Eating California’s Lunch

By Published On: August 28, 2009

California may be a leader in inventing and deploying green technology, but it’s lagging other states and nations when it comes to manufacturing the equipment that promises a clean energy future, say a growing number of economists and business leaders. “People don’t understand that manufacturing is an integral part of the high-tech and clean-tech economy,” stated Perry Wong, an economist with the Milken Institute in Los Angeles. In a report issued earlier this summer, the Milken Institute found that amid growing hope that manufacturing energy efficiency equipment, smart grid components, photovoltaic systems, wind turbines, and other technology will put people back to work the state is losing manufacturing jobs at a pace that outstrips the nation and neighboring states. Manufacturing employment in California has plunged 23 percent since 2000, according to the report, Manufacturing 2.0: A More Prosperous California. Despite the hubbub, clean-tech manufacturing is not filling the growing gap, according to another report issued by the clean vehicle industry consortium CalStart last month. The consortium’s study found that Oregon, New Mexico, and other states are “starting to eat California’s lunch” when it comes to clean technology manufacturing. Slow permitting, high taxes, and high operating costs in California are causing in-state inventors of clean technology and advanced biofuels to look elsewhere when the time comes to start manufacturing, the report noted. “This is an industry that could create new jobs,” said Tom Djokovich, XsunX chief executive officer. “Every other state offers some incentive.” Djokovich told Circuit that when his company was planning to set up a thin film solar manufacturing plant it chose Oregon due to the state’s incentives. California, he said, offered only a letter telling the company how great the state is, but offering no financial incentives. Ultimately it didn’t matter because the company lost its financing for the new plant last year during the financial crunch. But economists point out that there are numerous similar companies that other states are wooing away through tax incentives, quicker permitting, and aggressive marketing. “We’re at the cusp point now where we’ve seen so much job loss in the state,” said Barbara Halsey, California Workforce Investment Board executive director, at an August 20 meeting on clean technology advancement. She said that the year ahead will tell the extent to which clean technology can employ Californians. “We’re at the discovery point,” she concluded. The CalStart report recommended that the state streamline permitting for clean tech manufacturing by setting up a “one-stop shop” to coordinate siting. The Milken Institute recommended that the state establish a comprehensive clean tech manufacturing plan. Among other elements, it would include a tax credit for purchase of new manufacturing equipment, a “Made Green in California” label program to promote clean tech products made in-state, state university research and development aimed at clean tech manufacturing, and a coordinated public-private partnership aimed at financing new clean tech manufacturing operations in California. To build the state’s economic recovery on clean-tech and high-tech, according to Wong, the state has to begin addressing such underlying needs now. Otherwise, other states and nations will make what may be invented here.

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