Reinventing Manufacturing

Reinventing Manufacturing
While California may not have a competitive advantage
for all types of manufacturing, there are sectors that are
well positioned to thrive in the state. Particular examples
include the manufacturing of products that are timesensitive
and products such as foods and beverages that
are location specific, as well as R&D-intensive products
of an advanced technological nature.
Manufacturing in California, ranging from food and
beverages to technology products, is deeply integrated
into the state’s innovation ecosystem. Often, early-stage
manufacturing will be located close to a company’s R&D
facility to allow industrial process managers to interact
with researchers as new products are developed and
modified. In other cases, producers stay competitive on
the global market through their close partnerships with
local technology companies and research centers.
As production factors shift, some manufacturers will look
to locate closer to their end markets or to improve their
proximity to innovation hubs, supply chain networks,
and labor pools. The cost of doing business—including
regulatory compliance, land and infrastructure
availability, and access to capital and financial incentives—will
play a greater role in manufacturing location
decisions as well, especially as firms look for critical
cost advantages.
In California and across the nation, advances in automation
that enable increased productivity with fewer
workers than in the past will impact the skill sets needed.
Manufacturing jobs will remain an essential source
of middle-wage jobs, vital for a thriving, competitive
economy. Specific actions can be taken to support the
growth and advancement of manufacturers in California
and to develop the workforce its producers need.
Stimulate the
Commercialization of Research
and Development through
Cluster-Based Strategies
Manufacturing has undergone multiple shifts over the
last 20 years, beginning with the movement of lowvalue
manufacturing processes to lower-cost locations.
In addition to the loss of many American manufacturing
jobs, offshoring portions of the US manufacturing base
risks the related offshoring of innovation. Historically,
the offshoring movement first shifted lower-end production
and later higher-value activities, including applied
research and development. Over time, more R&D followed
manufacturing to overseas locations, calling into
question the model where manufacturing is allowed
to leave but advanced R&D is presumed to remain a
domestic strength.
Critical components of the manufacturing ecosystem—
including knowledge and skills, supply chain vendors,
tools, and production equipment—have been lost in
industries that have undergone extensive offshoring.
Because of this movement overseas, many high-tech
products can no longer be manufactured in the US, 24
such as compact fluorescent lighting; LCD displays for
monitors, televisions, and mobile devices; lithium-ion
batteries for cell phones; consumer networking hardware
such as routers and set-top boxes; and advanced
composites and ceramics. The US has also lost the ability
to manufacture key categories of high value steel.
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