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Reinventing Manufacturing

How the Transformation of Manufacturing Is Creating New Opportunity for California
Technology is revolutionizing manufacturing processes through innovations in 3D printing, robotics and big data (the Internet of Things) – often based on innovations that come from California. A range of factors, including rising labor costs in China, are leading some manufacturers to bring production home. California is in a good position to capture much of this growth, but needs policies that support and incentivize investment.

Throughout much of the 20th century, the US economy was buoyed by the manufacturing sector, which provided a source of middle-income jobs and drove new waves of innovation. Offshoring and recession have had major impacts on the sector, causing employment to shrink. However, technological advances and shifting global cost factors are now creating new opportunities for domestic manufacturing.

With more manufacturing jobs than any other state, California has a diverse manufacturing base. Its innovation ecosystem, which has led to links between manufacturers and technology companies, makes it particularly well positioned to take advantage of a resurgent interest in domestic manufacturing. This is especially true for products of an advanced technological nature and products that depend on custom design and repid response to markets.

Due to technological change, which has reduced the number of workers required for most production processes, this manufacturing renaissance is unlikely to generate jobs at the high levels it did in the past; however, it is central to a balanced economy and, if supported, can be an important source of economic competitiveness and high quality employment.

Acknowledgments

The Bay Area Council Economic Institute thanks the content contributors and generous funders of this project: A.T. Kearney; General Electric; Autodesk, Inc.; Lawrence Livermore National Laboratory; Lawrence Berkeley National Laboratory; Siemens TTB; Jabil; Wendel, Rosen, Black & Dean LLP; University of California Office of the President; PARC, a Xerox company; and Jones Lang LaSalle.

ATKearneyMiniLogoThe Institute is particularly appreciative of the support of A.T. Kearney, which led the research and drafting of the Major Drivers of Change section.