Viewing blog posts written by Jack Stewart

Proposed labor bill could backfire on safety, costs and jobs

Posted by Jack Stewart, on Aug. 30, 2013

California’s manufacturers place a high premium on a skilled workforce that produces world-class products while protecting their safety and the safety of their neighbors in the surrounding community.  So we are understandably alarmed by legislation that would not only put that safety at risk, but create an unprecedented mandate that would fundamentally alter the ability of private businesses to make critical hiring and compensation choices.

SB 54 (Senator Loni Hancock) is just such a bill.  It purports to be about safety but in fact could increase risks, displace highly skilled workers with excellent safety records, and remove the flexibility of employers to hire the best available workers.  SB 54 would establish arbitrary training requirements that would force refinery and petrochemical facilities to choose a large percentage of their workers from the membership of a single union, and to pay those workers government mandated wages.

In the case of the refining industry, California’s 14 facilities will be limited to far fewer qualified workers for essential projects that directly impact the safety of a facility and its surrounding community.  SB 54 impairs those employers’ ability to select their contractors on the basis of their expertise, experience, actual safety record, risk and safety management compliance and workforce training and availability.  SB 54 will materially increase payroll costs that likely would be passed on to consumers. As the first such law of its kind, SB 54 sets the stage to do real damage to the state’s economy just as we’re beginning to recover from one of the worst recessions in history.

The bill will displace, according to the United Steelworkers Union, up to 10,000 highly skilled and experienced workers for no cause other than that they belong to the “wrong” union.

Any manufacturer will tell you this is not a small matter of inconvenience for the targeted employers – it’s a recipe for an array of unintended consequences in terms of safety and consumer costs.  And it’s made even more frustrating because SB 54 is entirely unnecessary to improve safety. Thankfully, there is a common-sense alternative to SB 54.

In the wake of last August’s Richmond refinery incident, the Governor formed an Interagency Working Group on Refinery Safety, charged with strengthening emergency preparedness and improving worker and public safety through increased oversight. 

The Governor’s Working Group is already making good progress in tightening up monitoring and oversight, and in increasing the penalties for violations of safety, health and environmental regulations.  California’s refining industry boasts one of the best safety records in the nation. It makes sense to start a conversation about safety reform with solutions that build upon and improve standards rather than displacing thousands of workers, raising the cost to produce a fundamental energy source, and establishing a mandated wage precedent statewide.

California manufacturers are distinctively proactive when it comes to issues of safety, and look forward to working with the legislature and the administration in a thoughtful process to improve safety. SB 54 works in direct conflict with that goal.  In the interest of safety, cost, and fair employment practices, SB 54 must be defeated. 


(You can sign the petion to stop SB 54 online here)

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Paying attention to manufacturing in California

Posted by Ashley Hong, Policy Intern 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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Three decades of CA manufacturing investment

Posted by Gino DiCaro, VP, Communications on Nov. 4, 2011

A look back at three decades of new and expanded manufacturing facilities in California leaves us scratching our head.  What's the state's next big game changer?  Our investment highs this decade equal our lows of the 80's and 90's.

The aerospace and information technology ramp-ups in the 80's and 90's were mostly based on innovation, a competitive state business climate, viable markets and a sufficient statewide talent pool, as well as some nice weather.  Those manufacturing upsurges created economic spillover effects in other manufacturing sectors and service industries, as well as massive footprints in the economy.  Many of those manufacturers still exist and helped sustain our economy through bad times.

This is specifically what we need now.  What will the game changer be? Who will be making the investments in California? (You'll see in CMTA's "Why not California" blogs that the climate is not conducive to growth). In previous decades, winners and losers weren't chosen by California government. Sectors and companies were built through hard work in a state where they could compete and supply products to realistic mass markets.

This chart is a look backward, but our future is much more critical.  Where will the new facilities and investment come from?  The state is uncompetitive with an increasing amount of California-only policies, and our skilled worker pool is shrinking fast.

The state should play a role in our growth, but that role must encourage all new investment opportunities, not hurt other investments for the gain of a few.  That's not how we grew in the 80's and 90's.


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