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Californians deserve better MFG information around SB 350

Posted by Gino DiCaro, VP, Communications on Aug. 31, 2015

The  "myths and facts" document created by the State Senate Democrats in support of SB 350, a bill that mandates 50 percent reduction in petroleum use, 50 percent use of renewable power and doubling energy efficiency in buildings by 2030, cherry picks data and chooses arbitrary timeframes to turn reality on its head. We can have a healthy debate about climate policy, but we must first put some perspective to these claims.

One "myth" the document claims to dispel is that “SB 350 will kill California’s manufacturing industry." To ‘prove’ this point, the document highlights the size of California’s manufacturing economy and picks statistics for jobs, output and exports to prove manufacturing is flourishing under current climate policies, such as AB 32, and would do even better with SB 350.

They claim the sheer size of the California manufacturing economy proves that these policies are a positive for the state. However, it should be no surprise that the most populated state in the nation also happens to have a large manufacturing employment, production and export base.  On a per capita basis, a more rational way to understand manufacturing’s role in our economy, the story is different.  “California has twice as many manufacturing companies as Texas,” might be factually true, but California has still has the same per capita manufacturing jobs as Texas – one for every 29 people.

Second, while we are still the country’s largest manufacturing state there has been a shift away from California in recent years. Since the end of the recession in 2010 manufacturing jobs have only increased in California by 2.8 percent while the U.S. has grown its manufacturing base by 7.8 percent – that’s more than 200 percent greater manufacturing growth outside California.

In that same time period, we attracted less than two percent of the country’s new manufacturing investments. The result of these disturbing trends is that since 2009 U.S. manufacturing output has grown by a healthy 22 percent while California’s output has been lagging with only 11 percent growth.

Finally, we wonder why the State Senate Democrats trust the Manufacturing News Index (MNI) to count jobs rather than the Bureau of Labor Statistics (BLS) that is relied on by California’s own employment agencies.  MNI uses outdated Standard Industrial Codes and includes more types of companies in their analysis (mining, extraction, among others) than does BLS.  According to BLS, we grew manufacturing jobs by 0.4 percent which is far behind the 1.6 percent US growth for the period March 2014 to March 2015.

Policies that increase energy and transportation costs on manufacturers will encourage further declines in employment, investments and manufacturing output.  We’re glad the State Senate cares about California manufacturing and we hope  these facts about manufacturing will lead to smart policies going forward to reduce burdens and maintain affordable energy supplies.   

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