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Keeping California on the leading edge of innovation
By: Milken Institute
October 19, 2010
   
   
While great ideas are still incubated in California, the manufacturing muscle is applied elsewhere, said Shariq Yosufzai, vice president of Chevron Corporation and incoming president of the California Chamber of Commerce. A State of the State Conference panel on innovation brought home the fact that we're losing out on these jobs because of red tape and high taxes.

In fact, Texas is using us as an example of how not to do manufacturing.

Californians like to rest on their innovation laurels, but Silicon Valley isn't going to bail us out of this, said leading venture capitalist Tim Draper. He was blunt about blaming unions for many of the state's woes. Instead of haggling over terms that make a business or government less competitive, he'd prefer to see unions negotiate for a management stake so they'd have incentive to make their enterprises great.

LEDtronics president and CEO Pervaiz Lodhie offered a breath of optimism. As a small business owner, he is seeing a strong spike in demand that signals a recovery, and he is firmly committed to keeping his company's jobs in California.

Unfortunately, that wasn't how things played out with Coda Automotive. CEO Kevin Czinger recounted his journey from R&D to scaling up manufacturing. He started a battery-cell manufacturing plant in China, where the government acted decisively with incentives and it's lightning quick to launch. Coda is also locating a plant in Ohio, which actively wooed his firm, in sharp contrast to his experience in California. In Ohio, he found qualified workers, no corporate tax on exports and a much more streamlined permitting process.

The Milken Institute's Perry Wong noted that California's human capital is slipping. We have long had a terrific ecosystem for innovation, but government, education and industry have act in concert. Somewhere along the line, he said, we forgot about industry's part of the equation.

But the golden age for the Golden State wasn't that long ago, Yosufzai reminded the audience. He believes we can take advantage of our size and diversity, and we have the opportunity to lead the way in sustainability. But we need to act now to stem the flow of jobs.


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