Is California Comfortable With Manufacturing Investment Levels?

Gino DiCaro, Vice President of Communications for the California Manufacturers & Technology Association, addressed the issue of California's lack of manufacturing employment growth in a February 13th article on foxandhoundsdaily.com. He stated that although California’s economy is improving, with its unemployment rate down two percentage points over the last year and with state revenue growth (for the first time in a while) allowing the Governor to project a small surplus in 2013, the state still has far too many workers either unemployed or underemployed. DiCaro's opinion is that California's underemployment rate of 18.3 percent is due in part to the fact that the state continues to lag behind the country in manufacturing employment growth and in the manufacturing investment trend. In the first three quarters of 2013, California was last among all states in per capita manufacturing investments at 1.17 new or expanded facilities per one million people. Even worse, the state only reeled in 1.97 percent of the nation’s expansions and new sites.

DiCaro continued that it isn't because California is not trying. The state’s rebuilt recruitment agency, GoBIZ, is doing everything they can to pitch the state’s manufacturing benefits, including a new manufacturing sales tax exemption, and recruit new scale ups, but the competition is tough. One of the more telling trends is that California is lagging more in expansions than in new facilities, which means the existing manufacturers, the ones that know the most about operating in California, are opting to scale up in other regions.

Manufacturing provides a gateway to the middle class for many workers, pays an average $76,000 wage in California and creates many other opportunities in the economy. Job growth in manufacturing can even allow the state’s most vulnerable to move out of poverty. DiCaro's conclusion is that our comfort level with an improving economy must not mask our declining facility investments. Manufacturing champions like GoBIZ, CMTA and others need the state’s regulators and policymakers to focus on turning this trend around.