|
|
Losses of factory jobs in California
blamed on regulation
A report to be issued today by the Milken Institute attributes the departure
of 79,000 manufacturing jobs between 2003 and 2007 to onerous regulations
and high taxes.
By Alana Semuels
June 23, 2009
The El Monte factory stopped operating just a few weeks ago, but already
it feels abandoned, an appropriate setting for a "Terminator" movie.
The dusty clock on the wall is frozen at 7:00. Below it, the deep pits
that once held molten steel are now empty, and the parts created there
wait in hundreds of boxes to be shipped off across the country or turned
into scrap.
Two months ago, more than 300 people were employed
at the site making engine parts for trucks and heavy machinery for Gregg
Industries, which is owned by Neenah Enterprises Inc. in Wisconsin.
But a settlement with the South Coast Air Quality Management District
required Gregg to spend $5 million on factory improvements, so the company
decided instead to leave the state. Company spokesman Adan Ortega Jr.
said Gregg didn't want to make the payment in the difficult economic
climate.
Gregg is part of the parade of companies marching out of California.
The state lost 79,000 manufacturing jobs between 2003 and 2007, while
seven other states with a meaningful percentage of U.S. manufacturing
gained 62,000, according to a report scheduled to be released today by
the Milken Institute.
The report blames the state's onerous regulations and high taxes in particular
for pushing businesses elsewhere.
"The picture is not pretty," said Perry Wong, senior managing economist
at the Milken Institute, which received funding from the California Manufacturing
and Technology Assn. for the study.
The state is shedding manufacturing jobs at a faster pace than the nation
as a whole, the report said. Though many jobs left the country in the
2002 recession, states such as Arizona, Nevada and Oregon saw an increase
in manufacturing employment in 2003.
Part of the problem, Wong said, is that regulations change so often in
California that it's difficult for companies to plan. The state enacted
an average of 15 changes in labor law each year from 1992 to 2002, four
times more than state legislatures averaged nationwide.
California also often requires projects to be approved in many different
jurisdictions, so that a plan vetted by the state could be sidetracked
by the county, Wong said.
Not everybody agrees with the report's conclusion. Christopher Thornberg
of Beacon Economics said manufacturing output has been as high as ever
in the state and that there's no evidence that jobs are going to other
states.
"At least up to the last couple of years, the pace of job loss in manufacturing
in California was no different than anywhere else," he said, basing his
calculations on the state gross domestic product, the value of goods and services
made in the state.
California GDP grew last year despite the global financial crisis, said
Brian McGowan, the state's deputy secretary for economic development
and commerce. And green-energy jobs in the state have grown at a rate
10 times faster than total job growth since 2005. To evaluate a state's
business climate, he said, companies should focus on workforce skill,
availability of capital and overall quality of life, rather than just
on taxes and regulatory costs.
Still, Gregg Industries in large part blames the frustrating regulatory
environment for its fate. Ortega said a few neighbors complained that
the factory smelled, calling the AQMD hotline frequently. He said inspectors
began to harass Gregg employees, citing the company for odor nuisances
on days when machines weren't even running.
"The agency here was accusatory and threatening," Ortega said. "Workers
lost their jobs because we couldn't meet an arbitrary standard of nuisance
odors."
The Milken report also broke down the job losses by sectors. Cut-and-sew
apparel manufacturing lost 45,000 jobs since 2000, the computer and electrical
product industry cut 70,000 and the printing industry shed 23,500. The
report calculates that if manufacturing had maintained its 12.8% share
of employment in the state, nearly half a million jobs paying an average
of $57,000 a year would have been preserved.
To prevent more departures, the study recommends creating incentives
for innovation, assisting companies in obtaining capital, investing in
workforce development and establishing an office to streamline the regulatory
process.
Heftier incentives might have motivated SolarWorld, a manufacturer of
solar technology founded in Camarillo, to keep more jobs in the state.
It decided to consolidate its wafering and cell manufacturing in Oregon
after that state offered incentives, such as property tax abatement and
business energy tax credits, said Bob Beisner, a company vice president.
SolarWorld will employ 1,000 in Oregon by 2011. It will also keep some
jobs in California.
"The price of land in California was extraordinary, and the incentives
that the state was willing to talk about were few," he said.
The business community fears that the exodus might quicken with the implementation
of more regulations, such as one that would cut warming emissions in
the state to 1990 levels by 2020. The California Chamber of Commerce
has labeled that law a job killer.
The state Assembly Committee on Jobs, the Economy and Economic Development
plans to hold a hearing June 30 on the departure of manufacturing jobs.
In April, Assemblyman Dan Logue (R-Marysville) brought 13 legislators
to Nevada to talk to business owners who had been lured there from California.
"We have to stop the hemorrhaging," he said. "We have to make
California business-friendly again."
Source: Los Angeles Times
June 23, 2009
back |
|
