54.3 F
San Diego
Thursday, Mar 28, 2024
-Advertisement-

Manufacturing Job Losses Mounting Countywide

San Diego lost 135 more manufacturing jobs last month when Koch Membrane Systems Inc. announced it was moving its production line from Scripps Ranch to the company’s headquarters in Wilmington, Mass.

While the news wasn’t surprising given the high costs associated with making things locally, it underscored a trend of job loss that’s been occurring countywide for much of the past two decades.

“It was a hard decision for us to make but it really came down to where we want to invest our dollars, and put in a new production line,” said Phil Moynihan, general counsel for Koch Membrane, a maker of reverse osmosis water membranes used in larger water desalinization systems.

Moynihan said Koch owns a large facility in Wilmington with available space — it’s been leasing space in San Diego — plus its home site has a research and development unit.

“It makes more sense for us to have it in Massachusetts,” he said, adding that the investment to establish the new line is about $25 million.

Declining Numbers

Koch’s final net loss of 135 jobs wasn’t likely included in the latest state jobs report, but the statistics up to November paint a dismal picture. Up to that point last year, the San Diego region lost nearly 8,000 manufacturing jobs. As of November, manufacturing employment in the county was 93,800.

According to the California Employment Development Department, from August 2008 to September 2009, the state lost 121,300 manufacturing jobs. Dating back to December 2000, California has lost 557,300 manufacturing jobs, the EDD reported. Manufacturing employment in the state was about 1.3 million as of November.

While many of these jobs weren’t high skilled and paid low wages such as those in the apparel industry, the average wage was well above those paid by the services sector, said Michele Nash-Hoff, president of San Diego-based ElectroFab Sales, which provides customer services and sales support to nine small local manufacturers.

The manufacturing sector has a far greater impact on the economy because of the multiplier effect. For every manufacturing job, there are three to four other jobs created from businesses that supply materials and services to that company, Nash-Hoff said.

“Manufacturing is still the No. 1 generator to our economy in terms of its dollar contributions to the gross regional product,” Nash-Hoff said.

Indeed, it is the job multiplier effect, and noticeable lack of it, that is hindering this region and the entire nation from making much headway in reducing unemployment rates that hit 10.3 percent in San Diego County in November, 12.2 percent in the state, and 9.4 percent in the nation.

Not Overly Stimulating

Marney Cox, economist for the San Diego Association of Governments, the region’s planning agency, said the federal government’s stimulus funding may be creating some jobs such as construction work at area military bases, but the bulk of the funding is going to jobs that either have a less than 1 job multiplier, or a zero multiplier result, such as funding for unemployment benefits or job training programs.

“If you’re trying to lower the unemployment rate and generate job growth, we should re-evaluate how we’re spending that money,” Cox said of the well-publicized $787 billion program allocated by Congress in February.

At an Economic Roundtable presentation this month at the University of San Diego, Cox and two other economists noted the level of job loss locally last year was greater than any other year on record.

“2009 was the worst year ever as far as the local economy is concerned,” said Alan Gin, an associate economics professor at USD. Gin said in the past 35 years, there’s only been four years where the region had net job losses, and three of those years were during the recession of the early 1990s.

Though the data hasn’t been released yet, the net job loss for all of 2009 will likely be in excess of 50,000, Gin said.

Gin said while there are some signs the employment picture is improving, he expects the local jobless rate to rise to about 11 percent this year before it begins to drop in the second half.

More Optimistic

Lynn Reaser, an economist with Point Loma Nazarene University, sounded more optimistic about the national economy, saying she anticipated a V-shaped recovery, although less robust than in past recessions.

A national deficit of more than $1 trillion during the next decade could have a dampening effect, Reaser said.

Cox noted that the current deficit increased in the last two years by $1 trillion, an amount equal to what was paid in personal income taxes last year.

Though the region won’t show exceptional growth this year, at least there will be some, ranging from a half-percent to 1 percent of the gross regional product. The area should also generate a net gain between 6,000 and 12,000 jobs, he said.

Unfortunately, the majority of those jobs are going to come in lower paying service industries, not in manufacturing, Cox said.

High Cost Of Business

The cost of operating a business locally compared with many other areas of the country is much higher, causing many companies to allocate their capital resources in other areas, he said.

California and San Diego have huge gaps when it comes to support infrastructure, such as energy, water and transportation systems. And then there are massive structural problems associated with how the state is funded, and managed, Cox said.

The solution could lie in changing the state’s outmoded taxation system, and creating new ways of paying for government, he said.

Another idea is changing tax codes that now encourage cities to build more retail because of the need for sales taxes. As consumers trim their spending, there will be greater consolidation of retail outlets, resulting in increasing amounts of land.

“We should be looking at ways of converting this excess space, those car dealers and malls that will no longer be around, into land that can accommodate factories,” he said.

And with those factories, manufacturing jobs that pay higher wages, and create even more jobs.

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-
-Advertisement-