California’s Aerospace Dilemma

High costs and a lack of political support are the major factors leading aerospace firms to move out of California, according to a study released Tuesday by the Los Angeles Area Chamber of Commerce.

The study, conducted for the chamber by the consulting firm McKinsey & Co., estimated that as many as 150,000 aerospace jobs--and up to 250,000 jobs overall--could be lost in the state over the next five years if the state does not improve its business climate.

The study said the aerospace industry is a major supporter of charities and education, as well as the employer of 155,000 minorities who represent 32% of the total industry work force.

The report recommended that California could retain its leadership in aerospace by mobilizing public and political support, nurturing a healthy base of specialized industries and helping the industry reduce costs. The industry, meanwhile, must respond, including formation of a coalition to speak to key policy issues.

Groups Rate Congressional Delegations Associations rate delegations based on their voting records in support of the industry. Average index (100: most supportive; 0: least supportive). NATIONAL ASSN. OF MANUFACTURERS California: 38 Georgia: 58 Texas: 54 Florida: 49 Pennsylvania: 43 Ohio: 40 Washington: 40 New York: 25 AMERICAN SECURITY COUNCIL California: 38 Georgia: 78 Texas: 72 Florida: 71 Pennsylvania: 55 Ohio: 47 Washington: 49 New York: 34 BUSINESS AND INDUSTRY PAC California: 32 Georgia: 59 Texas: 55 Florida: 62 Pennsylvania: 45 Ohio: 45 Washington: 49 New York: 34 Source: Mead Data Central; McKinsey analysis Reasons Firms Leave the State In a survey, prime defense contractors ranked their reasons for leaving California. The scores represent an average, based on a scale in which 1 is the most important reason and 10 the least. Labor: 2.3. Wages too high; healthcare costs too high. Housing costs: 2.8. Cannot attract new employees. Regulatory climate: 3.8. Environmental regulations too restrictive. Local ordinances too restrictive. Federal lawmakers: 4.0. Insufficient support from federal legislators. Alternative locations: 5.3. Offer tax and other financial incentives. State infrastructure: 6.5. Transportation system insufficient. Taxes: 7.0. State taxes too high. Work force skills: 8.5. Better production labor elsewhere. Source: McKinsey & Co.