This month’s Government Relations Update video highlights crucial legislative developments for California’s manufacturing sector.

This proposed legislation, which aims to introduce a manufacturing tax credit for qualified manufacturing equipment and research and development (R&D) purchases, has recently cleared a critical hurdle, passing the Senate and Assembly Floors with unanimous support. It now moves to Governor Gavin Newsom’s desk for a final signature. 

California is the nation’s leading state in manufacturing, boasting over 30,000 manufacturers who collectively employ more than 1.3 million people. However, the current economic conditions have not been favorable to the state’s manufacturers, particularly small to medium-sized ones. These businesses, which make up more than 70% of California’s manufacturing landscape, have faced increasing challenges due to the state’s high tax rates at the state and local levels.  

AB 52 represents a potential game-changer for these manufacturers. If signed into law by Gov. Newsom, this bill will provide much-needed financial relief to manufacturers by offering tax credits for crucial investments in manufacturing equipment and R&D. This could significantly reduce operational costs, making it a more attractive option for businesses to remain and expand their operations within the Golden State.  

AB 52 is projected to have a broader impact on California’s economy. The bill is expected to create approximately 163,000 new manufacturing jobs and generate up to $3.5 billion in new economic activity. The potential growth will benefit the manufacturing sector and contribute to the state’s overall economic vitality.  

Moreover, AB 52 aligns with California’s environmental goals. By making it more affordable for manufacturers to invest in carbon-neutralizing products and equipment, the bill supports the state’s efforts to reduce its carbon footprint. AB 52 has the potential to help the state meet both its economic and environmental objectives, fostering a more sustainable industrial ecosystem.  

One of the most promising aspects of AB 52 is its potential to reverse the trend of “Invent Here, Build There,” a situation where innovations developed in California are manufactured elsewhere due to cost concerns. By reducing these financial burdens, the bill encourages manufacturers to keep their operations within the state, allowing them to excel and contribute to California’s long-standing tradition of innovation.

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