California productivity surges as employment shrinks, report finds

Tech causes productivity surge at California manufacturers but slashes jobs, LAEDC report finds

Manufacturing jobs in California have decreased dramatically — 40% of them gone in less than 25 years — but productivity in the state is leading the nation.

Even as the workforce has shriveled under the pressure of automation, offshoring and aggressive cost-cutting, manufacturing output has soared in the state, according to a report released Tuesday by the Los Angeles County Economic Development Corp.

The state is the top contributor to nationwide manufacturing output, responsible for 11.4% of U.S. production, compared with 10% from Texas, the report said. The manufacturing industry’s productivity is growing faster than any other part of the California economy, helped along by technological advances, researchers said.

Unlike many other parts of the country, where manufacturers work independently and ship components out of state, California has entire manufacturing supply chains for industries such as aerospace, biomedicine and fashion grouped in geographic clusters.

The proximity to similar companies encourages innovation and boosts efficiency, according to the report.

As of 2012, the largest group of California manufacturing jobs involved producing  semiconductors and other electronic components, centered largely in Northern California and accounting for more than 7% of the state’s manufacturing jobs.

Southern California has the second-largest cluster of such jobs, making components for satellite and radar systems for aerospace companies.

Overall, the lower half of the state accounts for two-thirds of total manufacturing employment, with more than 814,000 workers.

Manufacturers suffered more intensely during the recession and recovered more slowly than many other sectors of the state economy. Employment in other California industries, including government, soared 22.5% since 1990 while plunging for manufacturers.

The state bled jobs at a faster rate than the nation as a whole from 1990 to 2012, the report said, with 842,000 jobs lost — or more than the total number of manufacturing positions that currently exist in all of Southern California.

Less and less a powerhouse player in the California economy, manufacturing now accounts for 10.7% of the total value of all goods and services produced in the state, compared with 11.6% in 1990.

Follow Tiffany Hsu on Twitter at @tiffhsulatimes

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