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Dan Walters misses what's important in California Economy

Posted by Gino DiCaro, VP, Communications on April 21, 2009

The Sacramento Bee's Dan Walters opined on Monday that there is no evidence of job-migration out of California and generally that any concern over our business climate is unfounded.  He focused on the following two points:
  1. A 2008 PPIC report that found limited amount of job migration out of California. 
  2. The notion that California's business climate is unchanged from many years ago when the state experienced an economic boom.  I assume he meant the 90's.
At this blog, we focus on the massive opportunities that come from high paying manufacturing jobs for workers, the economy and the state budget -- and how manufacturing employers can succeed in California.  It should always be noted that a manufacturing wage pays approximately $20,000 more than a service job and provides the needed tax base for bold state government programs.  Here are three facts that should be considered in response to Walters' piece:
  1. The PPIC report did not account for decisions being made NOT to come to California (only decisions from companies already existing here).  A key component to backfilling the 528,000 lost manufacturing jobs since 2001 is the myriad of siting decisions being made across the country, where we don't even know if and when we dropped off a company's list in the first place.  Anecdotal information says too many companies decide to forgo the risks of costs and uncertainty in California and the trend does not look good.
  2. Data indicates that California manufacturing job changes since 2001 are worse than all of its western competitor states:

  3. Among many, there are two very significant policy shifts that do not reflect Walters' argument that the business climate remains unchanged since the 90's boom, at least for high wage manufacturing:
    • The expiration of the Manufacturers Investment Credit in 2003 made California one of only three states (with Wyoming and South Dakota) that tax capital manufacturing equipment purchases, yielding an even higher tax burden than the rest of the country.
    • The passage of AB 32 and the ongoing regulatory efforts have created prodigious amounts of uncertainty for any manufacturer looking to grow or site in California.

Policymakers and the media need to divert themselves away from disproving job migration and start zeroing in on what helps the private sector -- especially the high wage portion -- flourish in California.  That's what Nevada is doing ... and Assemblyman Dan Logue -- who Walters admonished for creating a "media stunt" -- is taking a few hours to understand their policies and their success.  That can't be a bad thing.

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Hurry-up, California: Fix all of our problems with green directives

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

I recently watched an employer focus group unfold.  An executive was asked, "Is there anything positive about conducting business in California?"  The employer replied, "Yeah, investment barriers to new competitors in California."  Another respondent replied without hesitating, "There is no way we would invest anything more in California."

These realities play out in so many ways -- notwithstanding California's tremendous quality of life advantages -- while so many unfounded and rushed policy directions tip economy-altering board room decisions against our working families.

We live in a state that is pressing greenhouse gas emissions standards with no understanding of costs to business and consumers.  We are constantly barraged with messages about hurrying our state's clean tech efforts, as if our existing efficiencies count for nothing and our competitive position is irrelevant.  We ignore studies like a Berkeley report on biofuel carbon footprints that argues a larger carbon leave-behind than fossil fuels -- an example that underscores the spectrum of the unknown in these arenas.   There is so much to learn about how new alternative fuels, energy and processes affect our costs and the environment.

We get it though, California, we get it.  Hurry up, right?

Many policymakers and issues leaders at the forefront of green policies don't understand that manufacturers and other employers want the state, along with their own businesses, to succeed.   But we also live in the realities of competition.  We don't just set up markets and watch them run.  As an example, and on a much grander scale, take Russia and China after ending communism.  Did they become 3 billion new customers or competitors?  This brilliant Reuters article explains why it was more of the latter.  Basically competitive position counts more than anything and these positions are tighter than ever .... everywhere.
Countless California Capitol discussions these days include a virtual fly-by of emerging green products and technologies as the primary savior for the state's still-growing budget and jobs calamity as well as our reportedly short environmental time curve.  Both of which perpetuate a hurry-up attitude, much like the one seen in this SF Chronicle article on a recent global warming conference.   Ugh, this is so dangerous and far too easy to pass the buck to policymakers and regulators - who in turn will get re-elected and praised in the short term because they have done their job by simply passing stringent and unaccountable mandates.  We need to start with what we know -- all of us.  And unfortunately there is far too much of that to argue even a hint of economic salvation from most of these blind green mandates.

Put plainly, reality must measure up with our state’s green expediency.

Yesterday, Assembly Republicans announced a fact finding mission led by Assm. Dan Logue to interview companies that chose to operate in Nevada over California (California lost 28 percent of its manufacturing sector since 2001 while Nevada actually gained a small percentage).  They are doing this to understand what our legislature could do to grow not only jobs but high wage jobs in California.  An important move no doubt.

On our end here at CMTA we are working hard with the Milken Institute on a follow-up study to a 2002 Manufacturing Matters report.  Likely titled "Manufacturing STILL Matters", we will release the study in mid-2009 as our collective offering of "What we know" about how a manufacturer survives and succeeds in this great state.    This and our bolstered efforts on our "Why Not California" campaign should be two pieces of many in the state's economic and environmental puzzle.

Another piece is CMTA's July Energy conference which will turn toward growing California's economy with affordable and technologically feasible green products.   Experts will speak to what is working and what isn't.  What we can afford and what we can't.

These and other centerpieces will be important chunks of knowledge for policymakers and the media in California's self-imposed race to the top. 


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