This week the Milken Institute released a study that shows California has long neglected a segment of its economy that is critical to economic growth.  Let’s face it, California’s business climate problems are as big and bold as its current budget morass.  We must seek out, promote and value our champion industries of economic growth.   According to the report, "California is the only one among its peers to lack a comprehensive long-term economic strategy."

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 some recommendations to make California manufacturing more competitive.

Here’s a key breakdown of the 94 page report:

Among the many key findings:

The state would have seen $54 billion more in output if we would have maintained the same manufacturing share of our total workers that we had in 2000 (12% share).

California is not winning.  Manufacturing’s share of GSP is far outpaced by competitor states, according to the report.

Lower wage sectors are growing while high wage manufacturing continues precipitous decline.

Do the math on the statistics and the state’s revenue situation could have looked so much better.

As the State Legislature debates a budget today, the state’s focus on one of the largest wealth creators for our workers and our state government should at least be widely agreed upon as a place to start for a long-term strategy for economic recovery.

Policymakers and media often say (and assume), "it’s California, we’ll be fine."  CMTA president Jack Stewart’s quote during a report discussion yesterday provides a perfect retort, "California has the capacity to innovate and make things but it is not at all living up to its potential."  Pamel Kan, President of 53-employee Bishop-Wisecarver in Contra Costa County agreed, "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."

In other words, manufacturing still matters but California’s unintended push to make it matter less is going to hurt if we don’t turn it around and leverage California’s most precious and wealth creating asset — the ability and capacity to make things.

CMTA Key Findings of The Milken Report: Manufacturing STILL Matters (2 pages)
Milken Institute Report: Manufacturing 2.0 — A More Prosperous California (94 pages)