Tuesday, July 5, 2011

Everything Grows with Manufacturing

I am currently serving as Vice Chair of the California Manufacturers & Technology Association (CMTA). The CMTA staff worked very hard to put together the California Manufacturing Summit, "Everything Grows with Manufacturing" last week in Sacramento. I was happy and encouraged to see how many people showed up. I think the panel, with its diversity of interests, shows how important the topic is to our state, the economy, and our children's future.

Here are the top ten topics of discussion:

1) California cannot survive as a service based economy. A strong middle class is based upon the wages earned within the manufacturing sector (the average manufacturing job earns about 20K more than a service industry job).

2) We have to make technical education, with strong Science, Technology, Math, and Engineering (STEM), a priority for all schools for all children. Business has to get involved in helping schools develop their STEM curriculum. Young people need to get a marketable skill. Investing in career technical training is one of our best bangs for the buck. Apprenticeship programs are another way to advance the skill-set of our kids and grow long-term job skills, and prepare our future workforce. We have to open the door to the future of our kids. Eighty percent of California students don't go on to the UC system. Employment Training Panel funds (ETP) must be used in the best manner. California can't afford to lose these monies to the general fund. Workforce investment funds are needed to train for the needs of a higher skilled workforce. We need to see our schools as long term incubators.

3) Our skilled workforce is aging and we don't have a backup. We have to make manufacturing a focus again. Parents need to feel that it is a safe and smart choice for their kids to want to make a career in manufacturing. Kids have to see manufacturing as a cool, creative and innovative career choice and understand that manufacturing does pay well.

4) While California is the hot bed of venture capital, often the ideas are then produced in other states or countries. We need to keep production within our state as well. California dominates VC money because of the ideas and innovation coming out of our California university system. We are a financial innovator on a global basis. If California fails to attract the growth capital sector we will kill off our future. We currently have the JFK gap. JFK created a whole decade of enthusiasm by stating we have a purpose as a country. California is also a country. What is our purpose? A simple economic point, California is incredible at attracting the best minds into our universities but we completely lose the scale up after school.

5) Coast of Dreams. California needs an economic plan. It is shameful that a state that is the 8th largest GDP in the world has no defined economic plan. There is no economic development office for our state. This does not work for our state. This is about our democracy not just our state. We must create a vibrant private sector that allows entrepreneurs to take risks and build businesses and innovate. When people come together with a purpose we can get things done. Real passion makes a difference. We need to pick the most critical systemic reforms to focus on. A cabinet level position that reports to the governor to make business feel wanted, would be a great first step. We have to start marketing California. We had ten overseas offices at one time, now we have none. The private sector votes with their feet. We need to keep them here in California. In 2003 we shut down our trade and commerce offers, while other states were vastly expanding their offices. Even cities like Chicago are opening offices. We have to have an export and trade strategy. We have to acknowledge the problem. Stop the denial. We have depression era unemployment statistics in several counties in our state. This then leads to skills gaps in our workforce. California is still the innovation capital of the world and we need to get that message out and change perspectives. Texas is one cohesive state. California has to get its act together and got one purpose on both sides of the aisle. We need to develop a robust retention framework.

6) Globalization is not going to go away. California has an unfavorable business climate while other states are actively striving to improve their business climates. Supply chain is a vital piece of the pie for a vital manufacturing sector in California. We need to reduce the cost of manufacturing in California. We can take actions to change our policies if we have the WILL to do so. California is blessed by its visionaries that invested in our infrastructure and facilitated our golden area. Versus the choices we making now and cutting from our future. There is no commitment to how we are going to generate our future revenues.

7) Innovation - Research and development follows manufacturing wherever it goes. Small companies create a lot of innovative as well. We need to support the creation of new technologies. Manufacturing drives innovation not just entrepreneurs.

8) Going Green - The five largest clean tech deals where in California, a prime location for the bio-fuels market. We have the resources and the agricultural waste needed. A bio-fuel plant has to be within 50 miles of their source materials. California could really go after this market if it had the desire. It is a great opportunity for our state. But we have to build consensus across unusual allies to make this happen. Green business has to make good stuff happen sooner. Not just stop the bad stuff.

9) Regulatory Burden - The increased costs of doing business in California are well documented. But along with the costs comes an increase in time. Decisions by state agencies can take months or years. Don't drag out the answer; create a system that allows agencies to tell businesses yes or no faster. Site selection is a very metrics driven process. Why would a company chose to come into California with the current system? When companies are started here in California the easiest thing to do is to keep them here. California needs to focus on this issue first as to why business is leaving and/or not reinvesting in our state.

10) Create an informed state government. All government officials need to understand the regulatory impact of their actions. We have to get our act together and got one purpose on both sides of the aisle. California needs to establish a framework of leadership. Politicians tend to be risk adverse. But at this juncture California needs political leaders to take some risks. The governor needs to show up in the parts of our government where things need to get done. That would create an exciting future for our state. The governor needs to be an economic cheerleader for our state. Our state politicians need to demonstrate leadership that they care about a change in behavior. We are at a unique juncture in our states history. The best is yet to come for California.

CMTA Manufacturing Summit:
Moderator for the Day
: Political Columnist, California's Capitol - Greg Lucas

Bob Clesia, Boeing
Ross DeVol, Milken Institute
Bob Dutton, CA 31st District, CA Senate
Bob Epstein, E2
Mike Jimenez, CA Correctional Peace Officers Assoc.
Eric McAfee, AE Biofuels, Inc.
Gavin Newsom, Lt. Governor, CA
Art Pulaski, CA Labor Federation, AFL-CIO
Jack Stewart, President, California Manufacturers & Technology Association (CMTA)
Julie Meier Wright, CA Council on Science & Technology

CMTA overview of the summit - click here

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