Viewing blog posts written by Gino DiCaro

Where's the beef? Can venture capital save California?

Posted by Gino DiCaro, VP, Communications on May 19, 2010

How many times have you heard something like the following in response to the state's job decline and overall economic implosion?

"But California is the venture capital of the country."
"But we have so much cleantech investment, we're going to lead the country."

Venture capitol is good.  Cleantech venture capitol is good.  High wage job creation is IMPERATIVE.  Do the first two equal the latter?  See for yourself.



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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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Optimism (and employment) wanes for California's future

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

California plunged again last month in high wage manufacturing employment by 2,300 jobs.  The national media continues to single out California, using it as a narrative blueprint for how to overwhelm a once-thriving state economy, and almost dares anyone to bet on California's recovery.

For these and many other reasons this legislative session could be the most important year of decisions in the state's 160-year history.  Policymakers are no doubt giving lip service to ground zero -- growing jobs and the economy --  but there is little precedent in California for climbing out of such a monumental hole.

The following chart and media excerpts should inform the discussions when decision (and vote) time comes.  Gov. Arnold Schwarzenegger made job creation a priority in his State of the State address but as CMTA president Jack Stewart said, "The Governor was right that job creation should be our number one priority and we applaud his commitment. However, we don't share his optimism that the worst is over for the California economy and that we are well positioned to take advantage of the future."  (full statement)


Employment Chart

Some recent national and other media coverage on California:

»Investor's Daily
California Should Copy Texas
"While Gov. Arnold Schwarzenegger worries about rising seas, his state sinks below the waves. Don't mess with Texas, they say. But California and the nation could follow its lead.
Full article

»Washington Examiner
California is overregulated, overtaxed, and just plain over
"Today, California is a by-the-numbers state tragedy. Unemployment is higher than 12.2 percent as of September. Business costs are almost 23 percent higher than other states on average. Migration out of the state is at an all time high. A map by United Van Lines shows a strong demand for moving trucks as residents leave California for other destinations, particularly Texas."
Full article

»New Geography
A Milestone on the Road to Becoming a Third-World Economy
"Southern California is starting to look a lot like a third-world economy, service based, inequitable, serving a wealthy, mostly aging few, with little opportunity for younger workers and a large underclass. Changing the region’s prospects will be very difficult. Nothing short of a major generational change in leadership is likely to change the current sad trajectory."
Full article

»New Geography
How California Went From Top of the Class to the Bottom
Today, California’s economy is not vibrant and growing. Housing is not affordable. There is little opportunity. Inequality is increasing. The state’s schools, including the once-mighty University of California, are declining. The agricultural sector is threatened by water shortages and regulation. Its aging, cracking, highways are unable to handle today’s demands. California’s power system is archaic and expensive. The entire state infrastructure is out of date, in decline, and unable to meet the demands of a 21st century economy.  Indications of California’s decline are everywhere. California’s share of United States jobs peaked at 11.4 percent in 1990. Today, it is down to 10.9 percent. In this recession, California has been losing jobs at a faster pace than most of the United States. Domestic migration has been negative in 10 of the past 15 years. People are leaving California for places like Texas, places with opportunity and affordable family housing.  California’s economy is declining. Those of us who live here can all see it. Yet, Californians don’t have the will to make the necessary changes. Like a punch-drunk fighter, sitting helpless in the corner, California is unable to answer the bell for a new round.
Full article

»Las Vegas Business Press
Some of the city's best-known business leaders sound off about the coming year
"Once California companies can afford to move, they will move in droves due to the even worse business climate in that state."
Full article

»New York Times
Schwarzenegger Presses U.S. for More Aid for Needy California
"Administration officials, in preliminary discussions with state lawmakers and other Sacramento officials on how to close a projected $20.7 billion deficit, were pledging to push hard for as much as $8 billion from the federal government."
Full article

»Rasmussen Report
55% Say Better for California To Go Bankrupt Than Be Bailed Out
Full article

»Americans for Prosperity's Common Sense video
12 policies where common sense was missing in California
You tube video

»Bakersfield Press
Talk won't undo years of bad decisions
"Bad decisions made in Sacramento in recent years help explain why California's prospects for a timely economic recovery are looking considerably worse than that of other states. Those decisions also help explain why California is the most expensive place in the nation to do business."
Full article

»San Bernardino Sun - opinion by business owner, Joseph Brady
State regulations choking businesses
"I believe that the state of California is at a major crossroads. I believe that we have members of the Legislature who have never operated a business, made a payroll or taken a risk."
Full article



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Why Not California #8: More solar companies producing elsewhere to sell to California

Posted by Jack Stewart, on March 3, 2009

It looks like Tennessee just attracted a $1 billion solar manufacturing facility and 500 accompanying jobs from a German solar firm, Wacker Chemie, and an Associated Press story hints that the Volunteer state put up a $50 million incentive package to recruit the high-wage company.  This news adds to a previously announced $1.2 billion investment from another solar firm, Hemlock Semiconductor, looking to produce solar products in Clarksville, Tennessee.

Why is it that little old unsophisticated Tennessee can attract $2.2 billion in solar power investments and the home of solar and other green power mandates can sit and watch its unemployment numbers skyrocket to the country's third worst rate - 10.1 percent - and leave behind an economy-altering number of manufacturing jobs?  Didn't Gov. Arnold Schwarzenegger and then-Assembly Speaker Nunez promise that California's global warming mandate would create tens of thousands of new green jobs in the Golden State?  And didn't the California Air Resources Board in its economic analysis of AB 32 say that "implementing the recommended measures will have an overall positive impact on economic growth in California"?  Peer reviews shot many holes in the analysis and disputed AB 32's "riskless free-lunch" and now we've seen states such as Tennessee, Oregon and Nevada begin to attract these very high-wage manufacturing jobs and create hundreds of green careers for their working families.

Could one of the main answers be that business costs are so high in California that we will never see significant green investments; that workers in other states will be the chief beneficiaries of California's environmental mandates and that California's brightest and best are fleeing to states that put a high priority on economic growth?  The latest cost of doing business survey by the Milken Institute finds that operating costs for California manufacturers are 38 percent higher than for their competitors in Tennessee.  Is it any wonder that investments in industries that create high-wage jobs routinely bypass California?

Just look at California's record of job destruction over the past eight years.  Since January, 2001 California has eliminated 730,000 private sector jobs with an average salary of $69,000.  During that same period, California created 763,000 new private sector jobs that average only $43,200 per year.   It's time to wake up and take a whiff of the smelling salts.  This isn't working.

While we may want to gloss over theses disadvantages, bury our heads in the sand and believe that new business will come to California because of our sunny skies, beautiful scenery and a green commitment; the fact is that unless the Governor and Legislature deem improving the business climate to be as important as fixing the state budget and reducing greenhouse gas emissions, they should stop fantasizing about California leading the nation in new technology jobs and send Tennessee Governor Bredesen our congratulations and best wishes.

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California's budget and dangerous economic waters

Posted by Jack Stewart, on Feb. 4, 2009

During the first eight years of this decade, California has done an absolutely marvelous job of creating growth in government.  According to the Employment Development Department (EDD), there are 184,500 (8%) more employees on the government payroll than on January 1, 2001.  Over those same eight years, private sector employment is up only 33,600 (0.2%).  This means that the public sector accounts for 85 percent of the overall growth in California over the last eight years.  If you look at the chart below, it's obvious, given our state's trend, that the revenue "generators" can’t support the revenue "users" and a swelling government.

I sometimes feel like Roy Scheider in "Jaws" after seeing the shark for the first time.  Remember that?
    Captain: "Well, what do you think?"
    Roy Scheider:  "I think we’re going to need a bigger boat."
In this case, the boat we need is a thriving private sector with a growing economy, and we need it now.  California cannot sustain the nation's largest and most costly state government without a vigorous private sector.

As astonishing as the aforementioned numbers might seem, they are only part of the story.  EDD provides data that allows CMTA to track total employment and wages by 19 specific industry sectors.  For example, the average wage in the manufacturing sector is $64,220 per year while the average wage in the health care & social assistance sector is $48,256.  The manufacturing sector has seen an inordinate decline of 473,500 lost jobs while the health care & social assistance sector has seen the largest increase in jobs, with government running a close second.

Overall, the declining job sectors have seen a loss of 730,000 jobs with an average annual wage of $69,000, while the job growth sectors account for 948,000 new jobs with an annual wage of only $45,500.  Who could possibly be happy with these results or argue that these numbers are good for California’s workers?

Not included in this data are the recent layoff announcements we've read about in the media, such as Boeing, NEC, Home Depot, OptiSolar, etc.  Here's a sampling of layoffs -- not "furloughs" -- that were scheduled in the private sector for January and February, according to California's EDD WARN statistics:

  • Adobe Systems Incorporated -- San Francisco, Layoff date: 2/3/09, Employees affected: 75
  • Cadence Design System, Inc. -- San Jose, Layoff date: 1/4/09, Employees affected: 245
  • National Semiconductor Corporation -- Santa Clara,  Layoff date: 1/13/09, Employees affected: 151
  • Palm, Inc. -- Sunnyvale, Layoff date: 1/19/09, Employees affected: 107
  • Sandisk Corporation -- Milpitas, Layoff date: 1/11/09, Employees affected: 96
  • Seagate Technology LLC --Milpitas, Layoff date: 1/3/09, Employees affected: 48 -- Milpitas, Layoff date: 4/3/09, Employees affected: 43
  • Shutterfly, Inc -- Hayward, Layoff date: 1/16/09, Employees affected: 70
  • Sun Microsystems, Inc. -- Menlo Park, Layoff date: 1/5/09, Employees affected: 19
  • Symantec -- Cupertino, Layoff date: 1/19/09, Employees affected: 55 -- Mountain view, Layoff date: 1/13/09, Employees affected: 38
  • The Boeing Company -- Huntington Beach, Layoff date: 1/1/09, Employees affected: 19 -- Huntington Beach, Layoff date: 1/22/09, Employees affected: 42 -- Long Beach, Layoff date: 1/1/09, Employees affected: 50

As Governor Schwarzenegger and the legislative leadership continue their negotiations to close California’s gaping $42 billion budget hole with a combination of tax increases and spending reductions, it might be a good time to consider a strong dose of economic stimulus targeted at private sector job creation with a nod toward the high wage sectors.

Last week, the California Manufacturers & Technology Association, along with 17 other business associations, released a package of stimulus proposals that will begin the arduous task of growing private sector jobs.  We want to build a bigger economic boat to address the dangers that have been circling California's economy and working families for eight years.

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