Posted by
Playful Walrus on Wednesday, June 24, 2009 7:00:00 PM
Alana Semuels of the Los Angeles Times has the article.
Two months ago, more than 300 people were employed at the site making engine parts for trucks and heavy machinery for Gregg Industries, which is owned by Neenah Enterprises Inc. in Wisconsin.
But a settlement with the South Coast Air Quality Management District required Gregg to spend $5 million on factory improvements, so the company decided instead to leave the state. Company spokesman Adan Ortega Jr. said Gregg didn't want to make the payment in the difficult economic climate.
Gregg is part of the parade of companies marching out of California. The state lost 79,000 manufacturing jobs between 2003 and 2007, while seven other states with a meaningful percentage of U.S. manufacturing gained 62,000, according to a report scheduled to be released today by the Milken Institute.
What is causing this?
The report blames the state's onerous regulations and high taxes in particular for pushing businesses elsewhere.
But isn't the whole country losing manufacturing jobs?
The state is shedding manufacturing jobs at a faster pace than the nation as a whole, the report said. Though many jobs left the country in the 2002 recession, states such as Arizona, Nevada and Oregon saw an increase in manufacturing employment in 2003.
It isn't just the number and restrictiveness of the regulations.
Part of the problem, Wong said, is that regulations change so often in California that it's difficult for companies to plan. The state enacted an average of 15 changes in labor law each year from 1992 to 2002, four times more than state legislatures averaged nationwide.
It's hard enough to hit the target. Hitting it while it is moving is that much more difficult.
California also often requires projects to be approved in many different jurisdictions, so that a plan vetted by the state could be sidetracked by the county, Wong said.
It's one thing after another. In California, in addition to the usual federal, state, and local (County and City) laws, codes, and regulations, there are many for various special districts and commissioners such as the aforementioned AQMD, the Water Quality Control Board, the Coastal Commission, and so forth.
California GDP grew last year despite the global financial crisis, said Brian McGowan, the state's deputy secretary for economic development and commerce. And green-energy jobs in the state have grown at a rate 10 times faster than total job growth since 2005.
You mean taxpayer supported or taxpayer subsidized jobs? Those don't count.
To evaluate a state's business climate, he said, companies should focus on workforce skill, availability of capital and overall quality of life, rather than just on taxes and regulatory costs.
Well, yes, and when they see the land prices, artificial water and energy shortages, crime rates, graffiti, and the third-world unskilled, uneducated workforce with an entitlement mentality, they are further encouraged to leave or to expand elsewhere instead of here.
To prevent more departures, the study recommends creating incentives for innovation, assisting companies in obtaining capital, investing in workforce development and establishing an office to streamline the regulatory process.
The last one is the key. The other suggestions are likely to involve more government control and more centralized planning, which is the problem in the first place. Enough with the convolution system of rewards and punishment. Let property ownership and free enterprise work.