Senate Select Committee on Select Committee on Economic Development and Technological Innovation

The Subcommitee on Economic Development and Technological Innovation will come to order. We're meeting here in the O Street building in room 1200 and appreciate all of our panelists here today.

We have a number of Members who will be dropping in and out and we appreciate, we know we had to reschedule this due to the Senate budget retreat to a post session meeting, but we'll have a number of our colleagues I know who are watching remotely and have staff watching remotely and who will be with us today.

So. And I appreciate. Senator Wahab, we're just starting. I'm going to do my opening remarks and then I'll turn it over to you for opening remarks. You have your whole team here from Fremont. Very exciting. I call this hearing the Select Committee on Economic Development and Innovation to examine California's industrial policy as it relates to manufacturing.

California is the fourth largest economy in the world and we are a leader in advanced technology research and development. My district is one of the many, but is certainly a distinction of being a hub of innovation in California and an incubator for ideas that tackle today's most pressing challenges.

I myself am a former founder and often hear from innovators that when it comes time for them to scale their ideas with manufacturing facilities here, they're faced with regulatory uncertainty and risks that forces them to look to other parts of the country.

While yes, California costs are higher than average, companies in high tech sectors have real incentives to stay here as the lines between engineering labs and factory floors become increasingly blurred. And I'll veer off script to just tell a quick story.

When I was, which this is right before I was elected and I took a red eye to New York for something else and I saw a dad from my kid's school, I said, zero, what are you doing here? He said, well, I'm about to board the flight to Syracuse. I said, you know, why are you doing that?

He said, well, you know, they gave us a lot of incentives to build a manufacturing facility in upstate New York. I said, you know, would you have done it in the Central Valley, say if it was remotely close? He's like, yeah, absolutely. I'd much rather have done in the Central Valley.

But, you know, this was the opportunity for us and you know, but he clearly would have much rather stayed in California if it was sort of a remotely closed situation anyway. In 1990, the state had nearly 2 million manufacturing jobs.

Today that number sits at about 1.2 million after three decades of decline and stagnation, particularly in the tech sector. These are not just lost jobs, but Careers which offer wages that allow people to move up the economic ladder without a college degree.

And I would say that across, not just in the tech sector, but across the whole manufacturing sector. I'm proud of the work our Governor has done to address these losses. In 2025, the California Jobs first plan delivered 1.6 billion in funding, 61,000 jobs and 142,000 trained workers into the economy.

This investment is paying real dividends back to the people in our state. But there's still much more work for us here in the Legislature, and we must build on that progress.

Manufacturing doesn't just present opportunities for employment, but also for California to lead the charge in addressing climate change, which is another area where I hear from friends all the time about companies they've invested in that are manufacturing elsewhere. But climate change particularly, we need to lead in the face of federal inaction.

We have a duty to ensure California innovation is scaled here on a grid where more than nine out of 10 days in 2025 were powered by 100% clean energy for at least some part of the day.

And with a labor force that has strong protections for health and for safety, however, there are real structural barriers that manufacturing companies face. We had a roundtable in my district with about 25 folks and excuse me, one of the things we heard that manufacturers here are subject to more than 3,800 regulatory constraints.

On average, more than three times the national median. Again, the feedback was clear from these manufacturers. They all want to stay in California. But uncertainty in energy delivery, which I'm sure we'll hear about, energy delivery permitting timelines and regulatory requirements introduce a risk that sometimes prevents them from breaking ground.

I want to take a moment also to give a shout out to my colleague. Senator Tim Grayson can't be here with us today. I know his staff will be will be here and we'll give him a summary afterwards. But he's really led the way with a manufacturing tax credit.

He's focused on advanced manufacturing and this was in the governor's budget for the first time. So again, I give a shout out to Senator Grayson, who we'll be working closely with on follow up. The goal of this hearing is to understand where California compete without compromising on our values as a leader in the environment and labor protection.

This is about expanding good jobs for college graduates and non college graduates and harnessing the clean infrastructure we've invested in to shift industry away from unsustainable energy sources.

I want to thank the panelists and my colleagues here on the dais and the Ones who have, who have written to me about this hearing are very excited to hear what we're doing. I look forward to hearing from our witnesses. First, I'd like to turn it over to Senator Wahab for some opening remarks.

Thank you. You know, I really just am very proud of the work that's coming out of my district. And, you know, being able to have this particular hearing on examining California's industrial policy, manufacturing and economic development is incredibly important. So I want to thank the chair for having this.

And, you know, just for everybody that's participating, I also want to just shout out the city of Fremont, which is in my district. Both Geneva and Donovan are here, who pretty much do a lot of the work that we're going to be talking about.

And the reason why I'm highlighting Fremont in my district, it is because it is the city with the most manufacturers and in the state of California. And when you drive through Fremont, you don't necessarily see manufacturing. Right. You know, these buildings and things like that. It's a beautiful city.

And the fact that these jobs are actually good paying jobs. And I want to be very clear about that. A lot of the manufacturers that I have personally toured and talked to, they span different types of manufacturing throughout the district. Right. And I also cover Sunnyvale and Santa Clara and Hayward and much more throughout this particular district.

It is the economic driver of the state of California. And I want to be very clear about that because when we are talking about manufacturing, it stems from we're talking about chips and semiconductors. We're also talking about plastic bottles. We're also talking about, you know, a wide variety of things, including food manufacturing plants and much more.

So manufacturing is incredibly broad and there's a lot of opportunity.

And when we have these conversations with the manufacturers, the robust conversation that also is happening in the local schools, you know, I want to be very clear that a lot of us have gotten a degree and sometimes that degree doesn't pan out or doesn't pay as much as we'd like.

And there are people that are new arrivals to the United States. There are people that are single parents that are trying to find, find a better career path that pays more. The entry level standard in the majority of the manufacturers that I have personally asked about pay roughly $25 an hour. Right.

And this is an in, like literally an individual that they pull up, they train, they provide all these services and they have partnered with the local community colleges.

So whether it's Foothill College, whether it's Ohlone College, whether it's now we're trying to create this type of programming in Chabot College is that there is an apprenticeship program, right, that the students can actually learn, get paid on the job and be able to survive in the Bay Area.

And that's one of the biggest concerns that most people have is I need to get the education and the hands on experience, but I also need to get paid. And so our labor partners are deeply invested in manufacturing and making sure that people are paid fairly and equally.

And you know, again, I just really want to highlight that it is a team effort. You have the cities that you know, need to do the work to promote the business, help the businesses with permits and much more.

You have the institutions and the schools that also have to recruit and train and help the folks that are the employees. And then you have the businesses that also need to be successful and very open minded and nimble and pay fairly.

So I'll keep my remarks in extremely brief, but I wanted to stress the importance that manufacturing has for the long term success of not just our state's economy, but for families that live and work in our great state.

The chair clearly stated that manufacturing sector alone, you know, delivers $405 billion in output, which was nearly about 10% of our GDP. But more importantly, that translates to 45,000 manufacturers and 1.2 to 24 million workers that keep our communities employed, Fed housed with everyday people being able to invest back into their local communities.

24% of manufacturing jobs are located in the Bay Area, as I said, which is one of the reasons why it's so important. It's one of the reasons why the Governor even highlighted our district and specifically the city of Fremont. They're doing a great job. And these industries and the workers they hire are my concerns constituents.

California remains a global leader and I will say that this does play into our global politics. It plays into our global economy, it plays into our future. So we have seen a significant number of setbacks, you know, with the Federal Administration's tariff policies that are impacting the health and long term stability of our manufacturing industry.

So we cannot forget that manufacturing industry is directly related to the economic health of our state. And so I'm looking forward to hearing directly from stakeholders here, both labor, manufacturers and our local city. So I want to thank all of you guys for being here and again thank the chair for hosting us.

Good. Well thank you. And again I thank you particularly Senator Hobb, for your passion for this, for your work with the city of Fremont and also last year for leading our affordability working group. Which did a lot on workforce development. And particularly Senator Padilla led a lot of he also was talking to him in advance.

He could not be here today, but he's very interested in this, what we'll be discussing here today. And he led a lot of that workforce development stuff under your leadership with that working group. So grateful for that. Grateful, Senator Niello, for joining us here today with that, I'd like to invite up our first panel.

Excellent. Thank you all. I think we'll start with California Forward, and we have a presentation. Are you going to go through slides as well?

Yeah, we have a couple of slides that we're going to share. Yes. And I think the clicker works for that.

It should. It should, yeah. Looks good. Okay.

Excellent. Thank you very much, Chair Becker and Senator Niello and Senator Wahab. My name is Egon Terplan. I appreciate the opportunity to speak here. I serve as the Regionalism Fellow for California Forward, a multi-partisan nonprofit focused on building a new California economy that's sustainable, resilient, and inclusive.

Our work centers economic growth through a regions up approach, stewarding state resources, but also building resilience in the face of climate and economic change. I was fortunate to previously serve as the senior advisor in the Governor's Office of Planning and Research, where we worked on helping set up the current framework that's being used for state and regional economic development in California, in close partnership with GO-Biz.

We initially called this work Regions Rise Together, which is going to be a theme. I'm going to talk about the importance of regions. And it later became the Community Economic Resilience Fund and is now California Jobs First.

I'm here with my colleague Jake Higdon, who's going to follow me and speak in more detail on industrial policy and manufacturing. So in part, what I'm really focused on today to speak through is a little bit on the elements of the regional economic development system that we built in California, what we were intending to achieve, and some of the opportunities now to build on that further.

And I think what we're going to hear more from others is how do we have the more specifics to achieve some of what we heard in the opening remarks of companies that are growing in the Bay Area but that want to commercialize and expand and locate in the Central Valley instead of going to other states.

And the kind of punch line of everything that I'm going to try to get to is fundamentally this idea is we need a durable structure for regions to have a partner with the state, every region in California to have a strategic plan identifying its sectors, but really to have all ongoing, consistent funding.

And that's in part what we're going to describe briefly. So the first point to start at the big picture is that we often hear and talk about California as the fourth largest economy in the world, which it is in the aggregate, but it obscures a critical reality that we're really not a single economy.

We're instead a series of distinct but Interconnected regional economies. Every part of the state has distinct assets, risks, trajectories, and opportunities to build on. So of course we have Silicon Valley and the innovation economy that's growing and evolving.

But we also have oil and gas and renewable energy in Kern County, the warehousing logistics concentrations in the Inland Empire and other parts of the San Joaquin Valley. We also have food processing and emerging bioeconomy in the North San Joaquin Valley, and of course, the forested north and Sierra and the rural economies there that are also transitioning.

And each of these places experiences transitions differently, whether it's geopolitics, climate change, tariffs, automation. And understanding those distinctiveness is important to our policy work. We also have to be cognizant that California, despite the economic success, has some of the highest levels of poverty and inequality in the nation.

More than 7 million Californians lack resources to meet basic needs. And increasingly, that inequality is geographic, particularly between many coastal communities and inland areas. We know that educational outcomes, household incomes, you can see as double sometimes between the coastal communities and inland areas.

So recognizing that challenge, that geographic inequality, but also the inequality within regions, is what led us seven years ago, at the start of the Newsom administration, to talk about Regions Rise Together and try to set up this framework. And then with the impacts of COVID, which were unmistakable, but also were distinct across the different regions of California. As the shock of the shutdowns and then their trajectories in recovery led to the creation of something called the Community Economic Resilience Fund, which is now called Jobs First.

And so that deliberate strategy that was laid out in Regions Rise Together wasn't just about funding a specific program, but it was really about aligning state investments towards regions, as regions would identify their assets and prepare a transition plan, a recovery plan, a long term vision for their economic growth.

People at the regional level working in coordination, collaboration across sectors, business, labor, community, private sector, local government, as well as the state agencies, aligning resources to help those regions realize a different economic trajectory.

Part of that work also related to the K-16 education collaboratives and the notion that we also need to align education and workforce development. Because on the one hand, we need to make sure that there's economic mobility for people, especially in the regions where communities have been left behind.

And we know that there's much better returns when we have a full system that creates clear pathways from education through training and into high quality jobs. We want to be training people for jobs that exist, so the workforce system has to be very well aligned with the economic development system.

But then we also need economic resilience for places so they can adapt and evolve to these ongoing competitive pressures from technology, climate, global economic change. And so people can also have opportunities in the regions that they come from. So the good news, after a number of years, we've made some meaningful progress.

And I think we heard some of the statistics that, Senator Becker, you mentioned in the opening remarks. But first, we have in every region in California a strategic plan. We'd organize the state into 13 economic regions. They all have a strategic plan. Those plans have identified sectors. Every region also has a K to 16 education collaborative.

And there's been thousands of people participating in this process. That is new civic and institutional capacity all across the state, and for the first time we have the foundations of a statewide system. But here's where it comes now. We have to be honest about the limitations. It's built well in places where there's a lot of existing coordination.

There was existing institutions to build upon. But it's been harder in some of the areas that didn't have all the regional capacity, and that's been uneven. And so the system continues to remain fragmented. There's still workforce happening here separate from economic development. There's a lot of plans across many existing regions, but not as much coordination.

And I think the regions are really looking to the date for true ongoing partnership. But the most important point is the investment we made through California Jobs First and the regional investment program was one time. It wasn't a durable system. In 2021 it was funded at $750 million.

Then it became a $600 million program, and ultimately $150 million had to be cut during some budget challenges. And so we ultimately have a one time program, which is a lot to build on, but I think something that we need to look to make something more durable looking forward.

So that's where we think it's important to look at some other states. And I think we're going to hear more from others here about how that might look, how this looks in other environments. Many of our peer states and many states all across the country have a dedicated economic development agency, make ongoing investments in regional economic development.

And what that does is it builds collaborative capacity over multiple planning cycles. We have New York listed here. They have 10 economic regions and economic council in every region. There's a $50 million allocation to each of those regions on an ongoing basis. What that means is you have an incentive to stay involved in that collaborative process.

They align a lot of the state funding towards projects that are prioritized in those regional plans. So it's something to build on, it's something to learn from other places, and there's many, many models out there. But durability alone isn't enough. We also have to intentionally grow strategic sectors.

And that's also something we know very well from looking at other countries as well as these other states. We want to support real economic diversification and bring quality jobs to all regions. So that's why this three part system that California Forward is talking about, encouraging others to engage with us on, is part of what we're trying to describe.

How do we simultaneously have a state structure where there's an integrated state economic development plan based on regional input that's connected to regions that also have a dedicated plan where there's collaboration and coordination at the regional level, but also ongoing tools and investments in the projects that grow those priority sectors that are coming out of those regional plans.

So to explain a little bit more about the importance of that sector work, I'm going to pass to my colleague Jake to speak more about the role of manufacturing and the ecosystem and what a California specific industrial strategy can look like in practice. Thank you very much.

Thank you. Chair, Members, good morning. Thank you for the opportunity to testify today alongside my California Forward colleague, Egon Terplan. Egon laid out some of the history and the theory behind an overarching economic development framework that brings together state leadership, regional coordination, and project level execution.

I'll be zooming in a bit more on the role of industry and manufacturing in that strategy, and specifically on clean industry and advanced manufacturing. In my role at California Forward, I work on efforts to shift California's economy towards the industries of the 21st century. Now, California has long been a manufacturing powerhouse, perhaps an underrated one.

Senator Becker, you mentioned some of the raw numbers at the top of this hearing on overall output, on the fact that there are still over a million manufacturing workers in California. But those raw statistics belie a broader trend. The state's industrial muscle is slowly eroding.

In recent decades, California has found itself in the role of inventor of critical technologies on one end and consumer on the other. But it is missing many key steps along that value chain. When you lose that middle, you lose an engine of inclusive growth. Manufacturing contributes to high quality, stable jobs.

It supports local tax bases, providing revenue for schools and other critical services, and it drives innovation as you go from a controlled lab environment to full scale production. You learn every step of the way. You spin off new technologies, new businesses, and you build a workforce that attracts other manufacturers and Investment.

Our vision for green industrial policy revolves around the premise that certain manufacturing sectors and industries are not just a path to economic prosperity, but also critical to a resilient, durable energy transition. Climate action is not a pen and paper exercise. It's a matter of producing physical goods. Steel, cement, wires, batteries, cars, trains, chemicals, and moving them around.

Building the muscle to supply these goods will ensure we can achieve our state's ambitious climate goals in the decades ahead. It is rare in the history of modern industrial development to have this kind of win win. One such win win sector is in the next generation battery supply chain.

And I'm sure we will hear from others about the opportunity that batteries present for California, so I'm just going to touch on it briefly. Batteries are needed for our climate goals. In many ways, we invented them in California. UC scientists have won Nobel Prizes for lithium ion battery technology.

And yet the manufacturing has largely scaled up elsewhere, driving jobs, economic growth, and innovation spillovers outside of California. Those same California invented products then get shipped back into the state as one of the world's biggest end market for batteries.

Today, we risk creating that same missing middle with a next generation of amazing California battery companies, like Sila, Lyten, Antora. When our CEO Kate Gordon and I were at the US Department of Energy during the Biden administration, we consistently saw this dynamic. These maps are almost the inverse of one another.

On the left hand side, DOE programs were funneling tons of R&D dollars into the UC system, into national labs, into startups. On the other hand, on the right hand side, California was rarely positioning itself as the home for supply chain scale up.

In fact, I looked back at my database of bill and IRA demonstration and deployment funding. Of 67 grants totaling nearly $8 billion for battery and EV manufacturing, two small recycling demonstrations were awarded to California, just $13 million in total, less than a quarter of a percent of the total funding for supply chains and manufacturing.

So let's say we want to take collective action to change this dynamic. What does a green industrial policy that fits within that state and regional economic development framework that Egon was talking about look like? First, the state must finish the job with the process it started in Jobs First.

It must take the economic blueprint one step further to develop sector specific roadmaps that take a hard look at California's assets and limitations in priority sectors, then align state resources to fill those gaps. Let's take a specific example. Again, the economic blueprint and Jobs First regions have identified the bioeconomy as a strategic sector.

It makes sense given California's assets. We have the nation's greatest agricultural and forestry expertise, and we need to produce low carbon bio based products to replace things like petrochemicals and emissions intensive building materials as we undergo the energy transition. We also need a market incentive to do the waste management and wildfire mitigation necessary to get biomass out of our forests and out of ag waste piles.

Imagine a robust California bioeconomy that utilizes wood from forest treatments in the north state or almond holes from Central Valley farmers to manufacture new innovative low carbon products. The state, to its great credit, has provided a Jobs First grant to BEAM Circular's Bioeconomy Innovation Campus in Stanislaus County, filling a scale up gap in the biomanufacturing ecosystem.

So what happens next? More is needed to identify and solve challenges that individual regions and private companies cannot. What actions will be necessary to build out the bioeconomy over the course of not just years potentially but decades? How will we connect feedstocks with end markets, which could be in opposite corners of the state?

How can the state drive demand for these emerging products to get over the valleys of death as they scale up? This need for sector specific roadmaps is why California Forward supported SB 787 last year and why we continue to endorse efforts to expand the state's role in industrial road mapping and then put resources behind the specific recommendations in those roadmaps. It's also why we are doing our part to develop a statewide bioeconomy roadmap of our own.

There are many other ways the state can actualize green industrial policy, and I don't have time to get into them all today. But I want to leave with just one other recommendation. The need to empower California government to be a proactive partner in industrial development. Literally, industrial development should be in the state's job description.

It should be in state's employees job descriptions. It's not that hard to imagine it because lots of states do it. If you are a hard tech CEO looking to scale your products, chances are dozens of states are lining up to help you figure out where and how to build your factory.

California is probably just not one of them. For strategic priority industries that drive both economic prosperity and climate progress, partnership looks like building state capacity to do many of the things on this slide slide to help manufacturers navigate the complexity of scaling up in California.

In closing, California is the best place in the world to invent new clean technologies. It's the best market in the world to sell batteries and other low carbon products. But we still have this missing middle. We believe in the ends, a 100% clean economy, but we don't produce the means.

If California wants to achieve an energy transition that is truly equitable, resilient, and delivers jobs and economic benefit across the state, we need to embrace this type of industrial policy. I hope I've offered some initial inspiration for how to start. Thank you.

Well, you have. So thank you. We're going to probably hear from each panelist and then we'll kind of go to questions. So I think next, Priyanka, you'll be next. Great. Awesome. Thank you.

Chairs and Members of the Committee, thank you so much for the opportunity to testify today. My name is Priyanka Mohanty, and I am the Executive Director of the Center for Manufacturing a Green Economy, or CMGE. CMGE is the nonprofit sister organization to the United Auto Workers out here in California.

We focus on workforce training, industrial climate policy, and cultivating manufacturing companies across California's clean energy ecosystem system, particularly in critical industries like batteries. I'm going to be talking to you today about why industrial policy and manufacturing is a critical next step to California's climate progress.

Across my career, I've learned one central lesson. Climate action that is not paired with economic benefits is socially invisible and politically fragile. In countries around the world, climate action is treated as a development strategy, creating new industries, new good jobs, and new opportunities. And in doing so, bringing people into the political project of this massive whole of economy transition. That lesson is increasingly relevant here at home.

California has, of course, been a global leader in climate action, shaping national markets and building a strong foundation to continue decarbonizing even in the face of national regression. But we should be honest. Much of California's climate strategy to date has been driven by deployment and consumer incentives. If you can afford an electric vehicle, you buy one.

If you can afford solar and storage, you install it. Most people can't. Many Californians experience climate change's austerity, higher energy bills driven by wildfires and heat waves, rising insurance costs, and means tested incentive programs, not something most people easily benefit from. For example, I often hear that California now has more EV chargers than gas nozzles. That is an impressive achievement, but it masks a far messier reality.

45% of Californians are renters who face range anxiety and have limited access to fast, quality public charging. Even homeowners who want an EV are often deterred by the upfront costs, not just of the car, but of the panel upgrades required to charge at home. Polling in 2025 from Pew Research reflects this reality. Cost remains the top barrier to EV adoption for 8 in 10 Americans across income levels. And only 1/3 of Americans say that they want to own an EV.

At the same time, cities across California are banning battery storage installations despite overwhelming evidence that battery fires are rare, and increasingly so. Because the technology still feels unfamiliar and risky. These perceptions matter and these gaps matter. Our lives feel unaffordable above all else. And nowhere is that more acute than here in California.

When people do not feel that the energy transition is in their lives, when it feels abstract, extractive, or elite, it becomes a scapegoat. And that is why industrial policy and clean energy manufacturing is that critical next step in building California's green economy. It is the opportunity to grow good jobs, invest in our state's tax base, socialize this technology that we need, and connect climate action to economic development.

So what do I mean when I say industrial policy? You heard from my colleague Jake a little bit about this, but I mean a time tested playbook, public investment, joint ventures, loan guarantees, local production requirements, state procurement, and strategic supply chain planning. We have seen this approach used here and around the world.

For example, India's production linked incentive scheme provides domestic manufacturers in strategic sectors with financial support tied specifically to sales and performance benchmarks. Since 2020, it has increased clean energy employment, it has expanded a domestic manufacturing market, and it's actually helped position India to overtake the US as the world's second largest solar market in the world.

Brazil's neo industrial policy provides special credit lines for domestic green manufacturing technologies and preferential procurement for local products. And of course, over the past decade, China has dominated the clean energy supply chains that we know we need. China's advantage is not mysterious.

It comes through cross applying manufacturing know how from parallel industries, like cell phones to battery storage, strategically integrating supply chains, investing in low cost battery chemistries, and above all else generating sub national competition supported by provincial industrial policy, not federal. The result is climate affordability.

Roughly 60% of EVs sold in China are cheaper than their internal combustion engine counterparts. 60%. As technology continues to evolve, that vision of industrial policy is quite conceivable here in California. And in fact, this isn't new for us.

Our federal government has the tools to do this already, most notably the Defense Production Act, which allows them to provide direct investments, loan guarantees, off take commitments, and fund capital for manufacturers in sectors of national interest, from steel and semiconductors to PPE and vaccines.

California should provide itself with similar tools to achieve the benefits of this type of policy, including the potential to produce affordable climate goods. And of course, our industrial strategy must be targeted to meet the moment or we risk falling behind. You will hear from others today about California's array of opportunities.

But I want to highlight one example which coalesces around today's themes of affordability, the energy transition, and manufacturing, which is, of course, batteries. The political and market landscape shifted dramatically in 2025. The rollback of federal clean energy incentives disrupted manufacturing investment nationwide.

Here in California, our partner companies poised to manufacture in the coming years scaled back their ambitions as private investment dried up. At the same time, demand for utility scale battery storage accelerated faster than expected. AI data centers, electrification, and renewable integration are driving unprecedented load growth.

California will host the third largest concentration of data centers in the country. And utilities are actively seeking long duration storage, new battery capacity, and upgraded transmission. Automakers like Tesla, Ford, and General Motors are actually shifting portions of their business models towards battery storage manufacturing because that is where they see growth potential.

So the advent of high energy demand technologies like data centers certainly adds a new variable to California's energy transition. But it's also an extraordinary opportunity to apply the lessons learned from these other examples. The same industrial policy innovations that built robust industries in the past, public financial support, guided by strategic state planning, can help scale emerging technologies from California's many, many innovators.

We can make the batteries that Californians need right here in California. We know that government policy has always shaped market outcomes. And despite these challenges, California is uniquely positioned to lead. We remain the epicenter of clean tech innovation. Our strong labor standards are an asset to build expertise, reduce turnover, and improve productivity. And we wield enormous market power.

Our procurement is decisions in consumer markets quite literally grow industries from scratch. So the question is not whether industrial policy works. The question is which elements make sense to adapt here and how it can benefit Californians, generate new tax revenue, and allow people to actually experience these technologies. We're in what's called the mid transition.

How we move forward will be defined by the jobs we create, the industries we build, and whether people can see themselves in this future. Most Californians do not own solar panels or electric vehicles, but they understand what it means to see their economic opportunities grow. As this committee is thinking about next steps, the lesson here is clear. Industrial policy is not a departure from California's clean climate leadership, it is the next phase of it. Thank you for your time.

Thank you very much. Excellent. Good. Now turn to our third panelist. Mr. Richman, thank you for joining us.

Thank you, Chairman Becker. Thank you, Senator Niello, Senator Wahab, and other Members of the Committee, for inviting me to discuss California's economic development industrial policy today. I appreciate the opportunity to share perspectives that are drawn from my experience leading large scale site selection efforts for California based companies across the United States.

By way of brief background, from 2006 to 2020, I ran global business development and policy for San Jose and Fremont based Bloom Energy. During that time, I led the company's national search for where to locate our major manufacturing center, which was an extensive competitive process that evaluated dozens of states based on power availability, infrastructure readiness, costs, workforce incentives, and many more factors.

And then from 2020 to 2025, I served as Executive Vice President of Market Development at Palo Alto based PsiQuantum. In that role, I led the national search for where the company was going to build our first large scale quantum compute center in the United States.

Across both roles, I've seen firsthand how economic development decisions are actually made in boardrooms. Not in practice, but... Sorry, in practice, not in theory. And that experience informs the two core points I want to start with today. The first is that energy and economic development are inextricably intertwined.

The electrical utilities have a critical role to play in this effort. So when a company is deciding where to locate or expand, there are three power related factors that always matter. Power reliability, the cost of power, and the timing of power.

All three of those are important, but I want to be very clear that time to power is the decisive factor. Time to power means the confidence that the electricity will be available on the required timeline. If a company can't get that confidence, the state is disqualified. It's not deprioritized, it's disqualified.

I've seen this repeatedly in real site selection processes. Companies will tolerate higher electricity prices, will tolerate higher taxes, will tolerate higher labor costs. But what we won't tolerate is the uncertainty about whether or not we can turn the lights on when we need to.

In the many states we looked at, for example, when I was at PsiQuantum, the utilities joined the state in pitching the company to locate there. Utility executives helped identify sites within the states that would work. They'd share timelines, they'd outline electrical distribution routes, they'd provide cost projections for delivering the needed power.

And in California, too many serious economic development conversations seem to break down exactly at this point. Utilities in California are appropriately focused on safety, reliability, affordability, and decarbonization. But in California, economic development appears to be treated as someone else's responsibility, and the result is misalignment.

The state successfully will court investment, but the power system can't effectively engage or confidently support it on the required timeline. At PsiQuantum, ComEd was a critical partner and a key player in our decision to choose Illinois.

At Bloom Energy, we would not have chosen Delaware if Delmarva hadn't been at the center of the partnership that we ultimately formed. So if California wants to compete and win, we need to better integrate utilities, both the IOUs and the munis, into our economic development strategy.

That means clear coordination with state agencies, shared accountability for outcomes, and incentives that reward certainty, speed, and strategic alignment, not just procedural compliance. My second major point is about the critical role of creativity and collaboration in landing major strategic opportunities.

Some states approach economic development in a largely formulaic way, where a company gets sent a form, you fill it out, and then the state agency will respond with an incentive package that's generated from a standard framework based on those inputs that the company provides. But other states are much more creative in finding solutions to attract companies.

And from my experiences, it's clear that California can't compete with states like Texas or other states that are competing purely on low taxes, cheap labor, or low electricity prices. That's the core of their pitch, and they execute it really well. But California can't win on dimensions where we're structurally disadvantaged and we shouldn't try to.

Instead, we should ask a different question. Where can California excel and for which industries? California has some of the best colleges and universities, some of the best national labs, nonprofit institutions, and corporate leaders in the world. We're the fourth largest economy in the world.

Scale matters, market depth matters, talent density matters, proximity to customers, suppliers, capital, universities, and innovation ecosystems all matters. And very few places on earth can offer all those simultaneously, but California can.

So the challenge and the opportunity is how do you harness these strengths into comprehensive, coordinated, integrated, aligned packages that attract and retain the world's leading companies and industries in the industries that the state wants to lead in.

So by way of example, Delaware targeted clean energy manufacturing after the 2008 economic downturn, and they took very creative steps to attract Bloom. Illinois is now focused on becoming the global leader in quantum computing and has taken very creative steps to attract PsiQuantum and other quantum computing companies to locate there.

The sixth quantum computing company just announced yesterday that they're going to move to Illinois. So I've seen states, these states demonstrate the alignment, you talked about alignment, the alignment of their resources, between state leadership, between the utilities, between the economic development agencies, the nonprofit institutions, the private sector, the national labs, and more, with a clear commitment to winning.

And the lesson is not that California should try and copy another state's playbook, but it is that alignment works and proactivity works, that early and coordinated engagement between the state and the utilities works. And creativity is required in each of these instances where we want to win. So in closing, my message is simple.

Number one, energy and economic development are inextricably intertwined. If California wants to win, we have to be able to say credibly and early that, if you choose California, the state and its utilities will work together to identify where and how we can deliver the power you need on the timeline you need it.

And second, California's path forward is to align our unparalleled strengths with our utilities, universities, national labs, corporate and nonprofit leaders, all fully engaged as strategic partners. And if we get that alignment right, California can continue to lead not just in the creation of these ideas, but the execution and economic growth you can capture from it. Thank you.

Thank you. Excellent. I appreciate you sharing your hard earned observations from being at these companies. I'm going to turn it over to Senator Niello first, if he'd like to ask any questions.

A couple of points. And I'll confess that I'm looking at this from a, I think a fundamental different direction than we're discussing here. First of all, we're not talking about the some of the environment in the state of California that a lot of businesses would acknowledge make it difficult to do business here.

Things regulatory issues, wage and hour laws, PAGA, Private Attorney General Act, and things like that. To the extent that we are going to recruit companies here, it seems to me we ought to at least consider those things that cause companies to move from here.

So I throw that out as I think a strong consideration for state policy. I'm not optimistic that we're going to change it, but I think it's important, at least in discussions of economic development, that we acknowledge it. Regarding the various regions and economic development within each and coordinated in the total.

The Sacramento region has a pretty good model that we've developed here, the Greater Sacramento Economic Council, which actually has earned international recognition. It was started here. I ran our local Metro Chamber, and we were sort of part of, my company was part of the foundation of that. And it has been quite effective at recruiting companies here to Sacramento within California, dealing with the affordability issues of California.

So there has been some success that perhaps we could look at. Now in terms of some other things that you talked about. You talked a lot about China and India. And China is a leader in producing things that reduce carbon emissions, but their economy is largely driven, talking about power, by coal. Is that not true? Then maybe I'll have to ask that as a question because that's the information that I get. Maybe not entirely, but very largely driven by coal, power produced by coal.

It is undoubtedly.

Oh, go ahead. Yeah, I mean there's certainly transitioning, but I don't know that you have made more updated. Sorry.

It is largely. Senator, it's a great question. China has massive coal capacity, undoubtedly. But I think we should separate between capacity and generation. If we look at their generation over the past five years, last year they reached over 50% renewable generation with their power grid.

But the other 50% is coal.

It's a mixture of coal and gas, but over 50%.

And coal is significantly cheaper even than the natural gas that we utilize here in California other than our renewables. My only point is that their fundamental, their basic underlying cost structure for their energy generation gives them a cost advantage at the cost of additional greenhouse gas emissions from coal, which is greater than natural gas and obviously much greater than renewals and probably generates or contributes more to a 24/7 reliability of energy generation.

And that's been our challenge in transitioning to renewals is the reliability. And we've run into some challenges with regard to reliability, which does create challenges for people that might be moving to our area. So I'll be less concerned about that if China gets off of coal entirely, and we'll see. I'm not so sure that that's going to happen in the near term.

We talk about education and that is a great strength of California in the higher education space. But our kids who are fed to higher education, our K12 system is not so strong. Our education achievement is subpar. And the achievement gap between advantaged and disadvantaged areas, particularly the minorities and especially African Americans in California, quite frankly is horrible.

And the University of California, San Diego just recently came out with a report that they are having to remedially educate their freshman students to a degree that is increasingly challenging for them. They even have some high school graduates that they have accepted based upon grade point averages whose math skills are middle school level.

So in order to keep that strength of education and educated workers, we better pay attention to the achievement of Our K through 12 system troubles me greatly. Again, especially for minorities. We talk about the equality, economic opportunity. It is significantly compromised for minorities, disadvantaged communities and especially African American kids.

And that will severely compromise our ability to attract employers and technological development to California beyond what we have currently, as you have been discussing.

So sorry to throw a wet blanket on this, but I think it's important for us to acknowledge where we need to improve in order to compete with the rest of the states and the rest of the world in the way that you have been articulating.

I'll invite any, anyone on the panel to respond. I'll just note, you know, on. You raised several factors on the question of reliability. We really haven't had a reliability issue in California, California here for some time since 2022. We haven't really been close to having any kind of crisis like we had at that time.

Although certainly energy prices, as you know, are quite high and can be deterrent for industrial use. And I'll have a Bill on that this year. Okay. First we'll invite anyone to. By the way, on that point.

I'd like to raise another issue related to that and that is our climate goals. Our goals to reduce greenhouse gas emissions. We charged the Air Resources Board to reduce greenhouse gas emissions in AB32, which was passed when I was in the Assembly. We did not charge them to reduce greenhouse gases in the atmosphere because we can't.

We have not had any impact on atmospheric greenhouse gases. And I'm not saying that we shouldn't have policies to reduce greenhouse gas emissions, but we shouldn't be driven just by that. Acknowledging the fact that we're not going to change the world.

We can show the way and that's the way people, a lot of people articulate that which we try to do.

And I won't debate that point, but I would suggest that to the extent that regulations or initiatives that we establish to reduce greenhouse gas emissions have a disproportionate impact on cost of living, energy reliability and the like, we ought to second guess some of that.

And again, the Air Resources Board, their charge is just part of plane to reduce greenhouse gas emissions. And famously in an Assembly hearing last year, the head of CARB upon AST said that they really don't look at the impact of their regulations on everyday cost of living, which frankly I think they need to do.

They do economic impact, but they don't look at how much it's going to cost me to buy gas and groceries and energy and the like. And that's a bit of, I think a bit of a weakness. Reduced greenhouse gases, that's fine.

But what's the impact and maybe back off a little bit when the impact is severe in terms of economic development. You raised a number of issues.

So let's let our panel respond. I will say, yeah, I'm sorry, maybe, maybe I've piled on and I apologize. I will say just in advance there an observation on our cap and trade system. You know, fundamentally it is a market based solution supported by even conservative think tanks.

And I'll note that I was with and by industry, I was with the speaker in Oregon and the Republicans there had walked out and shut down the Legislature in opposition to cap and trade a number of years ago.

And now those same folks are coming back and asking them to do cap and trade and align with us in Washington state because they realize it is fundamentally a market based and I don't think they view it as inhibiting development but really providing a clear system.

But again, I think some of your points are well taken in terms of price of energy and overall and things that do play into some things the panelists raise. So I'll just turn up any number of things raised about K12, education, energy, a few other things.

Yeah, thank you very much, Senator. You did raise a lot. And I'll maybe first of all address the Sacramento point because I think you raised a really important point of kind of how a region works in alignment in an effective way.

And part of what you said spoke to is that Sacramento's been effective at capturing companies and growing the economy. And I think that's in part due to the in some ways it's actually a model for the rest of the state and something we try to encourage others to look at.

But in the Sacramento region you have greater sac, this economic development organization that's working with businesses. You also have Valley Vision, a civic organization that really brings a community voice, but also a much more collaborative approach across a whole wide variety of sectors.

And you have the Sacramento Area Council of Governments that's bringing the local governments and the infrastructure and the transportation investment. So I think it's an interesting example of how you can achieve economic development transformation by having alignment at the regional level.

Now that doesn't address a lot of the other challenges you raise, which are sometimes kind of state level. But I think it's a way that we can be inspired by that. Then very quickly on your K12 point is two things on that.

One, I'm a public school parent and I understand that the challenges in the schools on a daily basis and the challenges right now the educators are facing and the school districts with some of the potential for there to be school closures or labor walkouts over the coming days. And so that's in part ongoing investment.

But one of the models I spoke to that was connected to the Jobs First Regions Rise Together work was the K16 education collaboratives.

Now that doesn't answer all of the above, but in part if we have a more seamless pathway for people that are trying to look to develop a set of skills where they're going to have an assurance of a quality job in an industry that might be growing with some college, some post secondary, we know that that's a model for economic growth and economic success on the individual level.

And if it's tied to those sectors that you're growing on a regional level can really help the region grow. So again, we've made these one time investments in these programs. Part of the question now going forward is will we continue to have those on an ongoing basis that each region can continue to build upon?

Pass to my colleagues here.

Yeah, I just fully agree with you. That the cost of California and the regulatory challenges in California are really hard. Create a lot of challenges to do business here. Despite that we're the fourth largest economy in the world and all these incredible companies are being developed here and founded here and growing here.

I think the big question is how do you get them to continue to grow here and stay? And I think having a partner in Sacramento who can help you navigate all this red tape you were talking about and the challenges and understand, you know, what can you do and what can't you do?

Who can you call to get the answer and the information you need rather than just having this. Feeling overwhelmed with regulatory red tape.

I think that would be a huge step in this process knowing that if a company is looking to expand that they have a partner in Sacramento who will help them figure out the best way to expand here in the state rather than elsewhere.

That's a good point. And I would point out that startups aren't much affected by the regulatory scheme that we have here because they're really not making money yet. But as they grow and start making money, that's when they start looking at those things.

Yeah, I mean, from a tax perspective, you're right. But the cost of energy still impacts us the ability to expand.

If we need 5 more megawatts of power to be able to expand our manufacturing facility in our current building rather than having to look for new building, the clarity on how to get that done on a timeline that would work is something that is often missing.

Or if we're looking to expand within a, you know, 60 mile radius for the reasons that Senator Becker laid out in his opening comments about the importance of proximity of engineering to manufacturing, having a partner in Sacramento help us figure out where can we get the power we need, where can we get the.

How can we navigate the red tape for, you know, for renovating the building in the way that we need to for our purposes, from the purposes that it was for, just helping us get through that process that I think is a missing piece in the equation of how do we get companies to stay and grow here.

I wanted to just pick up on one piece around energy availability as well as reliability. There's no doubt that California energy prices are quite high and that manufacturers need clarity, certainty on when power will be available, be able to operate their factories as needed.

I think there's an opportunity for industrial policy to play a role in resolving some of these challenges around industrial development. When you identify strategic sectors, strategic places to foster sectors, you can think about what is the power needed to grow the sector in the way that we want to see.

Can we coordinate leveraging existing infrastructure so we don't have to build out additional new transmission and distribution lines? Can we cluster industry together and upgrade a single substation instead of a bunch of substations for industries in different parts of the state or different sectors?

And so I think there's an opportunity for some of the strategic roadmapping that I was referring to to help us get through what is admittedly a very challenging time in the energy supply in this state.

And finally, I would just add, you know, Senator, your point about affordability I think is a really prescient one that we're all thinking about here in California. And I would suggest that this cost of living crisis is also a bigger question about jobs and economic development, regional development.

And so as we think about these new sectors, whether or not they reduce our greenhouse gas emissions, these are new advanced manufacturing sectors that are becoming globally relevant for a variety of reasons.

Investing in building those here at home can have the opportunity to not only grow our markets, grow our economy, but create good jobs and create new regions of the state that are revitalized. And I think that is a really important consideration of how we tackle our cost of living crisis.

Great. Well, thank you all. I want to read a couple things. First of all, I really appreciate this panel because we've got the strategic plan and you know, I was on the workforce development board for seven years and there's a lot of acronyms. I used to joke after seven years, I understood at least half the acronyms.

But you did a really good job kind of creating outlines for the structure. But I think the Legislature and my colleagues need to be brought in even more on sort of the kind of region's rise, California jobs first.

I don't think we have a lot of knowledge about all the work that's been done and maybe, you know, how we can help encourage it, you know, going forward. So look forward to continue working with you on that. And you mentioned the McNerney Bill. I think that would have put had a manufacturing lead.

And I've talked to other states where they have a chief manufacturing officer in some cases and you know, clearly. You. Know, that, you know, seems something that we could, we can benefit from sort of better coordination, better alignment.

Priyanka, I think you've made a lot of great points about and I appreciate you bringing in some of the international examples as well and talking about what, you know, the path, clear path you saw, which also included public investment. And for Mr. Richmond, I appreciate you bringing in the experience that you raised.

I guess I'd ask a couple questions. In a sense, I think people do assume, zero, if we're losing manufacturing, we're losing companies, it's really low tax states or Non Union states. But again, in your experience, that wasn't the case with Illinois. Right. Illinois is really neither of those things.

And so, yeah, you could just sort of comment on that and just, you know, kind of tell us again a little bit about the process, you know, how that, how that alignment was manifested to you as a company.

Yeah, I think, yeah, there's not a. One size fits all approach. Right. There's one company that I'm advising that they're over half of their input costs are for their products is cost of electricity.

And there's nothing that, you know, some of these states, like California, others will do to be able to compete to keep them because the cost of electricity is so critical to their decision. That's essentially all that matters for where they're going to locate.

But for, you know, both, you know, the Delaware and Illinois decisions, you're right, I mean, those are states that the cost of electricity wasn't the driver. It was the creativity of a partner partner in the state that we went to. And the outcome in both cases involved utility, involved the state universities, involved national labs.

Some cases involved the federal delegation partnering to pursue additional federal funding for these things. So it really was a comprehensive approach that the state led, but brought a lot of stakeholders together who were all focused on trying to solve a bigger problem. And I think that, you know, for.

That's why I think it is critical for the state to choose which industries we want to win in in California, because, you know, there are going to be some that, you know, that are going to be just looking for the formulaic response, you know, what are the taxes going to be, what's the cost of electricity, what's the cost of labor, what's the cost of land?

And then from there, we'll put it into a spreadsheet and figure out which state wins. But for really strategic opportunities that represent not only thousands of jobs, but the industries of the future. That's where the creativity and alignment that we've seen in other states really, really rose to the top.

And I think when you look at the assets they have in play, California has all those assets. Yes, you're right. Cost of electricity here is high. Cost of electricity there isn't as high, but it's still higher than some of the other states. You're competing against. Taxes here are high. Taxes there are high, too.

They're not as high as some of the other states that were pitching us, but the reason that in both those companies we ended up in states where we didn't go to race to the bottom for lowest taxes, lowest cost electricity, it was because of the alignment that existed between all the assets that were critical to us being successful in those states.

Yeah, good. Well, again, I think there's, you know, again, we're doing a lot of great things here in California, but, you know, no pride of authorship. Right. We gotta look to other states and see what's working. And this is really helpful. I will mention, you know, we'll have a Bill this year on industrial load.

The fact is that, you know, 99.9% of the time we have lots of excess capacity on our gr. And so I think people are focusing now more on this notion of beneficial load. Right.

And so how can we bring on new industrial load and encourage it at those times, especially those times, especially during the day when we've got lots and lots of excess capacity and, you know, use that to encourage, again, encourage that low growth and when we have that capacity and make it attractive for them, hopefully, but also bring down costs for everyone else.

Senator Allen, any comments or questions or.

I missed a lot of the start. I mean, I got a chance to review this really excellent PowerPoint and talk to you a little bit about the Illinois model and some of the differences.

But I think I just want to dig a little deeper on some of those, on the successful strategy in Illinois and go back and watch the presentation. I apologize.

Yeah, no, it's good. Well, unusual for these hearings, we are exactly on time. So we're going to move to the second panel. Thank you all, really appreciate it. We'll bring up the next panel.

I think this is the first Committee hearing I've ever been at or ever chaired where we're like actually on time. So. Excited for that. Okay. We're very lucky to have Tom Hintz, political Director from UAW Region 6, and Sarah Flocks, who's legislative Director for the California Labor Federation, talking about employment opportunities.

Any other things on this topic that you'd like us to know? Should we start with. We'll start with Miss Flocks. Thank you. Go ahead.

Mr. Chair. Members, Sara Flocks, I am from the California Federation of Labor Unions, and I just want to start thanking you for having this hearing. That first panel blew me away. I was writing down things and scratching out a lot of my talking points because they covered it.

So the synergy between just the first panel and hopefully what we're going to talk about is there, which is very exciting. So I actually want to start.

Since I wrote down 8 million quotes from the first panel, I wanted to start with something you said at the beginning, which I very much appreciated, was how do we compete without compromising our values? And I think that is so core and important.

I would actually go a step further and say, how do we compete while promoting our values? And that's something that makes our state, I think, unique. And promoting our values, I think enables us to meet a lot of other goals.

One, to meet our ambitious climate goals and address the climate crisis, but also to address the economic and regional inequality crisis in our state that was raised by California Forward, but that there are a lot of different regional economies and we need to have economic development throughout the state.

The other thing is that there's a lot of excitement about manufacturing jobs. These are good jobs. They build the economy. And there is true that there is a huge multiplier effect. Each manufacturing job that's created in the state creates 2.5 other jobs in the supply chain. It is one of the highest multiple effects.

And then there is a whole supply chain that builds regional economies and can help build the state economy. So that is so important. But the other piece is that manufacturing jobs, even in advanced manufacturing jobs, are not intrinsically good jobs. In fact, they could be quite terrible jobs.

And that is why the UAW did so much work in the 30s and had the sit down strikes in Flint and were able to massively organize the big three automakers. And then manufacturing jobs became good jobs. Detroit became a booming economy. And that was because workers came together, unions organized, they increased density within this industry.

You saw labor management partnerships that were able to grow this industry. And that is what made manufacturing jobs good jobs. And that is a value that we need to promote in our state to make sure we can have that same economic impact.

So along those lines, about two years ago, the labor federation pulled together a number of our unions, industrial unions and construction unions and had a two. And at the end of that, we came out with our recommendations of industrial policy principles, which I know Tom will get into, the ones that UAW has as well.

And a lot of it were state interventions that could be made so that we could meet our goals, meet the goals of addressing the climate crisis and economic crisis. I'm not going to go through those, but I am going to talk about some of the recommendations that we have.

And it's surprisingly, I could just quote the panel from before me because it's a lot of the same things and it's a focus on both the importance of regions, identifying what is the unique resources that they have. But also we really need a coordinated state industrial policy. And I think 787, there's great first steps.

There's really looking at how do we study, what are, what do we does California bring to the table? What do we need? Where are the gaps? All of that's really important. I think we need to go a step further, though. And we worked around the loss of manufacturing jobs back in 2010 in the Great Recession.

And a lot of the conversation there was about, because we had lost many jobs, was we have to cut red tape. We need to make it what is happening. Like there was a lot of conversations about cutting red tape, slashing regulations, getting rid of protections for workers and the environment. And we said, hold on, hold on.

Like, let's not cut red tape. Let's roll out the red carpet. Let's figure out who are the manufacturers we want to keep here, who are the ones that we really want to grow in this state. And let's give them the celebrity treatment. Let's figure out what is it that they need.

Maybe what they need is navigating state, federal, local regulations, some of which may be duplicative. But can we figure out a way that if you meet one, you can meet all of them? And that had come up a lot. So that is a piece of it.

And I'm echoing, I think, Mr. Richmond, at this point, of a very active strategy to cater what we have in the state and deliver it to these companies. And a lot of it is we don't need to create more resources. They're here.

We have the I Bank, we have Indigo, we have all these different tools we can offer companies, but a lot of times they're trying to run a business. They don't have time to sort through the 8 million places that you can get this. And so there is a way for us to be able to package this.

I believe Governor Brown had a strike team that he was doing during the recession of like, do we need to save a business? Do we need to bring them here? Let's figure that out. Part of that packaging can be the skilled workforce. And I do think we need to start early, not just in colleges.

The trades have a great model of pre apprenticeship programs. So you can get into. You have the skills to get into an apprenticeship program, perhaps a UAW manufacturing apprenticeship program. And then you can earn while you learn and be guaranteed a job and figuring out what are the industries by region and then developing the programs there.

It doesn't have to be a one size fits all approach to the state. The other I'm going to now quote. I think it was Mr. Higdon on the missing middle, which is huge. We used to call it the valley of death, which is the gap between innovation and commercialization.

We have to figure out a way to bridge that and not just for innovation to commercialization, but for firms that are incumbent firms that want to go from perhaps being in the dirty economy to the clean economy or who just need to grow a little bit to get the contracts to grow.

And in 2010, we actually were contacted by a union manufacturer, had a good partner partnership and they said they wanted to get a federal contract. They could not get the capital, they could not get the loan to do it. It was the middle of the recession.

And so our proposal, working with the manufacturers association was for a revolving loan Fund that the state would run targeted at manufacturing. Whether it was getting you through that valley of death or being able to grow to get these contracts. But there were labor standards built into it. So you had to be a good player.

You had to be promoting California values to have access to that funds did not get signed. But it really was trying to make sure that this big, big company, union company was able to get the money it needed to grow. And that also would apply to. I mean, I'm going to bring up Gillig. It's another union company.

They are around since 1890 in California. They've become the largest transit bus manufacturer in the United States. They have made the transition from combustible engine to ev.

But it would have been great if the state had provided more support even, or that the state is looking around and can approach companies and say, hey, can we help you transition? Can we help you stay? Stay in the state of California and grow in the state of California.

So it's not just bringing manufacturing here, but really kind of supporting the businesses that are here and do want to stay here. I probably have so much else to say, but I will say that I think a lot. California has a lot of these tools right now.

And given the budget, how tight the budget is, I don't think we need to, you know, we may not be able to add a whole lot, but we can really package it, tailor it and deliver it to the companies that stand for and will put into practice the values that we hold dear and will help us build a middle class, address income inequality, address regional inequality, and also address climate crisis.

So with that, thank you. I really appreciate this hearing. I think it's so important and I'm happy to be here.

Good. Well, thank you. That was excellent and very much appreciated. We'll now turn it over to you, Mr. Hinsey.

Well, good afternoon or good morning. Still chair Members. We are running on time, as you pointed out. My name is Tom Hintzse. I'm an international rep with UAW Region 6.

And, and a lot of my remarks today are actually going to be taken from a policy paper that we put out last year which is called Organize, Industrialize, Decarbonize A Pro Worker Green Industrial Policy for California. And I'd like to thank Sarah also for mentioning the Flint Sit down strikes in 1936.

We're approaching February 11th, which is the anniversary of the end of the Flint Sit down strikes. In our union. We call it White Shirt Wednesday because when the workers came back to work after the strikes, everyone wore a white collared shirt to imitate management so that they wouldn't be singled out while coming back to work.

So it's an important milestone and anniversary for us. But California's economy is not working for the working class right now and it's not working for our planet. Billionaires are raking in record profits while millions of working people struggle to make ends meet. For most California workers, a living wage job is hard to find.

And at the same time, climate change is an existential threat. It's causing wildfires and natural disasters that are displacing millions of people. And it's sending the state's high cost of living skyrocketing even higher. California has set of the most ambitious climate goals in the world for zero emission vehicles, offshore wind and building electrification.

The question before us is not whether we fight climate change. But it's how we do it and it's who benefits. If we pursue climate policy without industrial policy, we risk repeating a familiar mistake. Taxpayer investment that lowers emissions but outsources jobs, weakens supply chains and leaves the working class behind.

The result, as we have seen at the federal level, is a backlash against climate policies which sets everyone back and threatens our climate goals altogether. We can and we must do better.

It's time for California to embrace a bold new economic strategy to create tens of thousands of good union jobs, rapidly slash greenhouse gas emissions and drive down and costs for communities. We need a worker led industrial policy where workers, industry and the state come together to shape the direction of growth in industry for the greatest good.

Industrial policy is government choosing to shape what our economy produces, how it produces it, and how the benefits are distributed. The choice is not between the market and policy policy. It's between intentional policy and policy by omission. Where corporate profits decide California's future, not us. A worker led green industrial policy must multi solve.

That means advancing climate goals, raising job quality, lowering consumer costs and reducing pollution, especially in frontline and working class communities. California relies too heavily on the weakest tools in my opinion. Tax credits and grants, often without conditions. Subsidies alone won't localize supply chains, improve job quality or ensure affordability. Instead, we need a mix of coordinated policies.

We need public financing that gives the state leverage and long term returns, strong labor and environmental conditions tied to taxpayer dollars, regulations that prevent a race to the bottom, strategic procurement to create stable demand and shape markets and where necessary, public ownership or equity stakes so that workers and the public have a real seat at the table.

These approaches are not radical, they're proven globally and here in California. So now I'm going to take a few minutes to go through some of the supply chains and industries that we found in our report to target. When choosing strategic industries, lawmakers should ask, do these industries reduce emissions across the entire economy?

Do they offer family sustaining wages and worker voice? Do they help bring down the cost of clean energy and transportation? So the first industry is batteries, which a number of the panelists have talked about. Today, California already drives enormous demand for batteries through ZEVs and grid scale energy storage. But today much of the value creation happens elsewhere.

Domestic production of critical battery components like cathode and anode materials, foils and separators is projected to meet less than half of expected demand. We have a strong foundation to build on.

Since 20213 advanced batteries battery material manufacturers have opened up facilities in California and others, including companies like Sepion and Silvatex will come online soon with state support. These are precisely the kinds of links in the supply chain that we should be doubling down on, especially as global trade tensions push manufacturers to source inputs domestically.

The state can go further by using offtake agreements, for example with lithium producers in Imperial Valley, to guarantee demand de risk investment and stabilize prices for downstream manufacturers. This is how California can convert climate ambition into durable in state industrial capacity. Another industry is energy storage and battery recycling, which others have talked about as well.

The rapid growth of of energy storage systems presents a major opportunity. Storage now accounts for roughly one fifth of the global battery market, and California utilities are planning to procure tens of gigawatts in the coming years.

That demand should be sourced in state to the greatest extent possible through procurement conditions, strategic stockpiling and where appropriate, public equity stakes. This is not only strengthening some supply chains, it helps battery manufacturers hedge against volatility in the EV markets.

And yet California lacks a coherent strategy for battery recycling, despite spent batteries being one of the richest domestic sources of critical minerals.

Building in state recycling capacity is essential to a closed loop battery economy and it will align demand side procurement with supply side investment, including public enterprises and advanced marketing commitments paired with strong worker and community safety standards. Next, I'll talk about offshore wind briefly.

Offshore wind will be a cornerstone of California's clean energy future, offering scale and reliability that other renewables cannot. With up to 200 gigawatts of technical potential, California is positioned to lead nationally. But leadership won't happen automatically.

While offshore wind construction will create jobs, the bigger opportunity lies in localizing the supply chain turbines, nacelles, blades, gearboxes and power electronics. Despite billions in national investment, no manufacturer has yet committed to produce these components in California. This is where industrial policy makes matters.

Offshore winds, high upfront costs and long asset life make it well suited to public financing, joint ventures and public ownership approaches that lower costs to ratepayers while anchoring jobs locally. Recent state actions on procurement, ports and transmission are critical first steps, but they must be matched with explicit strategies to capture manufacturing and ensure community and tribal benefits.

Finally, I'll talk briefly about heat pumps. Heat pumps are essential to decarbonizing buildings, which account for a quarter of California's emissions. Demand is booming and California has set a goal of 6 million installations by 2030 and more than 23 million by mid century. Public investment has helped drive this market, especially through programs aimed at low income households.

But despite nearly half a billion dollars in new national manufacturing investment, none of it is planned in California. Current programs measure success by installations alone, missing a major opportunity to create union manufacturing jobs. Looking ahead, California should consider virtual stockpiling through advanced purchase agreements that leverage in state production.

By directly procuring heat pumps, the state can lower costs, set high road labor standards, support local manufacturing, and perhaps even directly deploy equipment where equity needs are greatest. So in closing across batteries, offshore wind and heat pumps, the lessons are largely the same. California has the demand.

What we need is the courage to turn that demand into California production. Good union jobs and resilient supply chains. That is what a worker led industrial policy can do for our state. Industrial policy done right lets us fight climate change, creates good union jobs and lowers costs.

That's the opportunity before us and we urge you to seize it. Thank you.

Thank you. Well, I appreciate all of that and I'll turn over to my colleagues for questions in a moment. Last week I moderated a panel actually that was about building the domestic supply chain and batteries.

And we had a company, I can't recall the name right now, but they make a component about 50% of the cost of batteries. And you know, they are, it's California R and D located here, right around national labs.

And we're talking about the lithium that's potentially available in California and how we really could build that full cycle supply chain at a time when folks do not want to be as dependent on international, some companies, some countries internationally. And I learned a lot and that'll be part of my follow up along with this panel here today.

But I look forward to talking to you about that and I appreciate you really being very specific and, and laying out industries that we can, you know, that are worthy of, certainly of consideration for strategic targeting in the way that you really both identified with that. I'll turn over to my colleagues if you have any questions.

Sir Niello, Not a question, but a. Point of clarification and a comment that Ms. Fox made. Just want to clarify something. You mentioned getting rid of protections for workers and the environment. And I don't know if that was in direction of the comments that I made or concerns that I have.

I appreciate that, but I want to make one thing clear. I've spoken to the regulatory environment that we have in the state of California for decades and I've written about it and advocated for it. And I want to stress that not only have I never expressed opposition to regulations per se, I have supported the notion of regulations.

Regulations almost always support one of three classes. Workers and the environment, yes, but also consumers regulations. 99.9% of the time, they will benefit one of those three classes. The burden of the regulation is almost always on businesses, not entirely, because sometimes it's actually on local governments, which is also an issue.

But there is a clear benefit of regulations to one of those protected classes. The cost to meet those regulations is not so clear in precision. And what I've always stressed is we need to balance the two, and I don't think we do a very good job of that.

The cost to complying with regulations should not exceed the benefit to the protected class. Now, the question is, how do you assess that? And that is a complicated thing.

And part of that means that you and I may not ever come exactly together on, on defining the positive or negative of a particular regulation, but given that analysis, we could come closer together.

So I just want to stress that, and I appreciate the fact he didn't mean it as a response, but I have, I talked about it today, and I talk about it a lot, but it's not an opposition to regulations. It's an equalization of costs and benefits. I think that's very important.

Thank you, Sarah. Ellen? No, thank you for your comments and for all the work that went behind these presentations and the substantive programs that you're talking about. I'd love to just get some more insight from both of you as to models from other states that we should be taking some inspiration from. You've alluded to a few, but.

Where. Do you think we should really be directing our attention as we're grappling with how to. Obviously, we talked about Illinois before.

We're trying to figure out our model with Go Biz and how to steer our infrastructure, our governmental infrastructure, in a direction that will help to better allow us to coordinate the kind of work that we're looking to promote. So, yeah, I'd love to get your thoughts on, on that.

Well, at the risk of disappointing you, I'm going to suggest that we actually look internally because we were very proud of SB787 last year, which Mr. McNerney authored, which, you know, I think, as Sarah laid out, you know, is the first step in the kind of coordination that we as the UAW feel like we need at the state level in order to coordinate all of the different funds and agencies that are supporting industrial policy growth in California in order to target specific supply chains for building out.

Sure.

So we think that's a great model to look to. And we have several models for labor standards which I can highlight, which are also tremendous popular. One is the Power Forward program that's being administered by Calstr in the CEC. I know the chair authored SB322 originally, which laid out the standards for that.

And the program is tremendously popular. In fact, I believe they gave out so far $26.5 million out of the total $43 million that they were awarded. And companies applied for approximately $161 million.

And the program requires companies, there's a competitive scoring criteria, but to either meet CAR check neutrality, which means the company will respect the rights of their workers to choose to join a union free from coercion, have a collective bargaining agreement, or provide a living wage, employer paid health care, family leave and retirement benefits.

So in terms of grant programs and tax credit programs, we see that, you know, having strong labor standards can also align with having a tremendously popular grant program like that. So those are two of the examples that I would point to.

Given we're the California Federation of Labor. I am going to agree and say California has models. I know Mr. Richmond can come up and talk about some of the other states, but we have so much that the state has to offer. But it is scattered across. It is just everywhere.

I mean, at least now we have go biz, which we didn't have back in 2010 when we started working on this. But you look at, you know, CEC has programs, we have California compete, and then maybe you can get this. And then there's the Cape to program. And it's just you need.

You basically need a guy, you need a concierge. And so how do we maybe do an inventory of everything the state has to offer from pre apprenticeship to apprenticeship to HRTPs to all of these different resources? And then can we centralize a little bit and work on the coordination with the.

I'm going to call it surf, but I guess it's California jobs first. Now the programs that we have that are moving at the local level and the workforce investment boards that we have at the local level. And so how do we take everything we have and package it? I think that's the challenge for California.

I don't know this other states as well, but it seems like a lot of that is the very tailored for the companies they want to bring in.

Okay, thank you.

Well, thank you. I think I'm 100% aligned with everything that you just said. And really I appreciate you highlighting that. Again, we do have a lot of these resources here. We're doing a lot of good stuff, but bringing it together in a way that's more coherent and digestible and really proactive for Companies makes a lot of sense.

I think that's one area we need to continue to work on. Work on coming out of this hearing and was wonderful to work with you the last few years on, on the positive. Right. Encouraging what can we do to incent companies to do the right thing and adopt, adopt good labor standards.

And again, in a very positive, not a regulatory top down way, but a really positive incentive way. And it's great to hear that is all moving forward. So again, I sort of take out of what you said a lot of positives here. But but certainly work to do going forward. So I really appreciate it.

Thank you to both of you. And we will move on to our third panel. Thank you again. That was wonderful. Josh, I'm in a quick seat. Okay, great.

And a reminder, actually when I was on that, when I was monitoring that panel last week, one of the folks that was on my panel was byd, actually a foreign company, but fully union manufacturer of electronic, sorry electric buses and other things in Lancaster and been doing it for over 10 years with a lot of success.

So that was one of the folks that was on there that was talking about sort of this holistic supply chain. So awesome. Well, we appreciate our last panel and this is really about opportunities for local government.

And you know, it was remarked talking to one company that has had great success in a city in California and they really remarked to me it's not that California per se is difficult to do business, but certain regions are difficult to do business and some are less difficult. Some regions are really making it quite easy.

And that's sure we'll hear about some examples of this here.

But something I want us to continue to think about is how do we again in that, as we were just talking about with the last panel, in a kind of proactive, positive way, highlight those regions that say, hey, we want these jobs, we want these companies to locate here.

We're going to make it easy for them in various ways and how can we highlight those? So anyway, with that, I would love to start with you, Jonathan, and the city of Fremont and love to hear some of what's made it all work so far in your mind.

Thank you very much for having me. I'm here to testify with you this afternoon. My name is Donovan Lazaro and I have the pleasure of serving as economic development Director for the fine city of Fremont.

I'm joined by some fantastic colleagues from our city manager's office and I think our collective presence here today really speaks to what we feel is a critical issue for California to tackle and I'll get into Fremont's experience and hopefully how it can be a model Looking ahead.

Before I begin, I would just like to say a thank you to you, Senator Becker and your colleagues here on the Committee for convening this discussion with a really just best in class diverse cross section of different thought leaders and experts on this topic. It's really an all hands on deck situation.

Also, I know she has already stepped away, but I would like to also thank our local state representative, Dr. Aisha Wahab for her advocacy on this issue. Manufacturing in California has not declined by accident across the state.

Industrial land has been undermined really intentionally for many years by state and local governments and entitlement processes have become longer and less predictable and rising cost and globalization have and really incentivize companies to start looking elsewhere. Fremont is an Anomaly.

Our City Administration has worked tirelessly to foster a robust manufacturing sector through intentional programs and initiatives, fiercely protecting and expanding our industrial lands and growing and modernizing our industry base. As a result, Fremont is Now the number one manufacturing city in California.

Home to approximately 900 manufacturing facilities spanning more than 55 million square feet of real estate and a manufacturing technician workforce of 65,000 strong. We're incredibly proud of that and I also want to point out that that's a doubling of our workforce over the last decade. So we really are bucking the trend today.

I would like to share why Fremont is bucking the statewide trend and how the city has intentionally structured its policies to support manufacturing and what this strategy has delivered for workers, communities and California's broader economic competitiveness. Manufacturing remains one of the most powerful economic levers available to California.

It provides the highest economic multiplier of any major employment sector sector. Every dollar invested generates well over $2 in broader economic activity and each manufacturing job supports multiple additional jobs across the regional economy. When manufacturing grows, entire communities benefit. It is also one of the most effective tools that we have for advancing social equity.

Manufacturing expands middle income jobs that have steadily disappeared from our economy and creates accessible career pathways for people from diverse backgrounds to earn family supporting wages and build long term stability. Manufacturing strengthens economic resilience as well. These businesses produce goods that are sold beyond our borders bringing new resources back to California.

And many operate as essential industries that continue to work through through economic shocks as we saw during the pandemic. Finally, manufacturing represents a durable long term investment and a strong public return. Facilities are continually reinvested in and they in turn generate substantial local and state public revenues and economic activity to support core Services and infrastructure.

Fremont's industry success rests on deliberate and consistent policy choices. Years ago, the city leadership recognized early on that manufacturing is not a legacy industry, but rather a future facing one that anchors innovation, economic mobility and resilient economies. The city preserved industrial land at scale.

Fremont's industrial base now exceeds 55 million square feet and the city has resisted the pressure to convert these areas to non industrial uses. This long term view has ensured that manufacturers can expand and that new firms can locate without competing over scarce space or having incompatible uses that could jeopardize their long term ability to operate.

Second, Fremont prioritizes certainty and speed. Nearly all forms of manufacturing and new industrial development are allowed via buy right zoning. That is an extreme differentiator that most communities do not have. In California, projects that comply with zoning standards can move forward without the years of discretionary review.

In many cases, this framework allows projects to be existing exempt from environmental reviews that would otherwise be required pursuant to ceqa, significantly reducing cost, risk and delay. For manufacturers making capital intensive decisions, this predictability is often decisive. Third, Fremont invests in in house technical expertise.

The city operates its own in house hazardous Materials Program Management which allows staff to work directly with advanced manufacturers in life sciences, electronics and clean tech. We're combining seven different state and federal regulatory frameworks all in house for the sole benefit of our industry at our cost.

And you know, it's something that we're doing out of a lot of intentionality. We also make it a point whenever we bring on new plan reviewers into our community development Department to make sure that they are trained in how to review and permit very complex facilities that we're often seeing for advanced manufacturing.

And so that is an expectation that you develop that skill set to be able to work in Fremont. Again, this is another differentiator. Finally, Fremont's location and infrastructure really supports industrial activity. We offer proximity to the ports, airport, major transportation corridors and really access to a deep and skilled regional workforce.

Some of these things are difficult to scale in other parts of the state. So we are a benefactor of location. However, I would just posit that you have to play to your strengths and Fremont maximizes the most of its opportunities that are available to it.

And to really underscore this point, as of today, manufacturing activities really continue to drive Fremont's economies and Fremont's economy and also contribute significantly to our tax base.

And I think this is something that I really want to emphasize as again, if you're leaning into your industry base, not only the economic benefits but the revenue benefits that you're able to reinvest into the community. Hiring more police officers, building more parks, community centers. This is really why we're doing it.

We often refer to Fremont as the hardware side of the bay, where Silicon Valley manufacturing comes to scale. Software and ideas may originate across the region, but it is in Fremont where physical products are built, tested, refined and scaled for global markets.

We romanticize how companies like Apple, hp Variance and many others were launched out of single family garages. Today, a significant portion of innovation occurs in nondescript industrial buildings like this one here on the right, which was very recently leased to a leading robotics manufacturing company. We think of these facilities as the modern Silicon Valley garage.

It's also really important to note that product development and manufacturing are tightly coupled. This proximity increases speed to market and supports the establishment of industry clusters. When California made innovations move manufacturing out of California, the engineering and corporate jobs will eventually go with them. We have seen this in countless examples with aerospace, semiconductors and many other industries.

The state pioneers these industries, but then the majority of national investment in the those sectors occurs outside of California as they mature. The innovation needs room to run and scale if it is going to remain in the state.

As a quick case study, I'd like to share a company called Behringer Ingelheim, which is a biotechnology manufacturer in Fremont. Beringer Ingelheim, or bi, is one of the global leaders renowned for its innovations in biotechnology and healthcare.

They opened their first manufacturing facility in Fremont in 2011, leasing a single building and eventually scaling up to 150 skilled manufacturing jobs because the company could operate and grow without facing land use uncertainty. And they benefited from the robust ecosystem in Fremont and really California.

They were able to grow that initial foothold over time, ultimately leasing three additional buildings, getting their workforce to nearly 1,000 manufacturing technicians, and becoming one of the largest biotechnology manufacturing hubs in the state. Along the way, the city was highly supportive of of all of their efforts.

Working to get additional power, working to get approvals from, you know, a myriad of different regional and statewide and federal regulatory agencies helping them to navigate that process.

And that confidence in the relationship allows the headquarters in Germany to continue allocating major amounts of capital to Fremont, because they know that we are in their corner and we are invested in their success.

On the development side, Fremont's policies have enabled new industrial development at scale. We currently have an industrial pipeline of 21/2 million square feet and this is in an infill tight market like Fremont in the Bay Area. So how are we doing this?

This recent project here that I'd like to highlight, the campus at Bayside, really illustrates this clearly. This project includes more than 473,000 square feet of state of the art industrial space. Notably, it was entitled under Fremont's buyright zoning framework, meaning the project was able to move forward with speed and certainty and fully CEQA exempt.

Phase one is under construction and has already been entirely pre leased to a global artificial intelligence hardware manufacturer who is also benefiting from byright zoning and the city's ability to bring in additional power capacity. This really demonstrates that there are strong demand for modern industrial space in California and we can build when the regulatory barriers are reduced.

Fremont also shows that manufacturing leadership and environmental leadership can advance together. The city's leading industries include Cleantech, biomedical, semiconductor, electronics and emerging technologies that align very directly with California's climate and economic development goals. As you can see. Excuse me here.

As you can see, these facilities are often clean, but that doesn't mean that they don't have regulated gases or chemicals or can be placed next to residential zones. In fact, these facilities often cannot occur next to what we call sensitive receptors, highlighting the importance of mentees, meaning true industrial districts and buffers between industry and residential areas.

Fremont is a rare success story in this regard, but the continued loss of local land use authority erodes our ability to maintain healthy production areas and we are contending with this actively in Fremont. Tesla provides one of the most compelling examples of what's possible if we act with intentionality and champion our industry.

Despite relocating its corporate headquarters to Texas, Tesla has significantly expanded its manufacturing footprint in Fremont. Since that announcement, the company has added more than 12,000 additional manufacturing jobs to the city. I want to reiterate that we are growing faster in Fremont than they are in Texas.

Today, more than 25,000 people work at the Fremont factory, which spans approximately six and a half million square feet and is the highest output auto plant in North America.

There are approximately 85 auto plants in the U.S. mexico and Canada, and the plant with the highest output of all of them is in the high cost, high regulatory Bay Area. It can happen. We can do this at scale if we really put our minds to it. Tesla's growth has also reinforced Fremont's role as a manufacturing hub.

Suppliers and competing firms, particularly in batteries EVs, AVs and Cleantech have clustered nearby to take advantage of the proximity, speed and most importantly, the talent pool. This is how you build industry clusters. This localized ecosystem strengthens regional innovation and encourages companies to locate near each other. And we benefit. The public benefits, the state benefits.

Despite losing over 750,000 manufacturing jobs since 1990, when nearly one in five jobs in the state were in manufacturing, California remains the number one manufacturing state for jobs. However, the lead that we have with Texas is rapidly narrowing.

According to JLL, there have been over 600 mega factory announcements in the US since 2020, largely driven by major industrial policy like the Chips and Science act. Less than 1%, and I would estimate probably about a tenth of 1% of those factories have been in California.

Despite the industries that we're talking about being EVs, batteries, semiconductors, aerospace industries that were birthed in California that we should be owning, It's easy to forget that the Tesla factory was once a symbol for economic disaster and California's inability to retain industry. I want to take you back to a moment in time.

It's 9:40am on April 1st 2010. The last Toyota Corolla has rolled off the Assembly line of what was once known as NUMMI. 4,500 jobs were lost plus a meter myriad of supply chain impacts. The Great Recession's in full swing, the city's unemployment hits 9% and we're experiencing significant cuts.

It would have been really easy to wave the white flag in that moment, but instead Fremont really chose its course. We doubled down on our industry bet and being a manufacturing hub, we really prototyped a lot of new land use archetypes and made a lot of efforts to streamline and incentivize the right kind of development.

It takes time and it takes a lot of work and intentionality. But those efforts are snowballing. Last year Fremont not only led all of Silicon Valley in total leasing activity, but we accounted for 70% of the entire Bay Area region's industrial leasing activity for manufacturing. 70% in one city.

So we really are a testament to how intentionality and hard work can pay off. And if you've really want to put the right policy in place, Fremont's experience offers lessons for the state. Manufacturing supports innovation, strengthens supply chains and provides accessible high quality jobs.

When cities protect industrial land, offer predictable permitting and certainty, and invest in workforce partnerships, manufacturers and industry respond. I would like to thank you for the opportunity to share Fremont's story with you this afternoon. And before I close, I'd like to end With a broader reflection on my home state.

As a fourth generation Californian whose great grandfather was tasked with overseeing many public works projects, including the Bixby bridge construction with the California Conservation Corps, someone who takes a lot of pride in the future of this state. California has increasingly embraced what many describe as an abundance agenda, particularly when it comes to housing.

Policymakers have recognized that scarcity is not inevitable and that bold sustained action is required to produce enough homes for our residents. Fremont's experience suggests that industrial policy deserves the same level of intense focus and urgency. This is a trying issue of our times.

Californians want meaningful work, the dignity of providing for themselves and their families and the opportunity to build long term stability. From a policy standpoint, manufacturing can help deliver on all of these aspirations. It creates accessible middle middle wage jobs, anchors innovation and strengthens communities that service based economy simply cannot do.

Fremont is proud to play our part in advancing this vision and hopes to serve as a model for what re industrializing California can look like. Thank you.

Well, thank you, thank you for you and your family's commitment to these issues and I'll have a lot of comments and reflection. I appreciate that. We'll first go ahead to our last presenter, someone I've worked closely with on some of these issues, but related issues as well. Mr. Covert, when you're ready to go.

Okay, great. We're just trying to figure out where the next slide begins. Do we have a. Might need to pull up another file. Okay, well, I'll get started.

I only have two, but thank you chair for having me today again, I'm Adrian Covert with the Bay Area Council and I'm here to talk about the benefits and opportunities of relocating advanced manufacturing and manufacturing generally in California and the benefits to cities, to residents and to the state, and why it should be a priority for both our economic plans and objectives as well as our climate plans and objectives.

So manufacturing, as Donovan was just explaining, offers the exact kind of jobs that California is trying to achieve. And they do so by offering also a clear career pathways that do not always require four year degrees, something that the state's been missing.

And just as important, manufacturing has one of the highest multiplier effects of any sector, with a range of each manufacturing job supporting three, but in some cases and in some sub industries, up to five jobs created for every job created in the manufacturing sector, supporting additional employment in logistics, construction, engineering, professional services and local small business.

So when a community wins a manufacturing facility, the economic benefits ripple outwards and endure for decades. On climate policy, I think California should be Viewing manufacturing really as the tip of its spear and in its climate change fight. California's electric grid is one of the cleanest in the United States and it's getting cleaner every year.

And our fuel mix, our efficiency standards and our emissions controls mean that goods manufactured here are often produced with far lower life cycle emissions than those same goods made elsewhere. And when manufacturing leaves California, our emissions produced here in the state may go down.

But that in the scheme of things, doesn't matter matter if the emissions go up because that same factory goes to a dirtier grid and those same goods now emit transportation related emissions to bring those objects to market here in California. That's not a win for California environment. It's not a win for our climate policy.

A factory in California emits in fact 33% fewer emissions than that same factory in Nevada, 56% fewer emissions than in Texas, and 70% fewer emissions than in Utah. Now onto the jobs and economy and local benefits for a moment. Recent research report from the Bay Area Council Economic Institute highlights the scale of the opportunity in this space.

So I'll pick one out because it's an analysis we recently did. Our analysis of the Suisun expansion plan and the Solano Shipyard project shows that at full build out, that project alone will deliver 225,000 jobs in the new development, but just as important, 205,000 jobs elsewhere in Solano County.

That again attests to the multiplier effect, a transformative impact delivering average wages 25% higher than current average wages and generate $16 billion in annual tax revenue.

And with many local governments, including my hometown in Santa Rosa, struggling with the loss of sales tax revenue to online shopping, backfilling that with new property tax revenue or licensing revenue from new manufacturing could be a critical piece to solving some of the financial and structural deficits facing schools, parks and other infrastructure liabilities across the state.

The need for action here is urgent. Since 2000, California has lost more than 6,000 manufacturing jobs, about 34% of total.

And that's not just a statistic that represents lost skills, weakened supply chains and communities that have missed out on stable middle class employment that oftentimes went to our competitor states and regions at the same time, there is no silver bullet to solve this.

California manufacturing is held back by a stack of obstacles and structural changes, high costs, regulatory complexity and perceived risk. Companies compare California not just to other states, but other countries and regions. And decisions are made on timelines of months and weeks, not years.

That brings me to the single most biggest challenge that we receive at the Bay Area Council when we talk to our industry Members in the manufacturing sector, which is delays and uncertainties relative to processes in California that don't exist elsewhere. Modern manufacturing operates on fast product cycles in tight financing windows.

Companies need predictable timelines to secure capital and to lock in customers and to commit to sites. And when permitting stretches on for years, or when CEQA processes create open ended litigation risk projects stall and they move elsewhere.

Even companies that want to build in California, which we have many because we're so good our, our strength is the ability to attract talent here and to use and leverage our universities to bring talent here to generate innovative companies. But sadly too often they go to other states to actually build up and scale out.

And I'm commending Fremont here for standing out and keeping and really pulling the weight for the region and keeping as many here as they do. So as the city of Fremont shows, local governments can play a decisive role. Here. But clearing zoning for industrial uses with upfront environmental reviews and coordinated permitting and firm timelines.

But Fremont is in the minority and I think the state should explore ways to raise the bar by lowering timelines and reducing the baseline uncertainty and the perception of uncertainty by being a bigger champion of homegrown California companies.

Otherwise, I'm afraid we're going to continue losing companies that were born here in the first place that we can't afford to lose. So with that, happy to answer any questions. Thank you so much for having this hearing.

Yes, well, thank you to both of you and thank you for the work of the Bay Area Council. It's been terrific to work with you. Obviously, I'm chair of the Bay Area Caucus as well. So again, we appreciate the partnership and I'm really fascinated with what I heard from Fremont.

I honestly really didn't know a lot of the details. So it's been really helpful to me and I'll make sure to share this with my colleagues subsequent to this hearing. But I'm trying to look at, I love the manufacturing by design, not an accident, not by accident.

So I love that piece and I'm just trying to, you know, go through here and obviously we can talk afterwards as well. But just trying to understand what, you know, some of the key things that you put in place. Obviously you start with the buy rate zoning for nearly all kinds of manufacturing and new industrial development.

And we did do some work last year though I know there's some continuing discussion in the Legislature about SQL exemptions for advanced manufacturing, the permitting, speed certainty and customer friendliness.

Customer friendliness is, you know, in some ways it's people may not view that as that important issue, but it really harkens back to what we heard on some of the previous panels as well because I do hear that from companies. They, they want to feel wanted. Right. And they don't always feel wanted here in California.

And so that part of customer friendliness, it's part of the ease of use of course as we just talked about in the last panel, but just more that really feeling wanted here because they certainly feel wanted by their state. So they need to feel wanted by California as well.

You know stuff to be learned here from some of your when you talk about the in house hazardous materials program management, how you took seven I think kind of state and local maybe regulations combine that in and love to learn more about that skilled workforce. That is something I think we again do have across the state.

But as previous discussions talked about and my own work with the Workforce Development Board, I think there's even more we can do to align with industry, with our tremendous community colleges and some of the other efforts that we have here today.

So anyway, I'm just recounting my own just for my own benefit some of the things you mentioned. Did I leave out any of the other pieces that you think were RIP and really critical to the success of Fremont and then generally.

Thank you. And I know I'd like to acknowledge that we are coming in at the end of a very long and detail and thoughtful Committee session here. So a lot of information thrown at you today. I would say we've talked a lot about speed and certainty really being kind of the big takeaways.

I'll just say that's table stakes to be able to have a seat at the table. I heard a little bit of conversation around attracting or recruiting businesses. I want to be clear we're not in a position to recruit. We're in a position to retain the next wave. What's gone is gone. It's not coming back.

But we continue to innovate and bring the next wave of technologies and innovations forward. And they're developed here and we can retain those here and actually grow those industry clusters like we've done previously. We saw this happen with Silicon Valley.

Where we hail from was once the really 80% of the world's semiconductor manufacturing and now it's, you know, not even a percent. So we can do this right? It's about retention. But the speed and certainty is really just the table stakes for this conversation. CEQA is a part of it.

I would pause it, but There's a lot more to it than that. There's a very, very kind of burdensome and complex regulatory framework that you have to navigate. And even with all of that, you have uncertainties around utility capacity and all of those things.

I heard some really great comments about leveraging Go Biz and others to kind of make that easier to navigate and maybe empowering, I would suggest empowering those kinds of folks to be able to do that.

And then once you've kind of made that you've gotten the table stakes down and you have a seat at the table, that's when you can really start doing some more innovative creative collaborations with workforce development, you know, certainly with tying in a lot of the different infrastructure and things that, you know, a lot of our assets that we have in California.

But before you can even, you know, talk about any of these kinds of great multisector collaborations, you need to provide an environment for investment that is not hostile or perceived hostile.

And I can tell you with a lot of, you know, engaging with a lot of executives, a lot of boards, venture capitalist, funders I'm sure you've spoken to, oftentimes California is not even a consideration. We do not have a seat at the table.

Our companies will go out and meet with officials in other states and they'll have a representative from the governor's office or the Governor themselves. They'll have an Executive or the CEO of the utility company, the chancellor or the President of the local community college.

And they'll have developers or local city folks with shovel ready land and they have a complete comprehensive package together to offer them that's very organized and succinct and provides a ton of certainty. And all of those key stakeholders being there really shows their intentionality about wanting to recruit them. We don't offer that here in California. Nothing close.

In fact, we make a lot of businesses feel like, you know, really they should be grateful for wanting to do business here versus us having gratitude. We do try to, you know, do our own, carve our own, you know, way in Fremont, and I think we've done really well with that.

But it's sort of been in spite of a much broader, challenging operating environment, frankly, you know, and we want to be a model, we want to advocate.

So I know today is really just the kind of, I think, start of what I hope can be an opportunity to use leverage Fremont's experience and help really champion this in the state capitol.

Well, thank you. As you said, I've heard that as well for companies too. And a lot of these Companies retain site selection consultants and we probably need to reach out to those as well and they need to be part of our outreach.

And, and because again, as you said, California's not often those folks that say they tell the companies don't even think about California. Right. So the isolation consultants are part of the issue, but also a group that we need to engage with.

But again, interesting to hear your experience, as you say, when you going up against other states and you see some of these, some of the folks align that are good lessons for us here today.

And I will say again, you know, as part of this, I think several times in this hearing, we're grateful for go biz and some of the resources we now have already now in California that we've built. But you know, I think we're seeing some about how do we bring that together a little bit more.

But I love what you said about speed and certainty, really our table stakes, because a lot of times here we focus on those as the end goal. But your point is really those are, those are kind of table stakes for being in the ball game, so to speak. Excellent. Turn it over to back to Adrian Covert.

You know, do you have, as I think, as Donovan said. Right. I think this hearing really is part of the beginning of the conversation. Any other advice you have for us? You talked about, by the way, some big potential. You know, sometimes we think, zero, there's no land here in say in the Bay Area, for example.

But we know you talked about big potential. The big potential shipbuilding project we talked about in my own district, you know, building a multi billion dollar space center at Moffett Field is something that Berkeley's engaged with.

And of course, the administration's opposition to California and trying to cancel anything positive for California has set that back a little bit because we're going to have the semiconductor innovation center there. That would have been a helpful catalyst.

But still the bottom line is there's lots of land and adjacent to lots of companies and lots of academic institutions. And we need to find a way to, you know, to kind of catalyze some of these pieces. Sorry, go ahead.

Yeah, I think those are all very good points. I think we're, I would just encourage you and your colleagues to think big, think big and think bold because we're in a unique world now where both there's a bipartisan agreement in Washington on the need to reshore manufacturing in the United States. And that's unique.

And of course the parties are going to have big differences in how you go about doing it. But the Fact that there's a consensus on the need to restore American manufacturing that's on the table.

And California needs to be really aggressive to get the biggest part of that, I think not only for our own economic well being, but also for our climate goals and for America's climate goals. Now I think what's standing in the way are we've got real issues and we've got perceived issues.

And on the real issues, we've talked a lot about them today. CEQA came up a couple times and I know the Legislature took action and the Governor took action last year with regards to advanced manufacturing. And I think that's an important win that sends important signals to industry that hey, something's happening in California, so that's important.

But even past ceqa, you know, there's a whole long list of post entitlement processes that happen in California that don't happen in other states.

And what we've seen in permitting unrelated in the bay, on wetland restoration in the bay, we've been able to drastically shrink the permitting timeline for certain restoration projects across very diverse state, federal, local agencies because we got them in the room together to do permitting in a concurrent way rather than a sequential way.

It doesn't sacrifice environmental quality, no shortcuts. It's the same high standards, but it's organized in a much more rational way to deliver yes or no, much quicker. That kind of process can help a lot and be applied this way too.

And then on the perceived, perceived barriers, you know, in every other jurisdiction in the United States, local representatives typically champion the largest employer in their districts. And I know a lot in California do here too, but not all the time.

And so we need to see, I think what would help would see more of a culture of championing homegrown California companies and companies that decide to be here and really get out in front and really get aggressive in touting.

This is the place and the pride that Californians and California voters take in cutting the ribbon on new manufacturing and doing whatever we can to bringing it here. Because it's perception, but perception matters.

Yeah, well, good. And we'll give a shout out also to the EPIC program. And because your host child has been very focused on the battery supply chain here in California and the auto supply chain too, but particularly around batteries. And I know that Bin's very supportive of some interesting start manufacturing in my district, that's been quite helpful.

So want to acknowledge that as well as, among other things, other pieces from the administration's efforts. But as you say, think big, think bold. The Opportunity with a more of a national focus on reshore manufacturing. And how can we make sure that we take advantage of it? I love the. I was with Secretary Crowfoot on Monday.

We also talk about cutting the green tape and we were talking about where that started. And actually he was quoting the head of our. Singling out. The head of our RCD in San Mateo county is someone who really, you know, helped kind of coin that.

But we were actually talking and I don't, you know, I got to spend more time with him on this, but he was talking about kind of regional adaptation. One of the things we make, we're doing big projects is adaptation planning.

And how can we again do that on a more regional basis so not every project doesn't have to do it. And there's just, I think, lots of ways we can continue to make improvements. You made me think about that one with your comments. Well, listen, this is excellent. I really want to thank both of you.

Really, super, super informative, very practical, very helpful. Thank you all for being here. Thank you, Senator. Thank you, Senator. We're going to move to public comment now. This will be the time for public comment. And I see Lens Hastings, head of cmta. We really appreciate all of your advocacy leadership for this over the years and we'll take you up first.

Great. Thank you very much, Senator Becker, for the hearing. Great to see Donovan and Adrian representing Fremont. If we could replicate and scale Fremont elsewhere in the state of California, it would be a wonderful state for all kinds of manufacturing. Yeah, I learned a lot here today about that model.

Yeah.

I'm Lance Hastings, President of the California Manufacturers and Technology Association. We represent represent the manufacturing sector here in the state. 30,000 enterprises, 1.3 million employees and $300 billion in output. Within that sector, we have the subsector of aerospace, which is the dominant within.

So I think right now I'd like to offer the commentary that we are at a intersection of innovation and opportunity that we've never really seen before, but it's being burdened by additional regulation.

So in California, we're developing some of the best things that the world really wants and needs, but we're just not able to get it up off the ground and build those items. We should be doing that here. We have 40 million residents and citizens in this state. Best workforce, best weather, I think the best opportunity.

But right now we're having pressure and challenge to meet that opportunity of the future. So I wanted to get that surfaced and also wanted to share an anecdote. One of our small medium manufacturers in Contra Costa County has been often sought after by other states, other counties. You get the brochure, hey, come here.

We'll roll out the red carpet like was mentioned earlier. And it's getting tough not to consider that from her business perspective. But last year her 80 employees came to her and said, we want to move.

So if something like that happens, it tells us there is a fracture in the system that we really need to work on to ensure we don't lose that. Because when you lose a small, medium manufacturer, they don't come back and it fills a void. And hers is a second generation company founded by our father.

So I put that on the record for all of us to be something we pay attention to as we move forward. But as always, CMTA is ready to have these conversations. And I'll close with making the observation we need to stop talking past one another. The good jobs are the manufacturing jobs.

And as Fremont has demonstrated, they can coexist in any community in the state, even the density of the Bay Area. And let's work on items like that so that California continue being the number one manufacturing state that we are. Because we're not a just a state. We are a global competitor.

And we have to resemble that and respect that opportunity that we have. So on behalf of, of CMT and our Members, happy to continue working with you in whatever form, whether it be this form, legislative form or et cetera.

But we have to kind of get out of our own way so that we can do the things that I think everybody shared earlier today.

Well, thank you and look forward to working with you on that. And that example hits close to home because I was on the founding trustee of the UC Merced board and I was on the Executive Committee for I think 15 years.

And we really worked hard to set the tech transfer, to make it really a model of tech transfer. And ultimately, of course, that's with the goal of building up businesses around there, including manufacturing businesses. And to think about a, you know, a small, medium sized manufacturer that wants to now leave. And that's painful.

So I think we need to work to prevent. So thank you.

And also, as Donovan said, time and certainty. I'll argue time is the most important thing. If we can't get it done in time in California, other states will find the time.

Yeah, good.

Thank you, sir. Thank you.

And before I take the next comment, I just want to acknowledge, because I know some people might leave after their comments, but I acknowledge Ian Higgins from my team for really working so hard to put together really super substantive and very useful hearing today. So thank you, Ian. Please go ahead.

Hi, my name is Will Tosburn. I'm a senior researcher with the UC Berkeley Labor Center Green Economy team leading research for high road clean energy manufacturing sector strategy as part of the Green Empowerment Zone Initiative.

The Green Empowerment Zone Initiative was started by Senator Tim Grayson, who as you said, is a real leader in this space at the Legislature, basically establishes a zone, a board, a big board of a lot of folks from employers, state, local, federal, state agency, labor, workforce development, economic development, and bringing together this idea of how do we use a clean energy economy to support the local economy in Contra Costa and Solano county and specifically, you know, obviously within the context of ongoing refinery, oil and gas refinery transitions.

And so we've been brought on to lead a strategy specifically around clean energy manufacturing. I want to echo so much of what was said today about needing to build out the, build out the middle and the production processes. And we really just wanted to stress a couple things from our research.

We've spoken with almost 30 manufacturers in the clean energy manufacturing space, have identified the technologies that we think are most viable to be produced in the gez. And I think that can be seen in a lot of places more broadly in the Bay Area in California as well.

And just wanted to highlight a couple things that we've been hearing. One, I really do think, as many have said that, that this clean energy manufacturing space is a place for us to leverage the innovation, talented workforce and other sort of leadership that California has to bring these manufacturing jobs back.

I want to just also sort of from our research on oil and gas refinery transitions, leverage the, you know, raise the idea of leveraging both the industrial assets and really skilled workforce in some of these important legacy industries like oil and gas refining and how can we use those to build the strengths of the next generation of manufacturing that will support our economies, our local governments, our local communities and the economy that we want to build.

So really just wanted to thank you. It's been a great panel. I've learned a lot, a lot of people here that I've looked up to in the work on manufacturing and just say that we will be coming, bringing research and the board will be making policy recommendations at the local and state levels to try to support this.

And so you can really think of the GEZ as a sort of local industrial policy applied project that's happening in lockstep with California jobs first, but really with a laser focus on the issues that we're talking about here today. So happy to share more and Just really appreciate the venue and your leadership on this issue. Thank you.

Excellent. Good, good. Look forward to working with you on that. I did talk to Disintegration this morning about some various issues, but I do want to continue to learn more about the work and looking forward to the recommendations. When are those coming out? When are those are there?

Sort of throughout the year, but first set will be in September.

Okay, great. We very much look forward to that. Thank you.

Thank you, Mr. Chair, for having this hearing. And I also want to thank Ian for putting up with the myriad emails and meetings and bugging you over this hearing. I also learned a lot and I think the timing of this is really important.

Faith Conley with Weideman Group on behalf of Supply Chain Federation, the committee's own background paper actually pointed out that keeping manufacturing jobs in California is going to take collaborative development and really focus on not only the jobs, but logistics, efficiency and trade infrastructure.

And I would just add that the high tech, manufacturing, manufacturing part of that is really a system of systems that's all a part of the supply chain of California that supports a global economy. And a really big part of that system is actually having industrial land available to have these warehouses, to have the plants.

I know City of Fremont made some really good points about having the industrial land available and prioritizing that as a local government and as a state is very important to keeping all of that here.

So I would just add for an ask for future conversations around this issue that we really take into account that while, you know, things like housing development in California, making sure things are affordable is a really big part of the conversation.

But just as high as a part of that conversation is making sure that this type of land exists for companies to be able to come build here, put their, their workers here and make the family things that we need to keep the global economy moving. So thank you.

Thank you very much. Look forward to learning more about the Swedish Chain Federation and working with you.

Thank you. Chair Adam Regley on behalf of the California Chamber of Commerce and also here on behalf of NAEP SoCal, echoing everything that was said here, we've learned a lot about not only manufacturing, but also the endocrine system of, of California's economy, which is the goods movement sector.

Cal Chamber has been a long proponent of building more housing. We have a supply imbalance, but we also have an imbalance of jobs and manufacturing in this state. And we've prioritized a lot of different policies that sometimes I think someone said we talk past each other and I think when we prioritize certain policies.

It has pushed certain industries out of California when we could do it better and cleaner here, as stated. And I think these types of conversations will foster more homegrown manufacturing goods movements, jobs. And frankly, we think that supports the climate change policies, green energy economy, et cetera.

And we don't want to look at those as mutually exclusive or in conflict, but actually synergistic. And I just want to emphasize we've talked to tens of hundreds of companies over the years on why they don't expand in California or why they decide not to come here at all or worse, leave when they were here in homegrown.

And certainty, regulatory certainty is almost always number one and affordability or cost to do business here. And so every conversation we have to alleviate those perceptions and make businesses come to a state that has the strongest regulations on environmental issues I think is a win for everybody.

And so we will be a part of those conversations and appreciate this conversation.

Thank you. Excellent. Well, thank you and look forward to working with you in the Chamber going forward on this. Well, again, I want to thank all of our presenters for just, you know, fascinating, very practical and helpful testimony has been noted, especially here in public comment. You don't always hear that.

And thank Ian again for all of his work and those who've my colleagues who were here and others who expressed interest. And I'll be sharing the results of this hearing with that. This meeting of the Select Committee on Technological Innovation, Economic Economic Development is adjourned.