obvious measures.

Texas Governor Rick Perry was reportedly in California this week to recruit businesses to his state.   The Lone Star behemoth has increased its jobs base by 580,000 since 2001, while California has lost 976,000 badly needed jobs.  Gov. Perry is clearly not waiting for us.

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What's the big deal? -- Economic Impact analysis bill stirs big fight on Assembly floor but not about the bill

Posted by Gino DiCaro, VP, Communications on June 16, 2010

A red herring is a "purposeful attempt to divert attention from an item of significance." It is exactly what some lawmakers decided to do earlier this month. 

A bill to get better economic impact analysis for regulations (AB 2529) came to the Assembly Floor on Thursday, June 3. To put the bill's broad appeal in perspective, the city of San Francisco and the Clinton administration have supported similar efforts in the past.

The opposition was outraged that the bill was amended in Appropriations before passing to the floor for a vote. Trust me when I say that this process is regularly employed by this legislature as it moves bills. The problem this time is that lawmakers who are usually in charge of the process didn’t like the bill, but they decided to mostly bark about the process. The few times the opposition departed from their "shredding of integrity and deliberative process" complaints, they expressed fear that certain industries or stakeholders will be unfairly advantaged while others would be harmed by the bill. It begged the question that was left unanswered: What harm could arise from a more accurate economic analysis?

The rift in the majority democratic party didn’t stop the bill from moving out of the Assembly with 44 votes thanks to the bill author, Assemblyman Felipe Fuentes, Speaker John Perez, 15 other Democrats and almost all of the Republicans.

You can watch the debate here -- Part 1  |  Part 2 -- to see for yourself.  You can see the vote here .  Once the vote was final, 35 legislators (33 Dems and 2 Reps) abstained or voted against the bill.

This lawmaking body also spent a half hour on the floor two weeks ago passing a California-only plastic bag ban -- all while California tries to dig itself out of a $19 billion deficit -- with no independent economic analysis to help themselves make an informed decision.  In fact the bill was almost passed as an economic model for growth.  Basically, the "California gets to lead" notion is enough and real economic information is just too scary to absorb.

Someone said to me this week, "It's nuts, they are fighting over marbles while the school is burning."  Nothing was truer in legislative episodes this month.

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How can CA win the Lottery?: Become a powerful magnet for the next wave of innovative products

Posted by Gino DiCaro, VP, Communications on May 20, 2009

This week the Assembly Revenue and Taxation Committee passed -- with 6 voting yes and 3 not voting -- a bill that brings California in line with 47 other states by exempting the sales tax on manufacturing equipment and giving working families a fighting chance for higher paying careers.  The bill is AB 829 by Assemblymember Anna Caballero.  Unfortunately, the bill was amended to include offsetting revenue sources, a difficult circumstance during tough budget times.  But the vote on the bill shows that legislators want to put out the welcome mat for high wage employers.

Many in both the capitol and media circles have argued that companies aren't leaving the state and they often use that as carte blanche to oppose the removal of any barriers to conducting business in California -- including reinstatement of the sales tax exemption that our employers lost back in 2003.

I don't even care anymore about proving the decisions of current and potential California companies.    It's like arguing whether a last place basketball team is really the worst in the league - no offense to the Sacramento Kings.  It's not even an interesting question anymore, and a last place team needs to do only one thing - improve.   Yes California is beautiful ... no, California doesn't lose thousands of jobs daily to other states ... yes, we don't know the reasons for all of the decisions being made all over the country that don't include California ... no, the state won't crumble into the ocean ... yes we've lost more than 30 percent of our industrial base -- most of those 530,000 job losses coming before the recent economic recession.

Let's just fix the problem.  Everything starts with signals to manufacturers that this state wants these types of operations.

CMTA's president, Jack Stewart, issued a formal media statement today that summed it up perfectly:

"California has a chance to lead the world out of recession and into a prosperous future if we make economic recovery the front and center goal in the debate on how to solve the budget crisis. Only through private sector investment and new middle-class jobs, such as manufacturing jobs paying an average $65,000 per year, can California enjoy sustainable tax revenue growth to pay for important government services.  To do this we must capitalize on emerging and innovative sectors in new and traditional technologies and products."

The Sac Bee's Dan Walters wrote an entire piece this weekend on understanding California's woes and then called out "silly Republicans" for trying to understand certain reasons for migrations to Nevada.  That trip was meant simply to gather information going forward and the facts still proved a 2 percent growth in industrial jobs in Nevada during the same time California's sector plummeted by 28 percent.  No one ever said Nevada stole all our manufacturing jobs.  Eight legislators just wanted to ask some questions about what Nevada was doing right.  What everyone in that room found was that Nevada was actively hunting down business as a lifeblood of the state's success.

Even Gov. Schwarzenegger's administration has gotten in on the act.  Two weeks ago, Brian McGowan, the Deputy Secretary for Economic Development and Commerce at the state's Business, Transportation and Housing Agency wrote in the Capitol Weekly that California "remains a powerful magnet for business."  I challenge anyone to find two companies that are exploring growth options that agree with that statement.

If we were a powerful magnet for employers, a $21 billion deficit wouldn't be sitting on every Californians doorstep today.  This brings me to a formula that we should all understand going forward after yesterday's iniative failures:
    Take the state’s annual budget and divide that by the state population.  That gives you the per capita number for running the state:  Basically divide $132 billion by 27 million working age people and you get $4,888 per person.

    Then look at the per employee tax revenue of a manufacturer. This is all the taxes the company pays in the state (divided by the number of employees) plus the taxes an employee pays.   I asked one of our member companies for their sample numbers.  Basically their per employee tax revenue amounted to $19,255 per year, which does not include the taxes their employees pay on an average $60,000 salary.  Compare that to the revenue the state generates from the service sector that pays far less tax revenue overall and a wage that is, on average, $20,000 less.
At that point, removing barriers for manufacturing growth becomes an obvious step in the right direction for the state.

Like Walters said in the end of his piece, we should solely pay attention to our future.  Agreed completely.  Then one must ask what we want to look like in 2 years?  For many reasons, we want Californians making more money, the state producing and selling innovative products, employment numbers growing and a budget balanced to pay for bold government programs.   Making us a "powerful magnet" for the next wave of innovative products will get us there.  Global recession or not, California will be in a better place.

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