California's PCB Community Storms Sacramento, Waiting for Back-Up

On Thursday, a handful of committed PCB fabricators, EMS providers, and their suppliers scaled the steps of California's capitol building urging state representatives to create a more business-friendly environment for the electronics industry.

In terms of creating meaningful change in the minds of some government representatives, the effort was like scaling Mount Everest.

Organized by the IPC and the California Circuits Association (CCA) council, the event attracted only a small fraction of the state's IPC/CCA membership. Most of the seventeen attendees were from small companies with no out-of-state or off-shore presence, including Sprig Circuits (Vacaville, CA), Hallmark Circuits (Poway, CA), and Hunter Technologies (San Jose, CA). Noticeably absent were representatives from California's large PCB companies like TTM Technologies, DDI, Sanmina-SCI, Flextronics, Solectron or Tyco Electronics.

In the past five years, California's PCB manufacturing industry has lost almost 10,000 jobs and almost $1.7 billion in revenue. Nevertheless, attendees were hopeful that with pro-business Governor Arnold Schwarzenegger in office, California might yet again become a place where electronics manufacturing and assembly can thrive. To that end, attendees lobbied for three measures that would help PCB and EMS survive in California.

First, members urged their representatives to implement a sales tax exemption on manufacturing and telecomms equipment. California is only one of four states that currently demands a sales tax on these purchases. Since PCB and EMS companies must buy new equipment every few years to remain competitive, attendees argued that the abolition of the seven percent tax is essential when competing against from out of state or offshore competitors.

But according to Pedro Reyes, the Deputy Policy Director for the state's Speaker of the Assembly Fabian Nuñez, this reform is unlikely because "if we give this [exemption] to California's PCB community, other industries will ask why they didn't get an exemption, too. We don't want to go down that road." He mentioned large oil companies abusing the manufacturers' tax credit, which expired in 2004.

Second, attendees lobbied to reduce electricity costs. Despite recent rate reductions, electricity costs in California remain nearly double the rate in neighboring western states. Hallmark's Tom White in particular addressed the negative impact escalating energy costs are having on profitability.

Finally, industry representatives pressed their state senators and assemblymembers to preserve the reforms made to workers compensation insurance premiums that Governor Schwarzenegger enacted in 2004.

Richard Woonacott, a legislative aide to Assemblywoman Rebecca Cohn (D), admitted that the electronics industry faced an uphill battle when it comes to creating a more business-friendly environment. He advised frustrated IPC/CCA members to be patient. "You're not going to change Sacramento overnight," he said. "But if you can chip away at some of the policies that hamper your business, you might be successful in the long run."