Is CA “steeling” for economic recovery?

150 150 Ed Coghlan

Originally posted at the California Economic Summit website.

“California has never been the best place to do business.”

We’ve heard these words for years.

When you head out to the vast Inland Empire of San Bernardino and Riverside Counties and talk to business leaders there, you can feel the urgency for a serious discussion about how the state does business. This is an area of the Golden State where manufacturing is particularly important.

Fontana’s California Steel Industries Inc. employs nearly
1,000 people in the Inland Empire and is one of the area’s
largest manufacturers (Credit: California Steel Industries).

Brett Guge is a senior executive at California Steel Industries, which employs nearly 1,000 permanent employees at its Fontana plant. He proudly states that in the 28 years they’ve operated, they have never laid off a permanent employee. Even at the depths of the recession when they were working at only 30 percent capacity, the workforce stayed intact. In fact, some of them were loaned out to other projects in the community.

In contrast, of the 179,000 manufacturing jobs lost in California from 2008 to 2011, this region saw a drop of 21,100, according to the California Employment Development Department.

Guge pointed out that, for every manufacturing job that California Steel Industries creates, seven more are developed in the local economy.

The people at California Steel Industries consider themselves a good corporate citizen and want to lend their voices to the discussion about how to revitalize the California economy.

In an interview with Guge, we heard two main areas that he strongly believes California needs to address in his industry and others are going to be able to expand:

1. A focused effort on workforce development.
2. A more hospitable regulatory environment.

Training A Work Force

On workforce development, Guge sees an opportunity for California to truly lead. He said that the manufacturing sector needs people who can understand technology.

“We don’t need workers to have four-year degrees, but there’s sophistication in today’s manufacturing plants that demands workers are prepared. It’s hard to find them trained and ready to go,” said Guge.

He called for a “focused effort” by California on using the community colleges for training manufacturing workers for 21st century jobs.

“The lack of trained and prepared manufacturing employees is not limited to California,” said Guge. “This is a real opportunity for the state to lead.”

Hospitable Regulatory Environment

Guge said, when he goes to Sacramento, people in the capital are often surprised there is even a steel industry left in California, which obviously frustrates him.

“Like it or not, California has the reputation of being anti-growth and anti-industrial,” said Guge. “Other states have set up shop in California trying to entice people to move to their states.”

Right now he said the time and costs of building a new manufacturing facility in California just don’t make sense to companies.

“The hard truth is it takes twice as long and costs millions of dollars more to build a plant in California,” said Guge.

Yet California Steel Industries isn’t moving. They’ve invested over $2.5 billion into what was the old Kaiser Steel Plant to renovate it and keep it competitive.

“But, as a state, we have to figure out how to come together so that the state economy can grow, the environment can be protected and most importantly that people can get back to work in good paying jobs that let them build a future for them and their families in California,” Guge concluded.

California Economic Summit

The first California Economic Summit will be held in Santa Clara on May 11 as local Californians convene to create an action agenda that addresses the issues that Guge has raised.

The head of the Los Angeles County Economic Development Corporation, Bill Allen, has a great description when he says the state needs “less red tape and more red carpet.”

To achieve that goal will be the focus of the Summit which will attracting leaders from around the state with real expertise to actively participate and come with real action that can create jobs and improve California’s competitiveness around the globe.


Ed Coghlan

All stories by: Ed Coghlan