Manufacturing in California may be bigger than you think. California is the number one state for manufacturing jobs, firms, and output. For every job created in manufacturing, at least 2-3 jobs are created in other sectors.
Manufacturing in California plays a critical part in California’s local economy. California’s manufacturing industry helps grease the wheels of the regional economy thus bringing business, individual, and community wealth to the region.
According to Inside California Manufacturing, it is because of this ripple effect that manufacturing firms have a deeper impact on the state of the economy than most other industries.
- Accounts for 11.7% of total US output
- Employs 9% of the US manufacturing workforce
- Generates $229.9 billion, more than any other states
As the climate of global manufacturing shifts in favor of the United States, California manufacturing must evaluate its strengths and weaknesses to continue capitalizing on the opportunities at hand.
Opportunities for California Manufacturing
A huge opportunity for California manufacturing firms has been created as the cost of outsourcing manufacturing overseas increases. As more and more companies acknowledge the increase and invest in US manufacturing, California is well poised for growth.
In addition to potential cost savings and supporting the local economy, there are many benefits to keeping manufacturing stateside:
Faster delivery times
Intellectual property security
The benefits coupled with changes in the global economy, like appreciation of currency, labor rate inflations, concerns about supply interruption, and lengthy delivery times, prove choosing a local manufacturer can be just as price competitive as hiring firms from low-cost economies. Best of all, as reshoring takes hold and production is moved back to the US, more jobs and wealth are created.
Challenges Facing California Manufacturing
California manufacturers have overcome many obstacles to earn their place at the top. To continue to prosper and ensure products are competitively priced for local and international markets, manufacturers must overcome several challenges facing the industry.
According to a 2011 report from the Center for Applied Competitive Technologies (CACT), the biggest challenges facing California manufacturers include:
Difficult regulatory climate; expensive and time consuming to navigate
Higher healthcare costs than other countries
Higher salaries and benefits packages
High costs due to litigation claims
Higher costs due to environmental concerns and protections
Higher corporate tax rates
Despite all of these challenges, the California job market and international exports have been on the rise, proving that growth is not entirely stifled by the challenges.