In my last blog post, I reported on Dan DiMicco’s keynote address on job creation at the third “Manufacturing in the Golden State – Making California Thrive” economic summit held October 16 in San Diego. The purpose of the summit was to discuss how several national and California policies are threatening the growth and prosperity of California manufacturers and what policies should be changed to help them grow and thrive.
At the conference, I provided an overview of California manufacturing. California lost 33.3% of its manufacturing jobs between 2000 and 2009 compared to 29.8% nationwide and 25% of its manufacturing companies. California lags in manufacturing job growth at a 0.36% rate compared to the national 6.09% rate.
I highlighted that the San Diego region offers a great deal of help for inventors and start-up, technology-based companies through the San Diego Inventors Forum, CONNECT's Springboard program, the Small Business Development Centers in North County and South County, CleanTech San Diego, as well as groups like the San Diego Sports Innovators. San Diego also offers more career path and workforce training programs than most other states, including those offered by three of our event sponsors: California Manufacturing Technology Consulting, the Center for Applied Competitive Technologies, and the Lean Six Sigma Institute.
The good news is that California is benefitting from the reshoring trend that is sweeping the country. According to data collected by the Reshoring Initiative, California ranks first in the number of companies (28) that have reshored and third in the number of jobs created by reshoring (6,014).
I then moderated a panel of local manufacturers, who gave their viewpoints of the effects of some of our national policies and the challenges of doing business in California.
James Hedgecock, founder and general manager of Bounce Composites, said the company is less than two years old and makes thermoset composites, starting with paddle boards and branching into small wind turbine blades this year. He bemoaned the fact that in California you have to pay $800 to incorporate a company, which is double to quintuple the cost of incorporating in other states. Also, as a LLC, you have to pay taxes on gross profits rather than net profits, which is tough on a start-up company.
Scott Martin, president, Lyon Technologies, said that his firm has been in business since 1915 and has changed its products several times over the years. Current products include bird and reptile incubators, poultry products, and veterinary products, which they export to about 100 countries. He stated that the value added taxes (VATs) that are added to the products they export and the currency manipulation practiced by several countries make it difficult for their products to be competitive in the world marketplace.
Robert Reyes, head of Strategic Sourcing, Stone Brewing Co., said they are expanding out of San Diego and are building a new $25M brewery and restaurant in the Marienpark Berlin, scheduled to open by end 2015/beginning 2016. Stone exports beer to Germany and other European countries and having a brewery in Germany will save on shipping costs for exporting. They are also planning on opening a brewery on the East Coast in Virginia.