Viewing blog posts written by Gino DiCaro

California awakening

Posted by Gino DiCaro, VP, Communications on Nov. 19, 2009

State policymakers are beginning to understand -- or at least face the realities of -- a fundamental reason for California's job loss and now a 3-year $81 billion budget deficit.  Basically we pass laws and move on to new ones and call it success.  Texas on the other hand -- a state that congregates its legislature in only odd years and requires a 2/3rds majority on every bill -- created 70% of the new jobs in the United States in 2008 and has a $2 billion budget surplus this year. 

I offer the following 3-week timeline of completely independent events and tidbits -- a syllogism if you will -- as a picture of evolving realizations of California's problem, as well as some minimal-cost concepts that are gaining traction. 

October 22

    » Treasurer Bill Lockyer testifies that two thirds of California bills shouldn't see the light of day and begs the Legislature to recognize the severe degree of dysfunction as it pertains to California's dire situation.

October 30

    » Trends magazine contrasts California vs. Texas and predicts whirlwind backlash and decline in the Golden State

November 1

    » The Milken Institute 2009 index shows California is 42 percent more costly than Texas in business taxes (TX is actually 27 percent below national average).  There is also a large disparity between wage and electricity costs, and their index does not even take into account regulatory costs.

    » The Milken Institute also comes out with top-performing cities index that shows four Texas metropolitan areas in top 10.  California had none in Milken's top 25.

November 4 (blog date)

    » SMA solar manufacturing locates in Colorado.  (another lost "green" opportunity to help back-fill 590,000 lost manufacturing jobs in California).

November 12

    » Attorney General Jerry Brown pronounces that California is over-regulated.

November 16

    » Harvard Business School blogs that manufacturing drives innovation (important for a state intent on innovating and leading the "green" economy).

November 17 (Senate Labor & Industrial Relations Committee)

    » Cal Portland Cement CEO, Jim Repman, testifies on closing a 100-employee facility this Friday, November 20, as a result of regulations, costs and uncertainty.  Invites Sen. Mark DeSaulnier to come see one of the Cal Portland facilities.  Key Repman quote:  "A cement plant cannot be picked up and moved, but the next new plant probably won’t be built in California meaning more good, high paying manufacturing jobs will be lost to Nevada or China or somewhere." (download testimony)

    » Vulcan materials' Angela Driscoll testifies that duplicative regulations and uncertain future costs are hurting their ability to compete. (download testimony)

    » NFIB's Michael Shaw testifies on dire situation for small businesses and the importance of streamlining regulations so they can return to creating jobs and growing the California economy.

    » CMTA's Dorothy Rothrock testifies on opportunity lost for $5 billion in income tax revenue as a result of declining manufacturing base.   Then provides minimal-cost oversight options to address California problems.  Basically analyze existing regulations for economic impact along with some other thoughts.  (download testimony)

    » Rothrock also floats "80/20" concept.   80 percent of our time should be focused on existing law impacts on the economy and jobs.  20 percent on new laws.   (I bet Lockyer loves it! See video link in Oct. 22 item)

    » State Senator Mark DeSaulnier supports oversight concepts, promises to continue to address our dire job situation and tries to find time to join Repman this Friday when he has to close his Colton facility.

November 18

    » LAO says California is in another gaping $21 billion hole.

    » Senate President pro Tem Darrell Steinberg released the following statement in response to the Legislative Analyst Office’s fiscal outlook report: "The numbers cry loudly for California to focus on rebuilding our tax base. The only tried and true way to do so is to use our fiscal levers to increase the number of high wage jobs (editorial note: insert manufacturing). Putting more people to work earning decent wages will help overcome our deficit. We need to protect our schools and universities, so as we create high wage jobs (editorial note: insert manufacturing) we produce a workforce able to fill them."


0 comments | Post your comment

Why Not California #10 - Colorado gets solar manufacturer

Posted by Gino DiCaro, VP, Communications on Nov. 4, 2009

Last week, German-based SMA Solar Technology announced it would open a manufacturing facility in Colorado, spend approximately $22 million on it's first non-European site, and hire 300 to 700 Denver workers starting in 2010.  It should be noted that Colorado is listed among the top five states to do business according to Forbes magazine and CNBC.

It was rumored that many states were in the running for SMA -- a company that makes components that integrate residential solar panels with electrical grids.  For a state with a "Million solar roofs" policy, I'd like to know what California did to court this company.   Why didn't they receive the same treatment as Tesla motors with a sales tax exemption on capital equipment or something similar to attract their impressive operation?

Colorado has now landed at least 300 high paying manufacturing jobs that will contribute to its growth and emergence from the national recession, while California continues to pass environmental policies on the notion -- not economic analysis or proof -- that the environmental frontier exclusively creates jobs and helps the economy. 

The state legislature regularly implies that businesses aren't moving out of California but they say nothing about the 589,0000 lost manufacturing jobs from the state - the largest percentage decline of any state in the U.S.

This SMA announcement, and so many others, indicates that our problem is getting worse.   We aren't taking advantage of the limited opportunities that exist to bring high-wage job creators to the state, never mind the ones we're leaking.

The Milken institute put out its 2009 California business costs last month and indicated our taxes, wage burden and electricity costs are 15, 13 and 33 percent higher than the national average respectively.  This doesn't even take into account the regulatory uncertainty and costs foisted upon our manufacturers.

In the same week, Time magazine wrote a cover-article titled "Why California is still America's future."  A piece which I'm sure will be twittered, e-mailed, used as more proof of California's perpetually automatic success, and most certainly go uncontested.  The word "manufacturing" is not used once in the 3,200-word piece, which highlights a few impressive innovators in the state and boasts about California being the "cutting edge of American future -- economically, environmentally, culturally and maybe politically."  Huh?

California's pioneers and innovators are integral to our success but "innovation" has become the ultimate buzzword for enlightened prosperity.   Never mind the thousands of people who put stuff together, work hard and make a family budget.  These workers are subconsciously devalued by our lack of interest in their jobs, wages and employers.

Time magazine's print version had the following pull-quote from a genomic pioneer about his reasons for operating in California, "This is the most dynamic place for change on earth.  That's why we're here.  It is pretty nice not to have to wear pants."

Manufacturing employees from Opti-Solar (the recent California solar manufacturing facility that shuttered most of its operations) don't care about the length of their pants or that California is dynamic.  They want a job to pay their mortgage!

Get out and talk to manufacturers in California and abroad.  We're losing!!!  Our manufacturing employment is at a decades-long low.   Manufacturers are revenue machines for state government, and California will likely face at least another $10 to $15 billion deficit next year.   There are so many issues for policymakers to start with: high electricity rates, regulations with no regard for economic impact, growing unpredictability.  All issues that could be fixed with little to no money.

I've said it before and I'm going to say it again: Manufacturers are good actors bringing in high salaries, incredible benefits and producing the technologies, products and innovation that drive a regional superpower and its economy.  These are employers who should be courted at every turn, not left to ponder their future based on their close vicinity to the Pacific Ocean, a few Universities and workplace wardrobe.

1 comments | Post your comment

Manufacturing STILL Matters in California

Posted by Gino DiCaro, VP, Communications on June 24, 2009

This week the Milken Institute released a study that shows California has long neglected a segment of its economy that is critical to economic growth.  Let's face it, California's business climate problems are as big and bold as its current budget morass.  We must seek out, promote and value our champion industries of economic growth.   According to the report, "California is the only one among its peers to lack a comprehensive long-term economic strategy."

The study takes an in-depth look at California's manufacturing decline compared to competitive "peer" states, simulates what the state would look like if it had maintained 2000 levels of manufacturing, explains the massive economic benefits and ripple effects from high and even low wage manufacturing, assesses the challenges of manufacturing in California and makes some recommendations to make California manufacturing more competitive.

Here's a key breakdown of the 94 page report:
  • California's economy was built on manufacturing
  • California's manufacturing decline is a virtual "canary in a coal mine" of things to come in our overall economy
  • California is NOT living up to its potential
Among the many key findings:

The state would have seen $54 billion more in output if we would have maintained the same manufacturing share of our total workers that we had in 2000 (12% share).

California is not winning.  Manufacturing's share of GSP is far outpaced by competitor states, according to the report.

Lower wage sectors are growing while high wage manufacturing continues its precipitous decline.

Do the math on the statistics and the state's revenue situation could have looked so much better.

As the State Legislature debates a budget today, the state's focus on one of the largest wealth creators for our workers and our state government should at least be widely agreed upon as a place to start for a long-term strategy for economic recovery.

Policymakers and media often say (and assume), "it's California, we'll be fine."  CMTA president Jack Stewart's quote during a report discussion yesterday provides a perfect retort, "California has the capacity to innovate and make things but it is not at all living up to its potential."  Pamela Kan, President of 53-employee Bishop-Wisecarver in Contra Costa County agreed, "This report is a wake up call to California's policymakers that we need a focused manufacturing strategy in the state to retain and grow the nation's most coveted producers."

In other words, manufacturing still matters but California's unintended push to make it matter less is going to hurt if we don't turn it around and leverage California’s most precious and wealth creating asset -- the ability and capacity to make things.

CMTA Key Findings of The Milken Report: Manufacturing STILL Matters (2 pages)
Milken Institute Report: Manufacturing 2.0 -- A More Prosperous California (94 pages)

0 comments | Post your comment

Copyright © 2019, California Manufacturers & Technology Association. All rights reserved.