Once upon a time, California was the beating heart of American manufacturing.
From aerospace in El Segundo to semiconductors in Silicon Valley, the Golden State built things — big, bold, world-changing things.
But over the past three decades, factories have shuttered, jobs have moved overseas and California has become better known for exporting ideas than importing machinery.
Now, the tides are shifting.
COVID-19 exposed the fragility of global supply chains. Container ships stacked outside the ports of Los Angeles and Long Beach reminded us just how far we’ve outsourced our productive capacity.
Talk of “reshoring” — bringing manufacturing back to the U.S. — became more than just political rhetoric. For a moment, it felt like American industry was ready to make a comeback.
And yet, here in California, that comeback has been more sizzle than steak.
So what’s standing in the way?
Let’s start with the obvious: cost.
Industrial land in California is among the most expensive in the country. In Southern California, you’re lucky to find dirt under $50 per square foot, and in many infill areas, it’s well north of that.
Add in construction costs, utilities, taxes and the dreaded “soft costs” of entitlement and permitting, and your manufacturing project might collapse before you ever pour a slab.
But cost is only part of the equation.
Manufacturers also face a regulatory labyrinth. Consider CEQA, AQMD and CARB. If you know those acronyms, you probably also know how difficult it is to get an industrial use permitted in this state. Even clean, tech-enabled operations must navigate lengthy environmental reviews that can stretch on for years.
And then there’s labor.
California offers a deep talent pool, but it comes at a price. Employers must contend with one of the most complex labor codes in the nation, high workers’ comp premiums and rising minimum wages.
For many, it’s easier to head to Nevada, Arizona or Texas, where the cost of doing business is lower and the red tape is less suffocating.
So, if we truly want to bring manufacturing back — not just to America, but to California — we have to get serious. That means addressing five key areas:
Regulatory reform
Streamline environmental review for industrial projects, especially those involving clean or advanced manufacturing.
Fast-track permits for uses that reduce emissions and create living-wage jobs.
Strategic incentives
Offer tax credits, relocation grants and training subsidies that reward companies for building here. Compete with other states, not on ideology, but on economic viability.
Energy reliability
Manufacturing requires power — lots of it. California must ensure its grid can handle industrial demand without rolling blackouts or punishing peak rates.
Industrial land preservation
Zoning is destiny.
Too often, cities rezone industrial land for higher-tax retail or residential uses. If we want jobs, we need to protect the land where jobs happen.
Workforce development
Invest in vocational education, community college partnerships, and apprenticeships. We must rebuild the talent pipeline that once made California a manufacturing powerhouse.
We do have some bright spots.
Tesla, against all odds, continues to operate in Fremont. In the Inland Empire, logistics has exploded, proving that goods still move through California even if they aren’t made here.
But let’s be clear: we’ve missed major opportunities. Semiconductor plants are being built in Arizona, not Anaheim. Battery gigafactories are opening in Nevada, not Norwalk.
Manufacturing won’t return on sentiment alone. It will take political courage, private investment, and a willingness to rethink how California supports its industrial base. We’ve done it before. We can do it again.
The question is: do we really want to?
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.
