Fueled by aeronautics, electronics manufacturing, and the entrepreneurial dynamism of Silicon Valley, California manufacturers are one of the most influential contributors to the American economy.
For nearly 100 years, some of the best and brightest minds in manufacturing, aerospace, and information technology have called California home. In fact, with tens of thousands of manufacturing companies setting up shop in the Golden State over the last 50 years, California has more suppliers of custom manufactured parts per capita than any other state in the Union.
By a long shot.
Boasting those kinds of numbers, it’s no wonder that California’s manufacturing sector has a huge impact on the national manufacturing market.
According to the Los Angeles County Economic Development Corporation, California’s net manufacturing output has grown twice as fast as any other state, “increasing by almost 73% since 1998, compared to less than 32% for the nation” as a whole.
In 2014 alone, California’s manufacturing output was more than $250 billion, or 11% of total Gross Domestic Product.
And it all began with a small college by the name of The California Institute of Technology.
LOOKING SKYWARD: HOW CALIFORNIA’S MANUFACTURING SECTOR TOOK OFF
Not long after Orville and Wilbur Wright changed the course of history with the first sustained heavier-than-air flight at Kitty Hawk, North Carolina, aerospace pioneer Donald Douglas partnered with the budding California Institute of Technology to establish a then state-of-the-art aviation facility on CalTech’s campus in Southern California.
A decade later, in the late 1930s, that same aviation facility would help CalTech students Frank Malina and Jack Parsons test a small alcohol-fueled motor that would change the aerospace industry forever. Part of the first jet-assisted takeoff rockets – or JATOs -- Malina and Parsons' discovery would kickstart California's aerospace industry and the defense manufacturing boom of the 1940s.
But following World War II, the emphasis on California aerospace production was quickly lost to other states: Dwindling defense funding and shifting commercial markets forced aerospace companies to restructure both their manufacturing and sourcing strategies on a monumental scale.
Throughout the latter half of the 20th Century, California struggled to keep manufacturers of aerospace parts from looking – and moving – elsewhere.
Today, aerospace manufacturing in California is much different. Gone are the days where spacecraft and commercial airliners are manufactured from concept to reality in the Golden State. Or defense contracts fuel manufacturing growth. Instead, California’s modern aeronautics suppliers mostly don the hat of subcontractor, manufacturing custom parts for the many assemblies demanded by space and aviation verticals in states such as Florida, Michigan, and Ohio.
But not all is lost.
According to the California Space Authority, about 50% of the entire aerospace industry is supported in some way by California aerospace manufacturers, such as SpaceX and Boeing.
What’s more, the California aerospace vertical is responsible for thousands of subsidiary jobs in manufacturing subsectors and sister industries:
Since 1990, aerospace jobs in California have declined about 60 percent. But the sector is still responsible for around 203,000 direct employees, and supports 511,000 total jobs across multiple industries, directly and indirectly.” -- The California Economic Summit
And if not for aerospace, California's most influential manufacturing subsector may have lost its charge.
COMPLETING THE CIRCUIT: ELECTRONICS MANUFACTURING POWERS MODERN DAY CALIFORNIA
Perhaps not surprisingly, California’s modern manufacturing sector – neighbor to technology powerhouses such as Apple and Microsoft -- is mostly powered by suppliers of custom computer parts and electronics equipment.
Of the 4 highest ranking states for computer and electronics manufacturing (California, Texas, Oregon, and Massachusetts) California ranks first. And it’s mainly because of information technology and aerospace production and exports:
As global demand for technology products increases [many of which are used in aviation], California is well positioned to take advantage of that growth [in technology and aerospace]. In much of the developing world, incomes are rising and people are consuming more of the products made [in California].” – Beacon Economics
With more than $68 billion in production value in 2013 (the most recent year for data), computer and electronics manufacturing accounted for more than 20% of the United States’ total manufacturing output.
Benefitting from an increased emphasis on aircraft manufacturing during the 1950s and '60s, demand from a quickly evolving technology sector in the 1970s and '80s, and an influx of entrepreneurial engineers and venture capitalists in the 1990s, electronics manufacturing has become a staple of California manufacturing.
From semiconductors and computer peripherals, to electronic components and highly sophisticated space instrumentation, California electronics companies powered the aerospace industry, the machining vertical, and startups like Hewlett-Packard and Intel to weave an interconnected electronics web that has kept the Golden State economically competitive in the global manufacturing marketplace for more than 50 years.
INTERNATIONAL TRADE: CALIFORNIA MANUFACTURERS LOOK OVERSEAS
Exporting to key foreign markets such as Canada, Mexico, Japan, the United Kingdom, and France, as well as emerging markets like Taiwan and Brazil, California has made it’s manufacturing living from international trade.
In 2014, California exported a record-breaking $174.1 billion of Made-in-America goods to the world. $149.8 billion of those exports were manufactured products. In 2013, California exports of goods supported 802,000 jobs. And exports of manufactured products alone supported an estimated 668,000 jobs that year.” – Office of the United States Trade Representative.
Let’s put that in perspective. In 2004, exports of California’s durable goods accounted for only $64 billion of export revenue for the state. 10 years later, that same revenue stream has skyrocketed to $171.4 billion. An increase of 58%.
That’s a dramatic shift.
The largest contributor to export growth for California was computer and electronic products; this category contributed 15 percent of the increase in exports” over that 10-year period" – Office of the United States Trade Representative.
But it isn’t just aerospace manufacturing and custom electronics and computer parts that are driving California’s exports explosion. With an exports strategy more diversified than most other states in the Union, California provides global markets with “agricultural products (12 percent), miscellaneous manufactured commodities (11 percent), transportation equipment (10 percent) and machinery, except electrical (9 percent)” each and every year.
Moving forward, international trade agreements like the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership look to help increase the global footprint of California’s manufacturing sector, especially in emerging markets.
Custom Parts Manufacturing: What Does It All Mean For Engineers and Sourcing Professionals?
It all means that California is a land of expansive opportunity for buyers of custom manufactured parts, especially in the aerospace and electronics manufacturing verticals.
From metal fabrication to custom machinery and plastics and rubber manufacturing, California suppliers provide a diverse set of manufacturing disciplines to meet myriad sourcing needs.
If you’re looking to source custom parts for the commercial aviation or space industries, Southern California manufacturers are a good fit. Commercial aerospace R&D is growing at 4 times the pace of military & defense investments in California region.
The integration of information technology and digitization into aerospace products and industries—often funded and developed by the commercial sector—is becoming a disruptive force.” -- Los Angeles County Economic Development Corporation
And if you’re a sourcing professional or engineer looking for parts manufacturers in California to fill your custom sourcing needs in the electronics vertical, these 5 categories are perfect fits:
- Audio/Visual Equipment
- Laboratory and Medical Devices
- Custom Manufactured Computer Parts
- Circuit Boards and SemiConductors
- Aviation and Aerospace Components (Electrical)
As the boundaries of the California manufacturing industry are pushed to greater limits, and technology-heavy manufacturing solutions like “advanced manufacturing, robotics, and artificial intelligence” continue to be the primary foci of engineers and innovators, the Golden State will only increase its reputation as an incubator of manufacturing advancement.
This is Part 2 In A Series Examining America’s Top 10 Manufacturing States. Check back in 2 weeks to see how Indiana is strapping in and racing to the forefront of global manufacturing.
You can find Part 1 of this series here: From Agriculture to Automobiles: How Manufacturing is Retooling Alabama's Future