The company [Avnet] is closing two of its three Silicon Valley facilities and laying off nearly 100 employees as it moves its manufacturing operations out of state.
Kellogg Co., the multinational food producing company, plans to lay off 230 employees and close its Northern California sales office in Roseville.
Although the share of industrial jobs has shrunken from 10.5% of all nonfarm employment in 2005 to 8.5% today, manufacturing continues to have an outsized influence on regional economies, as is spelled out in the latest paper from the Center for Opportunity Urbanism. This stems in large part from the industrial sector’s productivity gains since 2001 -- almost twice as much as the economy-wide average, according to the Bureau of Labor Statistics -- and it has a far higher multiplier effect (the boost it provides to local job and wealth creation) than virtually any other sector. Manufacturing generates $1.40 in economic activity for every dollar put in, according to the U.S. Bureau of Economic Analysis, far greater than the multiplier generated by business services, information, retail trade or finance.
The Democratic governor gave his usual rally cry in this coastal Chinese city, imploring the packed ballroom to help reinforce a global commitment to climate change. But a more specific theme also emerged, an undercurrent in his five-night trip that he’s echoed in several meetings with officials: Brown is looking to China for the future of California’s electric vehicles. The state aims to put 4 million to 5 million electric cars on roads by 2030, he said at the event, “and we aren’t going to get there until Chinese business people, Chinese government leaders make it a priority to develop batteries and electric cars. And we will too.”
Every manufacturing investment and job creation decision is made by company executives who are looking down the road at future costs, taxes, and regulations. Many states and countries want to attract manufacturing investments and jobs. If they have longstanding policies that will be in effect for ten or more years, they will beat out the locations with policies that expire in the short term. In fact, the larger and more important the investments, the more risk averse company executives will be; they will assume the expiration in existing law will occur, as promised.
Lawmakers may believe that California will nevertheless attract manufacturing jobs and investments even without the policies under discussion, but the data states otherwise. Since 2001 California has attracted less than 2 percent of US manufacturing new sites or expansions, far lower than the state’s share of manufacturing GDP. More recently the re-shoring surge shows a similar loss to the rest of the country, with under 2 percent of those jobs coming to California since 2013. That means manufacturing jobs and investments are now shifting to other locations under our noses and long-term policies to keep manufacturers here are crucial.