California continues rise as ‘economic powerhouse’

The advanced manufacturing operations at Stratasys Direct Manufacturing in Santa Clarita center around 3D printing technology. Photo: Stratasys Direct Manufacturing

California’s grades on the 2018 Manufacturing and Logistics Report Card don’t look overly impressive: There’s just a single “A,” lots of “Cs,” even a “D.”

No, California won’t be this year’s valedictorian. But, the Golden State is among the most improved of the class.

Bolstered by improvements in four of nine categories – highlighted by a significant advancement in tax climate, long considered one of the state’s greatest weaknesses in business growth and retention – California is solidly positioning itself as “an economic powerhouse for years to come,” according to Michael Hicks, director of the Indiana-based center that produces the annual report that grades all 50 states.

California received one of just six “A” grades nationally for productivity and innovation, the same mark as a year ago, and also maintained its grades for logistics (B-), manufacturing (C), global position (C) and diversification (D).

A pair of the state’s improved grades provide the strongest signs of stability, though, said Hicks of the Ball State Center for Business and Economic Research (CBER).

In addition to improving from a “D+” to a “C-” in tax climate, a grade that puts California – and likely to the surprise of many business developers – in the “middle of the road,” Hicks said, the state moved from a “C-” to a “C” in human capital.

“If you’re attracting people, you’re going to do well in everything else,” Hicks told The Signal, noting that California will likely continue to enjoy an “endless supply of well-educated people” because of its favorable national reputation – and despite an inflated cost of living. “It’s when you’re not legitimately attracting people that you’re in trouble.”

Hicks also singled out the Golden State’s “C” grade in manufacturing: “California is a better place to manufacture and move goods than most people would say it is,” he said.

Advanced Manufacturing, in fact, is one of the Santa Clarita Valley Economic Development Corporation’s six primary clusters for continued growth, along with Aerospace & Defense, Medical Devices, Digital Media and Entertainment, Information Technology, and Headquarters & Professional Services.

The SCV’s top manufacturing companies, by employee count, include Stratasys Direct Manufacturing, which was honored in May by the Santa Clarita Valley Business Journal as Tech Company of the Year, as well as Honda Performance Development and Novacap, according to the SCVEDC.

Also on the 2018 CBER report card, California improved a whole letter grade, to a “C,” in liability gap and upped its mark from a “D” to a “C-” in benefits costs.

Nationally, Indiana was the top performer, earning an “A” grade in four categories, with Delaware and Kentucky both earning three “As.”

New Mexico was the weakest performer, logging five “Fs,” while Alaska and Hawaii both flunked in four of nine categories.

In addition to California, Delaware, Massachusetts, Michigan, North Carolina and Oregon were the only states to receive an “A” for productivity and innovation.

The only states to earn an “A” for tax climate: Florida, Indiana, Missouri, Montana and Utah.

The 2018 Manufacturing and Logistics Report Card, written by Hicks and Srikant Devaraj, CBER’s research assistant professor, is available online at

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