South Dakota Leads Nation : Study Ranks California No. 26 in Climate for Manufacturing

L.A. Times Archives

June 11, 1986 12 AM PT

From Times Wire Services

California’s climate for manufacturing ranked No. 26 among the country’s 48 contiguous states in 1985, according to a survey of manufacturers released Tuesday.

South Dakota ranked No. 1, as it did last year, followed by Utah and Nebraska, according to the report. South Dakota has no personal income tax, no corporate tax and no property tax. Michigan was No. 48.

The Southwest--Arizona, Colorado, Nevada, New Mexico and Utah--ranked as the best of eight regions. The West--California, Oregon and Washington--ranked No. 7, and the Great Lakes area was No. 8.

The study, titled the “Seventh Annual Study of General Manufacturing Climates of the 48 Contiguous States of America,” was conducted by Chicago-based Grant Thornton, an accounting and management consulting company. Thirty-six state associations representing more than 90,000 manufacturing companies were polled in compiling the report, the company said.

Factors taken into consideration in the study included the fiscal policies of state and local government, state-regulated employment costs, labor costs, availability and productivity of labor forces and other manufacturing-related issues, including energy and environmental costs.

Wages and unionization replaced energy costs as the top concerns of U.S. manufacturers, the study said, even though the nation’s manufacturing unions continued to lose ground in membership and work force penetration in 1985.

“Manufacturers are concerned with controlling costs so they may remain price competitive with the emergence of low-cost foreign producers,” said Selwin Price, who headed the study for the Chicago firm.

California’s rating slipped slightly from 1984, when the state was ranked No. 25. Among the 22 factors used in calculating the ratings, California ranked No. 1 in population growth. It also had high rankings in the stability of its unemployment compensation program and its high enrollment in vocational education programs.

California was rated poorly in areas such as energy, workers compensation levels and welfare spending because of its relatively high costs.

The state was rated No. 48 on the cost to employers of its workers compensation program, No. 45 for its energy costs and No. 43 for state and local government’s per-person spending for welfare programs.

The survey also showed that the Frost Belt continues to close the gap with the Sun Belt in manufacturers’ perceptions of good places to do business.

“Of the eight regions surveyed, three of the top four--Southwest, Southeast and South Central--are still Southern,” Price said. “However, there is a perceptible movement upward in the North, as well as ranking shifts between the regions.”

The top three individual states of 1985 all are from the Frost Belt: No. 1 South Dakota, and newcomers Utah, which moved from fifth to second, and Nebraska, which went from fourth to third.

Manufacturers consider an individual state’s performance in the rankings important in the consideration of future sites, Price said.

TOP 15 STATES FOR GENERAL MANUFACTURING CLIMATES

1. South Dakota

2. Utah

3. Nebraska

4. Arizona

5. North Dakota

6. Florida

7. North Carolina

8. Georgia

9. Kansas

10. Mississippi