California has long enjoyed a reputation for being on the leading edge of national trends, but many manufacturing leaders hope that's not the case when it comes to regulatory policy. 

California manufacturers feel the pinch not only from national regulations but from expensive state-initiated rules such as AB 32, which requires the state to meet 1990 greenhouse gas emission levels by 2020. Manufacturers also face green chemistry requirements, complicated and litigious permitting procedures and high energy costs.

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"We feel that the regulatory burden in California is at a higher level than the rest of the country and therefore makes us less competitive," says Gino DiCaro, vice president, communications for the California Manufacturers & Technology Association. 

Over the last decade, he notes, California has experienced the loss of 634,000 manufacturing jobs. And just in the last two years, California has seen no gains in manufacturing jobs while jobs grew 4.2% in the sector nationally. 

The situation in California is scaring off investment in new manufacturing investments and expansions, DiCaro adds. From 2007-2011, new manufacturing investment in California was $325 per capita. The national average was $2,073. 

Last year, California enjoyed the dubious honor of being ranked as the worst state for business by 650 CEOs in a Chief Executive poll.

The problem is not so much companies picking up and leaving California, DiCaro observes, as it is companies simply deciding to scale-up or invest in other states.

There is recognition in the state of a competitiveness problem. Last year, state legislators passed SB 617, which requires economic analysis of any major new regulation before it is passed. Better economic analysis, DiCaro says, will help public and private parties understand the costs of regulations.