BILL ANALYSIS
AB 2437
Page 1
ASSEMBLY THIRD READING
AB 2437 (V. Manuel Perez)
As Amended May 28, 2010
Majority vote
ECONOMIC DEVELOPMENT 6-0 APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|V. Manuel Perez, Logue, |Ayes:|Fuentes, Conway, Ammiano, |
| |Beall, | |Bradford, Charles |
| |Bill Berryhill, Block, | |Calderon, Coto, Davis, |
| |Salas | |Monning, Ruskin, Harkey, |
| | | |Miller, Nielsen, Norby, |
| | | |Skinner, Solorio, |
| | | |Torlakson, Torrico |
-----------------------------------------------------------------
SUMMARY : Authorizes the establishment of the California
Manufacturing Competitiveness Act of 2010 for the purpose of
supporting the retooling and expansion of California's
manufacturing facilities, enhancing the state's logistics
network, and retaining and creating jobs. Specifically, this
bill :
1)Requires the California Industrial Development Financing
Advisory Commission (CIDFAC) to establish the California
Manufacturing Competitiveness Loan and Loan Guarantee Program
(program) for purpose of attracting, retaining and expanding
manufacturing facilities with more than 200 employees.
2)Provides that the objective of the program includes, but is
not limited to:
a) Encouraging the development of the state's long-term
manufacturing capacity;
b) Creating jobs through the support of retooling and
expansion of manufacturing facilities;
c) Assist manufacturers to cost effectively respond to
energy efficiency regulations and new technologies;
d) Prioritize assistance to manufacturers who consistently
pay the highest wages, based on the average weekly wage
AB 2437
Page 2
rate for their industry sub-sector, and pay health
benefits; and,
e) Prioritize assistance to applications that are jointly
submitted by management and the union at the facility or
the union pending representation of workers at the
facility.
3)Requires CIDFAC to develop and administer the application,
review and evaluation process including the eligibility
standards, rating and ranking criteria and other appropriate
policies and procedures, subject to, among other requirements,
the following:
a) The maximum loan and loan guarantee limits are $5
million and $10 million respectively;
b) Applicants must demonstrate they are in compliance with
applicable federal, state, and local laws and regulations,
or that the project for which they are requesting funding
will bring them into compliance;
c) All applicants must agree to annually report to the
CIDFAC on total capital investments made by the company and
total employment, as specified;
d) Wages for employees in California are, on average, equal
to or more than the average weekly wage rate for similar
workers in the same industry sub-sector;
e) Applicants provide health insurance benefits for all
full-time employees;
f) The applicant's turnover rate has not exceeded 20%
annually at any facility where moneys obtained through the
program will be used; and,
g) Loans must be paid in full six months prior to
relocation of a facility outside of California. If the loan
or loan guarantee included a subsidized amount, that amount
must also be repaid subject to a sliding scale, as
specified.
4)Requires CIDFAC, beginning October 1, 2012, to annually
AB 2437
Page 3
provide specified information on the program's activities and
impact on the manufacturing industry and on the state's
economy, including, at a minimum, the:
a) Total beginning and ending balances in the Manufacturing
Program Account;
b) Number of projects funded and the number of
manufacturers assisted;
c) Number of jobs created and the number of jobs retained
through program assistance in each of the fiscal years;
d) Amount of investments made by the manufacturer in the
year prior to assistance and the next two years; and,
e) Amount of federal, state, and local taxes paid by the
businesses in aggregate. Information on publicly held
companies shall also be reported separately.
5)Sunsets the provisions of the bill on January 1, 2016.
FISCAL EFFECT According to the Assembly Appropriations
Committee, there are no significant costs related to this
legislation.
COMMENTS :
1)According to the author, "the choices that Californians make
in the next year will set the foundation for the state's
economy for decades to come. Historically, the state's growth
strategy has been to aggressively seize new ideas,
operationalize the idea and birth a new industry or transform
an old industry. Today, we can decide whether to shy away
from manufacturing after the loss of so many jobs, or to
transform the state's old manufacturing strengths into new
products, markets, and opportunities. We can decide to opt out
of the national shift to a lower-carbon economy, or to be at
the forefront of developing clean and renewable energy
industries and quality jobs." This bill provides a new
financial component - "a deal closer" - in California's
ability to attract, retain and grow the state's manufacturing
sector.
AB 2437
Page 4
2)Manufacturing is one of the top five private industry sectors,
responsible for employing 1.4 million workers (9.3%) and
contributing $179 billion to the state's $1.8 trillion Gross
Domestic Product (GDP).
A robust manufacturing sector has many benefits, including
high wage jobs and a multiplier effect on other industries and
businesses. As an example, the Milken Institute estimates
that every job created in manufacturing supports 2.5 jobs in
other sectors. In some industry sectors, such as the
electronic computer manufacturing, the multiplier effect is 16
to one.
Manufacturing is California's most export-intensive activity.
Overall, manufacturing exports represent 9.4% ($120 billion in
goods) of California's GDP, and computers and electronic
products constitute 29.3% of the state's total manufacturing
exports. More than one-fifth (21.9%) of all manufacturing
workers in California directly depend on exports for their
jobs.
Manufacturing in California, however, even prior to the
current economic recession, faced many challenges maintaining
global and domestic competitiveness, including providing a
skilled workforce to support the changing needs of
manufacturing and goods movement and maintaining
cost-effective productivity in the face of lower safety and
wage standards in emerging foreign markets.
3)A number of significant manufacturing related actions are
taking place at the federal level. In December, the President
put forth a new national strategy on manufacturing and in the
months since, has made a number of key funding announcements
including a $130 million for a new Energy Innovation Hub.
Congress has also increased its interest in supporting
manufacturing. In 2009, Senator Sherrod Brown (D-OH)
introduced the IMPACT Act, which will provide funding for
assisting manufactures transition to the clean energy economy.
The IMPACT Act is currently included in the House approved
energy bill including $30 billion for states to establish
revolving loan funds and $1.5 billion for projects under the
Hollings Manufacturing Extension Partnership. Greater
AB 2437
Page 5
targeting of existing federal funding is expected following a
March 17, 2010 hearing by the House Subcommittee on Science
and Technology, where much of the discussion centered on the
funding priorities for the agencies overseen by the committee,
including the National Science Foundation, the National
Institute of Standards and Technology, the Manufacturing
Engineering Laboratory, the Manufacturing Extension
Partnership and Technology Innovation Program.
AB 2437 would establish a manufacturing loan and loan
guarantee program to help ensure California remains
competitive as the federal government rolls out new and
expanded funding programs.
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN: 0004637