Industry Market Trends

As U.S. Manufacturing Expands, California Reports Sector Job Loss

Feb 05, 2013

A national manufacturing report by the Institute for Supply Management (ISM) indicates that production and employment are growing in the sector, but separate reports show that California struggles to keep pace with the country as high manufacturing costs and company closures are taking a toll on the state.

A new report by ISM signals a positive sign for manufacturing in several areas; new orders, production and employment are growing nationwide. According to ISM, the employment index was 54 percent in January, 2.1 percentage points higher than December's seasonally adjusted 51.9 percent, indicating that U.S. manufacturing employment grew for the 40th consecutive month.

Credit: Stuart Miles at Credit: Stuart Miles at

By contrast, a closer look at manufacturing in California reveals a different trend, with manufacturing jobs declining over the past year. According to the state's Employment Development Department's January report, the state unemployment rate remained unchanged at 9.8 percent in December, while four categories, including mining and logging manufacturing, other services, and government, posted job declines over the past year.

From a year-to-year perspective, U.S. manufacturing grew 4.2 percent from January 2010 to November 2012, while California manufacturing declined by 0.2 percent, according to Jack Steward, president of the California Manufacturers & Technology Association, who explained to the Orange County Register that the state needs to make a better effort to market itself and offer more specialized technical education opportunities for the high-skilled positions in industry. Manufacturing currently accounts for less than 9 percent of the state's non-agricultural payroll.

California's Los Angeles County is the largest manufacturing region in the United States, but since 1991, the county lost over half of its manufacturing jobs, according to a comprehensive capstone project written by Goetz Wolff, instructor at the UCLA Luskin School of Public Affairs, Urban & Regional Planning.

The steep job decline can be attributed in part to the fact that California has no organized tax credit program for companies that are adding jobs, as the Los Angeles Times pointed out. Wolff's publication also underscores the need for an industrial development policy in the state, and is critical of inaction by government officials who did not attempt to halt the recent closure of a manufacturing business that slashed 111 jobs. Last year, electronics company Sanyo closed a solar equipment factory in the state, eliminating 140 employees through layoffs after the cost of retrofitting equipment was too high for the manufacturer to stay in business, as Forbes reported.

There is some good news, though. Such layoffs come at a time when the high-tech sector is expanding. Southern California's Inland Empire, which includes San Bernardino and Riverside counties, is now second fastest in growing high-tech jobs in U.S., behind only the Washington, D.C., area, according to a new report.

Another bright spot in California's manufacturing sector is "Made in California," a program that enhances the state's industry visibility and boosts activity for individual businesses. Qualified participants of the program (now numbered at 250) can create a company profile for free, network with other in-state manufacturers, and showcase their products.