Viewing blog posts written by Gino DiCaro

Reshoring group outlines how we can compete for MFG

Posted by Gino DiCaro, VP, Communications on May 6, 2018

Dr. Harry Moser of the Reshoring Initiative recently outlined in IndustryWeek how California, and other states, have an opportunity to take advantage of the substantial reshoring surge across the United States, but how our competitveness internationally and locally play a significant role. He outlined some of the same issues we've heard anecdotally and in recent studies on California's competitiveness. Here are a few select comments:

• It is now clear that U.S. manufacturing, including foreign-owned plants, can be started up or grown to support a substantial flow of work back to the U.S.

• U.S. and foreign companies increasingly recognize that it is in their interest to supply more of the U.S. market by local production and sourcing.

• Based on timing of announcements, much of the surge was due to the anticipation of lower taxes and regulations and higher tariffs. To bring back more than about 10% of the five million offshored jobs will require more U.S. competitiveness, more leveling of the playing field—including some combination of lower USD, stronger skilled workforce training, still lower corporate tax rates, and a VAT (Value Added Tax).

• Bringing so many jobs from offshore disproves the weak claim that only 4 to 13% of the decline in manufacturing jobs has been due to offshoring, with the rest to automation. If so few had been lost to offshoring, so many could not be recovered in one year.

In addition to federal policy, states and cities need to play a role:

• Some states are more attractive and effective as destinations. The Southeast and Texas have dominated. The Midwest is now moving up in the rankings. Government incentives are the most frequently mentioned motivating factor

• Education and skills training need to be improved in almost all regions. Skilled workforce is the third ranked driver of reshoring and FDI.

• Infrastructure is highly ranked.

Companies can profit from the data below—here are some things to keep in mind:

• Skills training is a corporate responsibility. Some companies have taken that responsibility; others have ignored it. Without a larger and better trained workforce, the flow will decline rapidly. Skilled workforce is the third highest ranked motivator of reshoring.

• Industry 4.0. Automation, productivity, innovation and lean collectively are the highest ranked enablers of reshoring. Have you optimized?


In other but similar news, a study released in March by the Pacific Research Institute (PRI) revealed that we have a lot of work to do in some of the areas mentioned by Dr. Moser.  The PRI report said California business executives, including those in clean tech, R&D, manufacturing, and other highly desired industries say the high costs of housing and real estate, a lack of highly skilled workers, and expensive costs of doing business are among the primary reasons why they are not locating or expanding in the Golden State. 

The findings were based on 200 interviews with executives in R&D, IT, manufacturing, clean tech, and energy.  Participants were asked their attitudes on California's business climate and the factors that went into their decisions about locating in California. 

Key findings included:

88% said that "dealing with the high cost of housing and the high cost of commercial real estate would imapct our decision to locate in CA or not."

62.5% said that "improvements in the quality of education in California and the state's ability to provide employees with skills would affect our decision to locate in California"

71% said that "labor laws and regulations would play a factor in their location decisions."  When specifically asked what two or three things would make California more attractive, the most common responses were "reducing taxes and bureacracy" and "Improving housing affordability and transportation infrastructure."

Next week the Champions of MFG blog will highlight the country's 2017 manufacturing investment growth and we'll take a look at how California came out in the race to attract manufacturing jobs.

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Go-Biz tax credit and other CA incentive programs for 2017

Posted by Rob Sanger, on Jan. 4, 2017

GO-Biz Now Accepting Applications for California Competes Tax Credits

The Governor’s Office of Business and Economic Development (GO-Biz) is now accepting applications for the California Competes Tax Credit (CCTC).  There are $100 million in tax credits available during this application period for businesses that are expanding and adding full-time jobs in the state.  The deadline to submit applications is Monday, January 23, 2017, at 11:59 p.m. (Pacific Time) and the online application website will automatically close once this deadline has passed. 

See if your competitor accessed these funds in 2016:

Contact Rob Sanger, 916-498-3334, for details about this and other California-focused incentive programs. Even if you are not hiring new employees, but you are investing in new equipment or other capital improvements, your company may still qualify.

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California not taking advantage of reshores

Posted by Gino DiCaro, VP, Communications on Nov. 17, 2016

Dr. Harry Moser and the Reshoring Initiative are working to bring good, well-paying manufacturing jobs back to the United States by assisting companies to more accurately assess their total cost of offshoring, and shift collective thinking from "offshoring is cheaper" to "local reduces the total cost of ownership".

Acccording to Moser, most companies make sourcing decisions based solely on price, oftentimes resulting in a 20 to 30 percent miscalculation of actual offshoring costs. HIs Total Cost of Ownership (TCO) Estimator helps companies account for all relevant factors — overhead, balance sheet, risks, corporate strategy and other external and internal business considerations. Using this information companies are coming back to the U.S. and reshoring their facilities, for which our country's middle class benefits tremendously.

Unfortunately a look at the Reshoring Initiative's regional reshoring data since the recession shows that California has been unable to keep pace with the country and attract an amount of jobs commensurate with the state's size and manufacturing prowess. Even with our proximity to markets we are losing out to other states that can provide lower costs and predicability.

With only one percent of the reshored jobs, California should work to take advantage of the reshoring phenomenon for our middle class and economy. 


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California attracts 2.4% of U.S. reshored jobs

Posted by Gino DiCaro, VP, Communications on June 11, 2015

The Reshoring Initiative, an organization committed to helping manufacturers recognize the profit potential of domestic sourcing and production, has published its updated reshoring numbers that illustrate the U.S. manufacturing advantages driving the manufacturing renaissance. A growing number of companies across the country are bringing thousands of manufacturing jobs home from offshore.

California should do all it can to attract these new jobs.  But according to the Initiative's numbers, California attracted only 34 reshores over the last three years, totaling 884 jobs and a mere 2.4 percent of the overall 36,325 reshored jobs. Further, California was not the destination for any of the top 10 reshoring examples noted below.

Escalating offshore wages are causing companies to reevaluate total costs of doing business overseas and states are fiercely competing for these highly coveted middle class jobs. Each state is promoting their skilled workers, fair taxes and friendly business climates to beat the competition. 
California could be a good choice for many of these reshoring decisions.  By focusing on creating a more predictable regulatory environment with less litigation and affordable energy, we could attract our fair share of reshoring investments. 

Top 10 Reshoring cases



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