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Tuesday, Sep 27, 2022

AB 32 Puts Too Much Heat on Manufacturing Sector

It’s great that Tom Bowman, who wrote the pro-AB 32 op-ed in the May 3 issue, is voluntarily changing light bulbs, etc., but he does not run a manufacturing company. AB 32 – California’s new law that requires cuts in greenhouse gas emissions – is a mandatory “rock” on the back of manufacturers in California.

Los Angeles already ranks among the worst areas for job growth, according to recent reports from NewGeography.com and Forbes. Los Angeles ranks among the 10 worst in the nation for job growth among large metropolitan regions, ranking No. 59 out of 66.

The days of “Built in America” are becoming a thing of the past, as foreign countries are offering more to corporate America to entice investments of our wealth in their countries. Foreign competitors for our investments offer the following advantages over California:

• More business-friendly, i.e., local government, support for industry, fewer special interest groups and less potential litigation, etc.

• More cost-effective labor that is directly reflected in fewer “entitlements” to the labor force.

• Significantly less stringent environmental laws that impact the world’s carbon footprint.

California’s Global Warming Solutions Act of 2006, AB 32, places mandatory lower levels on manufacturers, not individuals, and continues to further the uneven playing field with other countries. It is set to push out our last manufacturing industry, the one that manufactures transportation fuels.

During a recent testimony before the California Legislature, Joseph Vranich, a business relocation coach, identified more than 100 businesses that have relocated or expanded outside of California, while just a handful have moved into California. The exodus trend may be hard to stop as it is difficult to attract private industry to invest capital in California and especially Los Angeles.

The cost impacts of AB 32 are as follows:

• Up to 60 percent higher retail electricity rates (Southern California Public Power authority).

• Eight percent increase in natural gas costs (California Air Resources Board).

• Increase in the cost of gasoline by 53 cents (U.S. Environmental Protection Agency).

• $50,000 more for the price of a new home subject to the AB 32 Scoping Plan for a net zero energy home (National Renewable Energy Laboratory).

• Higher prices for consumer goods due to increased fuel and energy prices. Low-income families would be particularly disadvantaged by the higher electricity, gasoline, and natural gas costs (California Air Resources Board’s Economic and Allocation Advisory Committee).

Alternative energy is expensive, as recently documented with the Department of Water and Power’s need for rate increases to provide the extra money necessary to lock in contracts with alternative energy providers. That’s because the DWP must get 20 percent of its power from renewable sources, as mandated by the mayor of Los Angeles.

Our California Legislature and the numerous special interest groups and entitlement groups that provide direction for our legislators may have failed to realize that California is dealing with a global not state or national economy. We are competing globally for private industry to invest their capital in California.

New infrastructure

California’s population, currently at 35 million and expected to grow to 50 million in the next few decades, will need new infrastructure to accommodate this growth. We need our legislators’ help to attract and retain companies in California that employ the folks who will pay the taxes that will ultimately fund the public infrastructure projects.

“Made in the USA” has become history as such manufacturing industries as textiles, steel, electronics, automobiles and the manufacturing of transportation fuels have mainly gone offshore or to more cost-efficient places in other states.

Increasing the uneven playing field in a recession – with 12.6 percent unemployment in California – by piling more rocks on the back of industry will only fuel the exodus of investments and jobs from California. Sacramento should be doing everything it can to attract businesses from other states and countries. Our legislator should be considering incentives and methods to create a level playing field with other states to keep the investments, jobs and technology here while we transition to alternative energy sources over the next few decades.

Ronald Stein is the vice president of business development for Principal Technical Services Inc. of Irvine. The company is a staffing firm for engineering and other professional service companies.


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