Solid state.

California weighs in with new programs to maintain its business base.

In any state or nation, manufacturing is the rock-solid base that creates high, value-added jobs and solidifies economic stability.

During the 1980s, manufacturing was an asset California took for granted. The California of the 1990s has no such luxury. Defense downsizing, a persistent recession, and the label of an anti-business climate have brought manufacturing retention into the economic development spotlight. It's a new day, and California must respond to the erosion of its manufacturing base.

Under the leadership of Director Julie Wright, the Department of Commerce is guiding the state's economic development activities with a strong focus on retaining California companies. The challenge to maintain California as a competitive place to do business is great. For too many years California relied on its many natural assets to entice businesses to build and grow within its borders, all the while creating bureaucratic barriers and obstacles which alienated them.

Now, in addition to the task of building a positive business climate through correcting the flaws in our state product -- workers' compensation, environmental permit streamlining, local government impact, education and training -- California must also battle the hordes of states attempting to lure them away.

States such as Nevada and Arizona, which possess a limited and less diverse manufacturing base, are investing millions of dollars in an attempt to acquire one. Often at California's expense, they tout cheap land, low taxes, and minimal environmental regulations.

California continues to be impacted by the national downsizing and inevitable restructuring of the defense industry. With more than 28 percent of all defense industry spending for goods and services taking place in the state, California's economy is significantly impacted by trends in federal defense spending.

The department is aggressively targeting its resources to respond to the needs of defense-related industries, with particular emphasis on aerospace prime contractors and their suppliers.

Significant initiatives in this area include the California Supplier Improvement Program (CALSIP), which is administered jointly by the Department of Commerce, the Community Colleges, Employment Training Panel and an industry advisory group.

The program targets aerospace suppliers for comprehensive training in Total Quality Management and other approaches for streamlining the manufacturing processes.

The department has also been named by Governor Wilson to administer a state industrial offset program established to help California defense contractors reduce financial obligations incurred through the sale of manufactured goods to foreign countries.

Developing partnerships at the local level is additionally important to the success of the state's efforts to assist the defense industry in developing new business opportunities. The Commerce Department currently is working closely with the San Diego Economic Conversion Project, a program designed to provide specific assistance to defense contractors in the area, and with the Los Angeles Aerospace Task Force on its defense conversion efforts.

The department is working with industry on the retention of Los Angeles Air Force Base, the hub of a large number of California aerospace contractors that support the nation's military space program.

Another ongoing project is to facilitate the establishment of Vandenberg Air Force Base as a commercial space launch facility. This designation would provide significant opportunities for existing human and technical assets developed in the aerospace industry.

Ensuring that California gets its fair share of federal monies currently targeted by Congress to defense conversion projects is also a priority for the Department of Commerce and the Governor's Washington D.C. office.

In addition to its industrywide activities, the Department has dedicated staff to respond to the retention of specific companies. Due to staffing limitations, these efforts have been concentrated on companies with more than 100 employees in metropolitan areas and 50 or more employees in more rural areas.

When Commerce staff learn that a company is considering relocation or closure, the firm and local officials are immediately contacted. After all issues have been identified, Commerce frequently leads a team approach which matches the needs of the company to appropriate public and private sector entities dedicated to the retention of the company.

In addition, Commerce personnel are working with city and county officials to create a statewide business retention alliance, which will distribute responsibilities of creating a positive business climate at all levels of government.

Since January 1992, the Commerce manufacturing retention effort is credited with the successful retention of nine California companies. Some of these companies were considering a move or expansion out of state and were convinced to stay. One had issued a WARN notice and closed its plant, which will now reopen, possibly under new ownership.

These businesses will continue to employ 2,472 workers, generate $65 million in average annual wages and produce approximately $6.5 million in personal income tax payments.

According to the California Association of Local Economic Development (CALED), 70 percent of business growth in the state stems from companies that are already located in California. The retention and expansion of California firms is essential to maintaining a stable tax base, attracting new business, and most importantly increasing employment for the state's ever-growing population.

The manufacturing retention program, established by the Department of Commerce, strives to forge a statewide network with partners in the private sector; officials at the federal, state, and local level; utilities; economic development corporations; and chambers of commerce.

It is through the leadership efforts of this network that California will be successful in maintaining its manufacturing base.