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Empowering Manufacturersto Lead the Way
California Manufacturers & Technology AssociationPresentation
Source: California Employment Development Department
-372,400
Government
Finance and Insurance
Accomodation and Food Services
Health Care & Social Services
Retail Trade
Manufacturing
Management of Companies & Enterprise
Professional & Technical Services
Information
Other Services
Construction
Educational Services
Arts, Entertainment & Recreation
Real Estate
Mining
Wholesale Trade
Administrative & Waste Services
Farm
Transportation and Warehousing
California employment snapshot:Low-wage sectors expanding, High-wage sectors declining
$42,225
$23,875
$43,913
$16,566
$80,074
$28,900
$39,862
$40,644
$42,781
$56,669
$88,556
$54,289
$29,626
$20,752
$44,145
$78,682
$70,832
$75,452
$56,524
Average pay ofgrowing sectors:
Average pay ofdeclining sectors:
-400,000 -300,000 -200,000 -100,000 0 100,000 200,000
Jobs lost Jobs gained
Employment changeJan. 2001- Jan. 2006
Average 2005 salary
1990 20061995 20008
10
12
M anufactur ing as a percent o f overall em ploym ent in statehas declined steadily since 1990
20069% of overall employment1,504,200 mnfg. jobs
199014% of overall employment1,970,200 mnfg. jobs
14 %
Source:LaborM arketInform ationDepartm ent‘01 ‘02 ‘03 ‘04 ‘05
1.9 million
1.8
1.7
1.6
1.5
Jan. 2001:1.878 million
March 2006:1.504 million
California lost 374,000 manufacturing jobssince January 2001
1.4‘06
Why Manufacturing Matters
•High Paying Jobs
•Creates Wealth
•Most Export Intensive Sector
•High Investments in R&D
•Ripple Effect
Based on large multiplier effect, manufacturing supports
almost 30% of California’s labor force
4.5 million jobs
SanMateo
SantaCruz
Monterey
SolanoSacramento
Contra CostaAlameda
SantaClara
Santa Barbara
VenturaLos Angeles
San Bernardino
RiversideOrange
San Diego
Tulare
SanBenito
El Dorado
PlacerSutter
SanJoaquin
Merced
NUMMIFremontStanislaus
Fresno
1-19
20-99
100 or more
NUMMIsuppliersby county
Shasta
MendocinoNevada
Calaveras
Amador
Madera
NapaSonoma
Tuolumne
Yolo
Marin
San Francisco
More than
1,000California suppliers
Nearly
20,000jobs created in state
$60 billion
$50
$40
$30
$20
$10
Manufacturing$41.8 billion
Federal govt.$11.8 billion
Manufacturersfund 60%
of California’sR & D Investment
0
State & Local govt.
Universities$821 Million
$236 million
Non- profits$366 million
Source:AmericanAssociationfor theAdvancementof Science
Knowledge:Patents
MachineryManufacturing
Skilledworkforce
Why Manufacturing is an integral partof the capacity to innovate
Revolves around the combinationof knowledge, labor, and production
GROWTH:
More than 115
100 to 114
85 to 99
Less than 85
Cost average = 100
Source:Milken Institute
High cost of doing business for California manufacturers
California:124
Overall cost Wage Tax Industrial space Office space Electricity
California 124.2 112.5 111.1 136.8 136.3 168.0
Nevada 103.8 96.5 99.0 107.5 131.5 122.7
New Mexico 95.6 82.0 130.8 103.1 80.5 93.8Arizona 94.0 93.5 95.8 85.4 105.8 95.1Texas 92.8 98.0 73.7 93.0 95.7 100.0Oregon 92.6 91.1 92.3 106.4 107.7 84.0
Utah 86.8 83.0 107.4 80.2 101.3 71.5
Washington 103.5 105.7 103.4 110.2 130.5 82.6
Western states cost indexOne of only four states with a sales taxon manufacturing equipment
Electricity 80% more expensivethan western states
So urce: M ilken Institu te
DevelopmentCounsellorsInternationalsurvey
California
New York
Massachussetts
New Jersey
34%
36%
22%
21%
saidCaliforniawas one ofthe worst
three statesto do
business in2005
66%
57%
25%
34%
29%
22%
18%
19%
15%
14%
California
New York
Massachussetts
New Jersey
California
New York
Massachussetts
New Jersey
21%
2005
2002
1999
0 10% 20% 30% 40% 50% 60%
Survey: What state has least favorable business climate
Changing Face of Manufacturing
• Aging of Baby Boom Generation
• More Productive Workers
• Different entry-level skill
requirements
– Basic computer skills
– Business application knowledge
– Critical thinking skills
Californiamanufacturing is
especially productive:its value added perworker in 2001 was
$191,000,16% higher
than national average
Change in labor productivity (output per hour),manufacturing vs. all nonfarm workersPercentage changein output per hour
Manufacturing
All other sectors
1986
8%
7
6
5
4
3
2
1
0
-11980 1992 1998 2004
Source: U.S. Dept. of Commerce, Bureau of Economic Analysis
90
100
110
120
$130 billio n
‘01 ‘02 ‘03 ‘04 ‘05
California:$117 billionin exports
9% growthsince 2001
Texas:$129 billionin exports
36% growthsince 2001
California no longer top exporter
So urces: Expo r t.go v,O ffice o f Trade & Eco no mic A nalysis
10% CA
TX
US
NV
AZ
0
50%
9%
36%
24%19%
177%
40%
30%
20%
-10%
‘02 ‘03 ‘04 ‘05
2001 to 2005
change fro m 2001
‘01
State’s exportgrowth lags farbehind restof country
Skilled workersEntry level
SupervisoryAdministrative
Employees most difficultto recruit and retain*
5527215
CMTAworkforce
surveyresults
72 HR executivesrepresenting
30,000 employeescompletedthe survey
Lack of job specific skillsPoor work ethicLanguage barrier
Employees leave for better pay or benefitsCommute time
Employee dissatisfaction with work hours
Barriers faced in finding and retainingqualified employees*
483425211411
CMTAworkforce
surveyresults
72 HR executivesrepresenting
30,000 employeescompletedthe survey
58%
Sustaining and/or acquiring a skilled workforceWorkers' compensation
Energy costsHousing costs
Health insurance costsEnvironmental regulations
Tax burdenOvertime laws
Most significant business challenge24141197841
said it wasone of top3 challenges
Respondents who ranked each as their #1 business challenge
CMTAworkforce
surveyresults
72 HR executivesrepresenting
30,000 employeescompletedthe survey
Given changes in economy and business environment, which of thefollowing will be most important to your company’s business success overthe next three years? (select up to three)
High performance workforceNew product innovation
Low-cost producer status
Increasing sales outside U.S.Increased customer service orientation
Supply chain integration with suppliesSourcing products in global markets
0 10% 20% 30% 40% 50% 60% 70% 80%
74%49%
45%32%
20%19%
14%
NAMskills gapsurveyresults
What types of employees are expected to be in short supply
Skilled productionScientists and engineers
Unskilled production
Management & administrationSales & marketing
OthersCustomer service
None0 10% 20% 30% 40% 50% 60% 70% 80% 90%
80%35%
25%18%
16%8%
5%4%
NAMskills gapsurveyresults
Why do companies provide training to employees today
Must train - it’s a business necessity
Keep workers’ skills current with new technology
Attract new workers
Provision in labor contract
Required by state/local government
Raise the basic skills of entry level workers
0 10% 20% 30% 40% 50% 60% 80%70%
73%
68%
59%
59%
NAMskills gapsurveyresults
61%
60%
39%
40%
0 10% 20% 30% 40% 50% 60% 70%
Poorlyprepared
Adequatelyprepared
+500 employees
under 500
+500 employees
under 500
How prepared for typical entry level job in your companyare applicants with high school/GED qualifications
8%
19%
92%
81%
0 10% 20% 30% 40% 50% 60% 70%
Poorlyprepared
Adequatelyprepared
+500
under 500
+500
under 500
How prepared for typical entry level job in your companyare applicants with a certification from a two-year college
80% 90%
NAMskills gapsurveyresults
California career tech education enrollment declineswhile high school enrollment increases
0
.6
.8
1
1.2
1.4
1.6
1.8
2
1987 1997 2005
million
million
High school enrollment
Career tech enrollment
2005:-32% decrease since 1987
48% increase since 1987
1,915,370
644,909
Source: California Basic Educational Data Sytstem
2005:
1,289,806
952,097
Decline in number ofcareer technical education teachers
Decline in number ofcareer technical courses
7,500
7,000
6,500
6,000
5,500
5,000
4,50040,000
35,000
30,000
25,000
20,000
1988 20051997
1988 20051997
6,922
4,923 38,402
24,141
1988
2005
teachers
teachers
1988
courses
2005
courses
New Opportunities
• Bio-Tech and Pharmaceuticals
• BioMedical Devices and Instruments
• Wireless Communications
• Advanced Materials
• Nanotechnology
• Space and Communications Satellites
Good Jobs Coalition
• Commission On Industrial
Innovation
– AB 2860 (Lieu)
• Education and Workforce Training
• Level the Playing Field
Other Manufacturing Issues
• Sales Tax Exemption
– AB 2218 (Torrico)
• Global Warming
• Energy Supply and Cost
• Stay the Course on Workers’
Comp Reforms
Source: California Employment Development Department
-372,400
Government
Finance and Insurance
Accomodation and Food Services
Health Care & Social Services
Retail Trade
Manufacturing
Management of Companies & Enterprise
Professional & Technical Services
Information
Other Services
Construction
Educational Services
Arts, Entertainment & Recreation
Real Estate
Mining
Wholesale Trade
Administrative & Waste Services
Farm
Transportation and Warehousing
California employment snapshot:Low-wage sectors expanding, High-wage sectors declining
$42,225
$23,875
$43,913
$16,566
$80,074
$28,900
$39,862
$40,644
$42,781
$56,669
$88,556
$54,289
$29,626
$20,752
$44,145
$78,682
$70,832
$75,452
$56,524
Average pay ofgrowing sectors:
Average pay ofdeclining sectors:
-400,000 -300,000 -200,000 -100,000 0 100,000 200,000
Jobs lost Jobs gained
Employment changeJan. 2001- Jan. 2006
Average 2005 salary