Prioritizing Productivity:
Manufacturing’s Quiet Power in California
The economic importance of manufacturing in the Golden State
California’s Manufacturing Industry Is Losing Jobs, but Its Productivity Advantage Tells a Different Story
Manufacturing may employ a shrinking share of California’s workforce, but its economic importance remains substantial. In this study, Beacon Economics, in partnership with TeamCalifornia, examines the changing role of manufacturing in the state, revealing how technological innovation, capital investment, and extraordinary worker productivity have sustained the sector’s contribution to economic output. Despite decades of employment declines, manufacturing has continued to account for approximately 10% to 12% of California’s economic output since 2008.
The contrast between jobs and productivity is striking. California lost more than 82,000 manufacturing jobs in 2024, with the largest losses concentrated in durable goods and electronic computer manufacturing. Yet the state’s durable goods workers generate nearly $300,000 in output per worker—approximately 70% more than the national average. The report explores the forces reshaping the industry, from automation and artificial intelligence to tariffs, venture capital, and global supply chains. Its central conclusion: California’s manufacturing future will depend less on restoring traditional factory employment and more on strengthening its competitive advantage in high-value production.
Key Highlights
A Major Productivity Advantage
California’s durable goods manufacturing workers generate nearly $300,000 in output per worker, approximately 70% above the national average.
Jobs Down, Output Share Resilient
Despite long-term employment declines, manufacturing has maintained roughly 10% to 12% of California’s economic output since 2008.
A Rapidly Changing Workforce
California lost more than 82,000 manufacturing jobs in 2024, including over 50,000 in electronic computer manufacturing.
Expert Insights
Niree Kodaverdian
“The future of California manufacturing isn’t about recreating the factories of the past. It’s about building on the state’s remarkable productivity advantage and adapting to an industry increasingly driven by technology, capital investment, and innovation.”
~ Niree Kodaverdian PhD, Research Manager, Beacon Economics
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