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Tipping point for California manufacturing investment

Posted by Gino DiCaro, VP, Communications on April 18, 2013

These days, it seems like states are figuring out how important manufacturing is to healthy economies.  The competition is picking up, as states move to reduce costs or create incentives for manufacturers.  After all, companies put investment capital in locations with the most attractive business climates.

This could be good news for California.  We have state-of-the-art advanced manufacturing facilities employing thousands of California workers. These companies could grow here if conditions are favorable. But there is one key issue that needs to be fixed if California is going to compete for its share of manufacturing growth.

A sales tax exemption on the purchase of manufacturing equipment is a policy most other states have adopted. This gives them a competitive advantage for their campaigns to grow high-wage manufacturing jobs. California had a similar tax rule, but it expired in 2003.  We could catch up by reinstating the exemption, which would put California back on so many lists for future investment and growth.  For many manufacturers, the sales tax exemption could be the 'tipping point' for a decision to invest in California.  

sales tax exemption

In the 1990's, when the tax credit was in place, California attracted on average almost 6 percent of the country's manufacturing investment dollars.   Manufacturing investment in California has now slowed to an average 1.9 percent of the country's, since that credit expired.

The credit helped Intel grow its wafer fabrication plant in Santa Clara and it helped Northrop Grumman grow in part  to more than 27,000 employees.  Because the exemption still exists in specific enterprise zones, it helped Fontana-based California Steel recently pay for a $100 million expansion.  Imagine if this powerful tool were available to every manufacturer again in California.

CMTA had its lobby day this week on the issue to start informing the legislature of the tremendous economic benefits, including new net revenues to the state.  Large employers, Intel, California Steel, Kimberly-Clark, International Paper, and Northrop Grumman joined to educate legislators why it is important to eliminate the tax on manufacturing investments.  

Economist, Bill Watkins put it perfectly last week when he urged the state Legislature to "Create an opportunity economy."  This manufacturing sales tax exemption would do exactly that and create the particular opportunity that California so badly needs.


(There are two sales tax exemption bills.  Assm. Kevin Mullin's AB 486 will be heard in Assm. Revenue and Taxation Committee on Monday, April 22 and Sen. Lou Correa's SB 376 will be heard in Sen. Governance and Finance Committee on Wednesday, April 24)

STE one pager |  Coalition letter in support





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Governor's 'advanced manufacturing' summit launches new California focus

Posted by Gino DiCaro, VP, Communications on March 29, 2013

Summit pics

California manufacturers are capable of meeting extraordinary challenges and can be the engine of job creation if they have the resources, skilled workforce, and long-term support of state and local communities.  This week, with a day-long Summit in Sacramento, the Governor's office took an important first step in launching a new focus on 'advanced manufacturing' growth in California.

The Summit's three panels made up of industry, workforce development professionals, research entities, and academic experts from universities and community colleges brought to the forefront a landslide of critical issues.

The Industry panel discussed the tremendous cost pressures and the fact that all manufacturing is in fact 'advanced' in California.  CMTA members Boeing and Bayer delivered essential input on those cost pressures.

The Academia and Research folks covered the difficulties of connecting the regions' needs to costly technical training and education programs, as well as the need for the technical training to start before college.

The Government Resource group shed light on the difficulties of training and attracting skilled workers to the small to mid-size and highly specialized manufacturers that make up a majority of California's industrial base.

You can watch the entire webcast here and read the key quotes below.

Following the discussions, the panelists and the audience broke into working groups to begin putting together potential action items for the state to grow our high wage 'advanced manufacturing' sector.  The lists were long but CMTA's Jack Stewart ensured the sales tax exemption on manufacturing equipment was listed and seen as a reform that could help the broadest number of manufacturers compete in the domestic and global market.
CMTA was pleased to be a part of a new commitment to grow high wage manufacturing jobs and fill them with skilled workers from our high schools, community colleges, and universities.  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, Kish Rajan will enjoy our continued support and participation as they take the next steps to create a short and long term action plan for California.
Following are some key quotes we (@cmta) tweeted during the March 27 Summit (from last to first):
GoBiz’ Kish Rajan in closing: We need to get CA in the pole position for the race for advanced #manufacturing.  #govcams
Community College’s Jose Anaya: hardest manufacturing jobs to fill = technicians. #govcams

LAEDC’s Bill Allen: There are significant cost challenges to #manufacturing in CA. We need partnerships to address this. #govcams
WIB’s Tim Rainey:  If you are a manufacturer not using ETP funds to train your workers, you should be thinking about it. #govcams
Tim Rainey: Avg age is 55 in #manufacturing. We need to rise to this challenge and provide skills to our younger generations. #govcams
WIB’s Tim Rainey:  CA is now made up more of small to mid-size manufacturers.  We need to listen to their needs. #govcams
Jose Anaya: It’s become very expensive to train students in manufacturing. We need help.
LAEDC’s Bill Allen: LA County has twice as many #manufacturing jobs than we do in entertainment (360k vs180k) #govcams
UC Berkeley’s Dornfield: Must have tight link between the comm colleges and universities to provide manufacturing skills #govcams
UC Irvine’s Gregory Washington:  I would highly encourage kids to follow the manufacturing path.  #govcams
Prof Dornfeld, UC Berkeley - academia must better connect with industry and CA needs #govcams
UC Irvine at #govcams:  Relationships between industry & universities need 2 be strengthened 2 deliver the skills that industry needs.
Dean Washington, UCIrvine  Universities develop articulation agreements w/ comm colleges to pipe students to engineering schools. #govcams
Dr. Chris Beyer, CSU Long Beach.  Students must find their passion, not just fill classroom seats.
Boeing: Other states are chipping away at CA mnfg base.  We may still be the biggest but we have lost a huge amount of ground.  #govcams
Boeing: I don’t think we have explained to our kids and students how gratifying it is to have a #manufacturing job. #govcams
Paul Geery, Boeing is biggest US exporter. #govcams
Bayer: We work with disadvantaged youth 2 educate them on biotech process. We hired several people out of that program. #govcams
Gene Russell, MANEX, California's first step must to preserve existing manufacturing base. #govcams
MANEX: American Licorice company is ‘advanced manufacturing’ … it’s a Willy Wonka on steroids.  #govcams
MANEX: Academics need to focus on the needs of small and midsize manufacturers #govcams
Erin Gore, CFO, UC Berkeley manufacturing provides higher wage careers.
Morei Seiki’s Adam Hansel: Manufacturing is cool.  Best day of my life was putting our first products together to make our first machine.
Adam Hansel, Mori Seiki -- need more shop classes in high schools to prepare advanced manufacturing workforce . #govcams
Morei Seiki’s Adam Hansel: Anybody surviving in #manufacturing in CA is ‘advanced manufacturing’
Adam Hansel, Mori Seiki -- difficult finding skilled workforce  #govcams
Boeing: affordability equation is a huge challenge for our industry and suppliers, especially in California. #govcams
Boeing on last mile #manufacturing: supply base in CA is $7 billion a year. 60% of money we spend is outside of the company.
Paul Geery, Boeing, $7 billion supply chain in CA. #govcams
MANEX: Community colleges will drive new skilled workers but it must start in high school.  #govcams  grow #careertech
Gene Russell, MANEX, huge shortage of machinists and welders in CA
Bayer’s Martin Grubbs at #govcams summit: getting the blue collar workforce better prepared at comm colleges is key .
Sandeep Duggal, EXTRON, final mile manufacturing -- $1 billion output with 100 CA workers. #govcams
Sandeep Duggal, EXTRON, huge misfit between US workforce skills and needs of high tech manufacturing. #economy #govcams
Morei Seki’s Adam Hansel at #govcams: We really need 2 think about how our decisions trickle down 2 smaller cos. that depend on bigger cos.
Adam Hansel, Mori Seiki -- manufacturing drives R & D. #govcams
Boeing at #govcams: National global realities are squeezing all of us. We need a sales tax exemption on #manufacturing equipment.
Paul Geery, Boeing, advocates sales tax exemption for manufacturers and hiring tax credit. #govcams
Boeing at #govcams advanced #manufacturing summit: in 2009 their CA payroll was $2.4 billion for more than 20,000 employees.
California Advanced Manufacturing Summit. Paving the way for California's manufacturing future. #govcams

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California trailing industrial states in recent manufacturing job growth

Posted by Gino DiCaro, VP, Communications on June 5, 2012

Since 2010 California has been stagnant in critical manufacturing job growth while other industrial states have found ways to grow the sector, which always translates to high paying middle class work, new government revenues and economic upswings in the rest of the economy. (Credit caveat: These numbers were researched by CMTA President Jack Stewart. He never stops.)

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Manufacturing growth: CA and Los Angeles lagging far behind the U.S.

Posted by Gino DiCaro, VP, Communications on May 22, 2012

CMTA looked at the growing lag of manufacturing growth in California after the California Labor Market Information Department's numbers last week showed a loss of 4,100 California manufacturing jobs in April. You'll see in the chart below that, for the past two years, the U.S. has attracted 4.3 percent growth in the critical sector and outpaced a stagnant California.   The largest manufacturing county (MSA), Los Angeles, actually suffered a 3.7 percent loss.


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