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California's MFG is big but growth is small

Posted by Gino DiCaro, VP, Communications on Feb. 5, 2015

Last week Dan Walters wrote a piece depicting the enormity of California's manufacturing sector, using a recent 2012 Census Bureau report, which prompted tweets like the following:
GO-Biz (@CAGoBiz) 1/27/15, 14:54 FACT: California has twice as many manufacturing firms as the next closest state, TX. @sacbee
Stockton Buzz (@stocktonbuzz) California leads U.S. in manufacturing jobs… #stockton #lodi #los angeles #jobs #manufacturing census via @cvbtnews
California is the most populous state in the country. The fact that we have the most manufacturing is not a surprise. The fact that we aren't growing as fast as the rest of the country is a surprise and a problem.
We are still hovering around one percent manufacturing job growth since the recession, while the rest of the U.S. is close to 7 percent growth. In 2013, we had only 1.5 percent of the country's manufacturing investments. With a state that has about 11 percent of the U.S. population, we must attract more manufacturing.
If we want to be a model for the rest of the country we need a growing number of innovative and energy efficient manufacturers to scale up in California and create middle class jobs. At the very least, we need to attract manufacturing at the same rate as the rest of the country.  It's not just Texas either. States like Indiana grew their manufacturing job base by 19 percent since the recession.
Things have improved no doubt. The Go-BIZ team recently touted 56 new investments (many of whom are manufacturers) as a result of Governor Brown's "California Competes" incentives. We've also seen an uptick in overall manufacturing investments in 2014. We won't know the final numbers for another month, which we will publish here, but California appears to be moving in the right direction. However there is so much work to do to catch up to the rest of the country.
Walters and others are correct to tout our state's large manufacturing industry but our manufacturing size does not equate to the rest of the country's recent growth. With wage inequality growing in California, it is even more important that California re-doubles its efforts to help manufacturers compete and invest and grow the largest manufacturing state in the country.

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California opinion leaders say 'Lead in a smarter way on energy policy'

Posted by Gino DiCaro, VP, Communications on July 25, 2014

California wants to lead in everything. We should. We have abundant resources. We have a large pool of talent to innovate new products. We have the eighth largest economy in the world. We have capacity to scale up and make our products here and improve middle class opportunities exponentially.

Because California wants to lead in bold initiatives meant to get the rest of the country to follow, we must also lead in the smartest possible way.

California's most significant and groundbreaking initiatives include policies to reduce our dependence on fossil fuels. The rest of the country is watching. We have the highest renewable portfolio requirement, the first economy-wide carbon cap-and-trade system, the lowest carbon fuel standard and numerous other California-only policies that come at a price. We don’t have an energy plan that seeks to integrate these policies in a cost-effective and technologically feasible manner. In other words we aren't leading, we're implementing laws, closing our eyes, and hoping ... and now the word is getting out about mounting cost increases. Those spikes will be felt in the entire state economy, for our manufacturing sector that lags the country in growth, but also among our poorest consumers who need to buy essentials and depend on a future with higher wage jobs.

The lack of a well-implemented statewide energy plan to control costs is bubbling up among opinion leaders, including three previous governors. We thought we’d make sure we highlighted the recent pieces here:



Governors George Deukmejian, Pete Wilson and Gray Davis 
Comprehensive energy plan must balance environment and economy
Sacramento Bee, July 13, 2014

Energy, the economy and the environment – the three are inextricably linked. Energy prices impact the economy, but energy production impacts the environment.

This important interrelationship was understood to be fundamental to the formation of energy policy when each of us served as governor of California. It was true then, and it is true now. Because of this, effective energy policy in our state requires a careful balancing of coequal economic and environmental interests.

Perhaps no one appreciates the challenge of achieving this balance more than we do. As three former governors, each of us had to grapple with tough issues during our tenures, and our collective experience includes lessons learned from energy policy decisions. Based on this experience, we believe that California is at a pivotal moment when a long-term energy strategy is urgently needed – especially if California hopes to increase its economic competitiveness while achieving its clean energy and environmental goals.


Daniel Oaxaca — Founder and Executive Director at the San Gabriel Valley Conservation Corps
Striking a Balance Between Protecting Our Environment and Rebuilding Our Economy
San Gabriel Valley Examiner, July 23

Teaching today's youth to care for the environment will go a long way in building healthy communities. Likewise, creating a business landscape with job opportunities and economic growth is the platform from which our youth can become strong, independent, responsible citizens. Both environmental and economic priorities must be pursued equally in order to ensure prosperity for future generations in California.

The San Gabriel Valley Conservation Corps (SGVCC) holds a unique role in influencing the lives of disadvantaged youth, and we are committed to creating a balanced economic and environmental approach toward improving quality of life. You can't have one without the other, but we are seeing state policies that are more and more dismissive of their economic consequences.


John Husing -- Chief economist of the Inland Empire Economic Partnership
Op-Ed: Economics & Politics, Inc.
Redlands Daily Facts, June 16

Clean energy is golden for the local economy” (June 12) shows a misunderstanding of my research for the Inland Empire Economic Partnership on poverty, public health and regulation and underscores our difficulty in addressing the catastrophic fact that 800,000 Inland residents now live in poverty (19 percent) including 26.5 percent of our children.

It enunciates the widely held view in upscale communities that public health lies in continued aggressive regulation to create an ever-cleaner environment. However, that was not the conclusion of over 1,000 public health professionals and concern citizens who just spent 18 months establishing San Bernardino County’s public health direction. For them, education and poverty topped their priorities. Air quality did not make the list.


Dan Walters -- Columnist
Senate passes bill to make electricity even more expensive
Sacramento Bee -- June 9

There are probably a few people living off the grid in the backcountry of California, but the other 38 million of us depend on our local utilities for electric power. That makes us stakeholders in how that energy is produced, distributed and priced – the latter accounting for many, many billions of dollars.

One would think that the nearly universal experience of buying electricity – not to mention its indispensable economic importance – would make politicians reluctant to mess with it.


San Diego Union editorial
Climate plan faces new challenge: Gas prices
San Diego Union Editorial, July 16

Fear of a gasoline price spike is creeping into Sacramento as California’s gasoline and diesel producers prepare for the first time to pay for the air pollution their products create.

State clean air regulators are getting ready to extend a cap on greenhouse gas emissions to motor fuels in the transportation sector on Jan. 1, 2015. Fuel producers are likely to pass on costs for acquiring necessary pollution allowances to consumers at the gas pump, though at what price is uncertain.

That has led some state lawmakers to seek a delay, in the name of protecting low-income communities in the Central Valley and Los Angeles Basin. Breaking party ranks in an election year, 16 Democrats are seeking a three-year delay on expanding cap-and-trade.


Little Hoover Commission hearing
Rewiring California: Integrating Agendas For Energy Reform.
April 24

The hearing on April 24th in front of the Little Hoover Commission focused on issues raised by LHC’s report, “Rewiring California: Integrating Agendas For Energy Reform.” Three panels provided updates and information on energy planning and governance issues in the state. There were representatives from the California Energy Commission, Public Utilities Commission, and California Independent System Operator, as well as Rob Lapsley, president of the California Business Roundtable on behalf of CARE (Californians for Affordable and Reliable Energy), and Professor Severin Borenstein, director of the University of California Energy Institute at Berkeley, among others.


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Walters nails it on education

Posted by Gino DiCaro, VP, Communications on April 22, 2009

Yesterday, I wrote about how Dan Walters missed the mark on California's job woes.  Today, Walters nailed it on education.  He all but declared California's recently imposed high school exit exam a failure and the continued one-size-fits-all education system a serious threat to our children and workforce.

This blog and the many manufacturers it represents (along with the emerging torch bearer for the state's career technical education needs, the Get REAL coalition) gives equal respect for all students' dreams by demanding non-discriminatory educational resources to attain those dreams.  A mantra that has fallen flat in California's $60 billion education community.   That notion is substantiated by the fact that, over the past 10 years, high school dropouts have increased by 27 percent (reaching annual dropout rates around 35 percent) while crucial and inspiring technical courses have declined by 20 percent (and 50 percent over the last two decades).

Career technical education is often referred to in a positive light by the media and policymakers.  In fact there have been 253 CTE related bills introduced between 2000 and 2008, but take a look at recent policies and a few comments  during the continued CTE devastation.   Bottom line - rhetoric is getting our students nowhere in an education system that continues to grow in a one-size-fits-all manner.

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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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