Manufacturing Growth Is Happening Across the Country — But Not So Much in California
This article is inspired by and expands on Ward Clark’s November 2, 2026, RedState piece, “US Manufacturing Renaissance: Factories Are Coming Home.” Click Here
A national manufacturing resurgence is underway. Peter Navarro’s White House report catalogs more than 500 projects announced since President Trump returned to office, representing nearly $400 billion in investment and more than 160,000 direct manufacturing jobs. The October Institute for Supply Management (ISM) Manufacturing Index hit 55.5 with strong readings in new orders, production, and employment. States such as Texas, Florida, Nevada, Utah, Arizona, and others are adding factory jobs and attracting new plants. California is not sharing in that growth equally.
California still employs the largest absolute number of manufacturing workers in the country (roughly 1.2 million as of mid-to-late 2026). Yet the trend lines diverge sharply from the rest of the nation. Analyses of BLS data show California posting net losses in manufacturing employment in recent periods (one compilation put the 2020–2025 decline near 48,000 jobs, or –3.8%), while faster-growing states recorded solid gains. Manufacturing employment in the state has fallen from a peak near 2 million jobs in the late 1980s–early 1990s, and year-over-year figures continue to show declines even as the national sector expands. Headquarters and production capacity in manufacturing and related sectors have relocated disproportionately to Texas, the Southeast, and other lower-cost states.
Why California Is Missing the Renaissance
The primary reasons are structural and longstanding. California’s high corporate and personal tax rates (top marginal individual rate of 13.3% plus payroll taxes), complex and costly permitting processes (especially under CEQA), elevated energy costs, expensive industrial land and construction, and dense regulatory requirements raise both the cost and timeline of building or expanding manufacturing facilities relative to competing locations. Site selectors and company announcements repeatedly cite these factors when choosing Texas, Florida, or Southeastern states over California. Industrial land prices and build costs in California are often multiples of those in lower-cost states. The Tax Foundation ranks California near the bottom nationally on tax competitiveness.
Even recent state efforts to streamline permitting for advanced manufacturing (such as the CEQA exemption in SB 131) were responses to the recognition that the state had become uncompetitive for large projects. Industry groups have warned that further restrictions would reverse any gains and push more investment out of state. High housing and energy costs also inflate effective labor costs, compounding manufacturers' disadvantage.
A substantial share of the existing industrial base has already moved out or contracted. Public Policy Institute of California data show that roughly half of the headquarters that left the state between 2011 and 2021 were in manufacturing, wholesale trade, or business services, and the annual number of exits has been trending upward. High-profile moves include Chevron (to Texas), Tesla and SpaceX (headquarters to Texas while retaining some California production), McKesson, and numerous midsize manufacturers.
Valero Refining Example
The pattern is especially clear in refining. Valero closed its Benicia, California refinery (approximately 145,000 barrels per day) in 2026 after citing the state’s stringent regulatory and operating environment as a key factor; the company cut more than 200 jobs at the site and shifted to supplying Northern California largely through imports. At the same time, Valero agreed in late October 2026 to purchase LyondellBasell’s recently shuttered Houston refinery—a facility more than 100 years old—for $320.5 million and plans to restart roughly 165,000 barrels per day of capacity there by the end of 2027. Phillips 66 likewise closed its Los Angeles-area refinery in 2025. Together these moves removed a significant share of California’s in-state refining capacity while capacity is being restored or expanded on the Gulf Coast. Many companies that keep some operations in California have shifted new capacity, expansions, or strategic functions elsewhere. Longer-term local data, such as Los Angeles County’s drop from hundreds of thousands of manufacturing jobs in 1990 to a fraction of that today, illustrate the scale of the contraction.
Local Context and the Bigger Picture
The North State has not been immune to the statewide pattern, even as pockets of activity continue. Sierra Pacific Industries and related forest-products operations remain important employers, and projects such as FABRIC Mass Timber’s planned facility at Stillwater Business Park represent real, if modest, advanced-manufacturing opportunities tied to local resources. These are valuable, but they are occurring against a backdrop in which large-scale industrial expansion is systematically more difficult in California than in much of the rest of the country. Also, the modest gains represented by these projects do not offset the sizeable manufacturing losses of the Roseberg Veneer Products closure in Weed and CalPortland Cement closure in June 2026.
Impact Super Intelligence to Jobs
As more technology companies deploy increasingly powerful artificial intelligence systems—what some are calling super-intelligence—many white-collar and tech-sector roles face real disruption. Software development, data analysis, content generation, customer support, and even portions of engineering and management work are already being reshaped or reduced by AI tools that can perform large volumes of digital tasks faster and cheaper than human teams. A concrete recent example is Microsoft’s late-October 2026 voluntary exit offer, extended to roughly 60,000 employees—about 27 percent of its global workforce of approximately 223,000—across eligible teams in the United States (including its Redmond, Washington headquarters), Canada, the United Kingdom, and India. The company framed the buyouts as a way to manage headcount and costs while committing massive capital (on the order of $175 billion in 2026) to AI infrastructure, data centers, and related capacity.
Earlier in the year Microsoft had already offered a voluntary retirement program to about 7 percent of its U.S. workforce. These moves illustrate how AI-driven restructuring is affecting large tech employers, reducing or reshaping roles that can be partially automated or reallocated toward AI priorities.
In contrast, a substantial share of manufacturing jobs remain comparatively resilient in the near term. Physical production still requires hands-on work, skilled trades, equipment operation, quality control on the factory floor, maintenance of complex machinery, and adaptation to real-world materials and conditions that current AI systems cannot fully replicate or replace. While automation and robotics continue to advance in factories, the combination of policy-driven reshoring, new plant construction, and the inherent physical nature of making things means manufacturing employment is less immediately vulnerable to the same AI-driven displacement now hitting large parts of the tech industry. For the North State, that distinction strengthens the case for prioritizing the industrial and forest-products jobs that are actually being created or preserved.
America is once again becoming a country that builds things. The data from ISM, the White House project inventory, and the investment announcements confirm it. California’s regulatory and tax climate, combined with the long-term erosion of its industrial base, means the state is largely sitting out the factory boom that other regions are experiencing.
For Shasta County and the North State, the practical path is to capture the limited opportunities that remain—wood products, mass timber, and related trades—while recognizing that statewide conditions continue to favor capacity moving elsewhere.
