How to Build a Better Manufacturing Ecosystem in California

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The COVID-19 pandemic and wildfires have made ongoing threats to California’s large, high-paying manufacturing sector even more challenging and the state needs to create a more unified and comprehensive strategy — the crux of new recommendations sent to the Newsom administration by a CA FWD manufacturing work group.

California has a rich history as a manufacturing hub, from aerospace companies that made their home in the Greater Los Angeles region to the genesis of the U.S. biotechnology industry in the Bay Area. Manufacturers leveraged the state’s network of research universities and its skilled workforce as part of a booming innovation economy, with biotech firm Genentech founded the same year as Apple was incorporated.

Approximately 11 percent of California’s total economic output in 2020 was generated by manufacturing, according to the National Association of Manufacturers. The industry is also known for punching above its weight when it comes to employment, providing well paid jobs to workers with a range of education levels and also serving as a driver of indirect job growth.

“Manufacturing is a key driver of California’s economy, providing high paying jobs and building wealth by producing exports in our regions,” said CA FWD CEO Micah Weinberg. “Creating that supportive environment with the right workforce and infrastructure must be a part of any long-term, sustainable economic planning in our local economies.”

Manufacturing jobs have a high average annual compensation relative to other nonfarm businesses in California. Income above cost of living is one of ten key indicators of economic mobility tracked by the California Dream Index. Click here to learn more.

As vital as manufacturing is to our state and local economies, the sector faces many headwinds like the offshoring of production facilities and perceptions that California is a difficult place to do business because of high costs, taxes and restrictive regulations. In particular, the state’s ambitious climate goals can sometimes seem at odds with the needs of energy intensive businesses like manufacturers.

From this backdrop, the Advancing Manufacturing work group — a part of the California Economic Summit network — set out in 2019 to bring together manufacturers to deliberate on the most pressing issues facing the industry and issue a set of recommendations targeted to state policymakers. Centered around four priority issue areas of strategy, workforce, infrastructure, and trade, the centerpiece of the recommendations is the creation of a California Sustainable Manufacturing Council, housed within the Governor’s Office of Business and Economic Development (GO-Biz).

The group’s recommendations, sent to GO-Biz, detail how the Council would help create consistent policy for a thriving manufacturing ecosystem in the state while also working to achieve emissions reduction goals, and develop a grant program to fund technical assistance, education and training programs, and partnerships with local governments and economic development organizations to attract and sustain manufacturers, among other priorities. The council would leverage the expertise of regional manufacturing councils throughout the state, along with the network of public and private stakeholders that helped develop the work group’s recommendations.

Work Group co-lead Lance Hastings, president and CEO of the California Manufacturers and Technology Association, stated that “manufacturing is at an inflection point in California. Working together, we can simultaneously explore expansion of the sector and deployment of new technologies to improve and enhance the environment. These concepts are not mutually exclusive, but do required more constructive engagement with and from policy makers.”

The group revised their recommendations in 2020 to take into account changing conditions resulting from COVID-19 and wildfires among other events that disrupted operations, including new safety requirements and a pivot to the production of personal protective equipment. The group is continuing to advocate for a state level manufacturing council to bring together voices from across regions and within different manufacturing sectors.

“Since California employs more Americans than any other state, and since California has proven that it can decouple economic growth from increasing greenhouse gas emissions, the whole country is looking to California to prove how an innovative manufacturing ecosystem can thrive in a sustainable way,” said work group co-lead Matt Bogoshian, executive director of the American Manufacturing Communities Collaborative. “With Governor Newsom’s help, California can lead the way in offering our example to other states and the Biden Administration for how the manufacturing sector must be a key part of any national strategy for sustainable development.”

The group submitted their recommendations to the Governor’s Office of Business and Economic Development in early January and is working closely with the administration on next steps. To learn more about the Advancing Manufacturing work group and to read the recommendations the group issued coming out of the 2020 California Economic Summit, click here.


Jennifer Lovett

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