MANUFACTURING GROWTH — Since the early 2000s, California has seen a steady decline in manufacturing jobs — a loss of 79,000 between 2003 and 2007 alone, according to the California Manufacturing and Technology Association. Could heavy regulations be to blame? A report paid for by CMTA and released by the Milken Institute concludes exactly that, saying California's stringent rules force manufacturers to set up shop elsewhere.
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Part of what makes manufacturing in this state difficult is the quick changeover of labor laws, which makes it tough for companies to plan, the report says. Also, the fact that companies need approval from a complicated web of jurisdictions, which slows progress and could make a plan OK'd on the state level canceled by regional rules. Tax increases, investment losses and diminished credits and incentives add to the damage, the institute maintains.
If California had kept as many manufacturing jobs as it had in 2000, it would have seen 1.6 million more jobs and experienced $101 billion more in output by 2007, according to the report. That would translate into $75 billion more in wages than experienced in '07 and $5 billion more in income tax revenue. Obviously, the jobs exodus is nothing to sneeze at, and so the question remains: How to stop it?
STOPPING THE JOB DRAIN — Thankfully for the industry all about making things, some federal initiatives are in the works that aim to promote manufacturing across the nation. California manufacturing advocates are hoping it gives the Golden State an extra push to invest in its own companies.
President Obama unveiled a blueprint to promote domestic manufacturing and encourage companies to "insource" in lieu of "outsource".
- First, the plan proposes removing tax deductions for outsourcing and add incentives to hire here at home.
- The incentive for insourcing would be targeted at companies that create jobs in the U.S. and the incentive would double for companies involved in advanced manufacturing.
- Establish a tax credit for companies to invest in communities hit hard by the recession and job loss.
- Provide temporary tax credits to green tech companies.
- Reauthorize the right to expense any investment in plants and equipment.
- Close loopholes that reward companies for investing abroad.