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Gino DiCaro: Study Makes the Case that Manufacturing Matters in California

The report takes an in-depth look at the industry's decline in the state

The Milken Institute on Tuesday released “Manufacturing 2.0: A More Prosperous California,” a study commissioned by the California Manufacturers & Technology Association to understand the state of manufacturing and the need for action to save the state’s most critical engine of economic growth.

The report proves that the effects of lost manufacturing jobs has been devastating and that the particular sector must become a cornerstone of the state’s economic recovery.

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 recommendations to make California manufacturing more competitive.

“California’s economy has been built on manufacturing. The sector’s steady decline is undoubtedly a ‘canary in a coal mine’ for the state’s economy,” California Manufacturers & Technology Association President Jack Stewart said. “California has the capacity to innovate and make things, but it is not at all living up to its potential.”

The Milken Institute did a similar study in 2002 titled “Manufacturing Matters.” Since then, and even before the current international recession, California manufacturing has remained in decline, with little attention from policymakers.

Among many things, the 2009 study retroactively looked at how much California would have benefited if it simply maintained the same level of manufacturing from 2000 to 2007 (a 12 percent share of all California workers in 2000). According to the report, the state would have seen $27 billion more in manufacturing wages and $54 billion more in total manufacturing-related output if it would have kept pace with 2000 levels.

“Just do the math on those numbers to see how much more the state would have seen in tax revenue,” Stewart said. “It’s absolutely crucial that our state doesn’t neglect this sector for another seven years.”

The report was to be discussed at 9 a.m. Tuesday in an informational hearing in the Assembly Committee on Jobs, the Economy and Economic Development. The committee is trying to understand the manufacturing sector’s role in our economic recovery.

“California manufacturing is clean, innovative, exciting and wealth-creating,” said Bishop-Wisecarver President Pamela Kan, who’s family started the company in 1950. “We employ 53 California workers who make great wages and very precise, innovative and technical products for many other manufacturing sectors. We hear constantly about our California suppliers’ and clients’ struggles with regulatory uncertainty and costs. Bishop-Wisecarver’s success is dependent on so many other manufacturers in the state. 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.”

The industry has had a 9.8 percent decline since 2000 in the manufacturing sector’s share of gross state product. Texas’ share has grown 24 percent in the same time. In terms of high-tech manufacturing, the gap widens even more: California’s rose only 7 percent while Texas is up 86 percent.

— Gino DiCaro is the vice president of communications for the California Manufacturers & Technology Association.

 

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