Economic Outlook n° 1187 | Special Report | The Reindustrialization of the United States
Euler Hermes
California CANADA Seatle Olympia
WASHINGTON Salem
Portland OREGON Boise IDAHO Carson City San Francisco
CALIFORNIA Sacramento
Salt Lake City NEVADA UTAH Los Angeles ARIZONA Santa Fe Phoenix NEW MEXICO Dallas TEXAS Austin Pacific Ocean MEXICO Houston New Orleans Tallahassee
COLORADO Denver
WYOMING Cheyenne NORTH DAKOTA Helena MONTANA Bismarck
SOUTH DAKOTA Sioux Falls
NEBRASKA Lincoln Topeka
Oklahoma City OKLAHOMA KANSAS
MINNESOTA St. Paul IOWA Des Moines
WISCONSIN Madison
Chicago ILLINOIS Springfield
MISSOURI Jefferson City
ARKANSAS Little Rock LOUISIANA
MISSISSIPPI Jackson
Baton Rouge FLORIDA Miami Atlantic Ocean
ALABAMA Montgomery
Atlanta GEORGIA
Indianapolis INDIANA
MICHIGAN Lansing
Detroit
Columbus OHIO
Frankfort KENTUCKY Nashville TENNESSEE Columbia SOUTH CAROLINA Raleigh NORTH CAROLINA
NEW YORK Albany
New York
PENNSYLVANIA Harrisburg
Washington WEST Charleston
VIRGINIA Richmond
The largest state economy in the U.S. Augusta Montpellier
VERMONT Providence
MAINE Concord Detroit MASSACHUSETTS RHODE ISLAND
CONNECTICUT Hartfort
NEW JERSEY Philadelphia
Trenton VIRGINIA
GDP for the manufacturing industry in California is $230 billion or 12% of all U.S. manufacturing. The concentration of industries within California manu- facturing is shown in Table 12 below. The first column indicates that computer and electronic products comprise 31% of all the manufacturing in California, by far the largest single industry. Along with petro- leum and coal product manufacturing, these top two industries are responsible for nearly half of the manu- facturing output of California. There are significant contributions from food beverage, and tobacco, and chemicals as well. The second column indicates that of all the compu- ter and electronic products manufactured in the U.S., 25% of it is made in California. California also pro- duces 21% of all the U.S. petroleum and coal pro- ducts. And once again there are significant contribu- tions from food, beverage and tobacco, and chemi- cals as well.
▶ Computer and Electronic Products Manufacturing
The computer industry is clearly the shining star in California manufacturing. The industry is heavily concentrated in the Silicon Valley region surrounding San Francisco. Corporations such as Apple, Cisco, Facebook, Google, Intel, and others have added tens of thousands of jobs and created billions in wealth over the past decade. The development of the indus- try is something of a random historical accident, lar- gely emerging from innovations at Stanford Univer- sity. As the industry blossomed in the 1980s, a secon- dary industry of venture capital formed in the region, helping to fuel growth. California’s share of total ven- ture capital funding in the U.S. is approximately 50%, the majority of which has gone into hi-tech indus- tries. Part of the remarkable growth surrounding the industry is due to the multiplier effect where one new job creates other related jobs, as in venture capital. The Milken Institute estimates that in the computer manufacturing industry one new job may create as many as 16 others.
L. California’s ID
% of California % of total US manufacturing in California
Manufacturing
Computers and electronic products Petroleum and coal products
Food, beverage and tabacco products Chemicals
Miscellaneous
Fabricated metal products Machinery
Other transportation equipment Plastics and rubber products
Source: BEA
100% 31% 17% 10% 9% 7% 5% 4% 5% 2%
13% 25% 21% 10% 9%
17% 9% 7%
12% 7%
These fast-growing businesses do require a highly educated and highly paid workforce. The San Fran- cisco Bay area has the highest percentage of college graduates in the U.S. workforce; 44% vs. 28% nation- wide. This is a hallmark of industries where the U.S. does not have to compete on labor costs; rather they compete on high quality, high value-added produc- tion.
Maintaining competitive advantage in this industry is critical, and the federal government should help in this effort. Educational standards in science, math, and engineering must be raised. Legal immigration must be promoted to keep talented workers on these shores after college graduation, instead of sending ◾◾◾