If film deserves a tax credit, so does manufacturing

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OPINION – From producing the first Apple computers in a Los Altos garage to pioneering electric vehicles and clean energy solutions, California manufacturing has long been a catalyst for global innovation and economic strength. It’s the quiet engine behind everything from semiconductors and aerospace systems to medical devices and the infrastructure that powers our daily lives.

Yet today, the very sector that helped build California into the world’s fourth-largest economy is at a crossroads.

Recently Governor Gavin Newsom signed a $750 million expansion of the state’s Film and Television Tax Credit, a bold move to keep creative industry jobs in California. It’s a strategic and symbolic investment in the state’s identity as a global entertainment capital.

But it also raises a critical question: If we’re willing to invest hundreds of millions of dollars to retain productions that come and go, why aren’t we doing the same for the manufacturers that anchor our economy, create long-term middle-class jobs, and drive regional prosperity across every corner of the state?

Manufacturing supports more than 1.3 million jobs in California and contributes nearly $400 billion in economic output annually. These are high-quality jobs that average over $90,000 per year in wages and benefits. At the same time, manufacturing plays a vital role in our climate goals, national security, and innovation pipeline.

Yet unlike the film industry, California manufacturers receive very little support from the state, yet still face the highest energy, workforce, land, and regulatory costs in the nation. In fact, 38 states already offer a manufacturing tax credit, and 6 other states have no sales tax at all! It’s time for California to offer broad-based incentives for manufacturers to invest in equipment, expand their footprint, or stay here.

That’s where Senate Bill 587, authored by Senator Tim Grayson, comes in. The bill would establish a targeted manufacturing tax credit for companies that invest in energy-efficient equipment, upgrade aging infrastructure, and grow their workforce. It’s designed to keep jobs in California and make us more competitive with states that are actively recruiting our manufacturers away.

And the competition is real. Texas, Arizona, Ohio, Indiana, Georgia are some examples of states offering attractive tax credits and site selection support to lure manufacturers from California. Without a similar tool in our economic development toolbox, we’re forcing California-based companies to make difficult decisions about where to invest and grow.

SB 587 offers a smart solution. It incentivizes precisely the kind of investments we want manufacturers to make. It aligns perfectly with California’s climate and economic priorities, and it helps level the playing field.

This isn’t just a good idea. It’s common practice.

According to national data, more states currently offer tax incentives for manufacturers than for film productions. More than 40 states offer some form of tax credit, exemption, or incentive for manufacturing equipment or capital investment.

Yet California offers neither. No state manufacturing equipment credit. No sales tax exemption for capital investment. Despite leading the nation in advanced manufacturing output, we’re one of the few states without a dedicated strategy to retain and grow this vital sector.

California has always been a leader in innovation, but we can’t assume that our manufacturers will stay loyal to the state while competitors make better offers elsewhere. Without meaningful incentives, we risk watching our legacy industries, and the jobs they provide, fade away.

We applaud the state’s investment in the film industry. The newly expanded credit is projected to generate over $1 billion in economic activity and support thousands of workers. But we must apply that same logic to the industries that build the tools, machines, and technologies that underpin every other sector of our economy including entertainment.

This isn’t about special treatment. SB 587 is not a handout. It’s a strategic investment to keep California competitive, reduce emissions through industrial modernization, and preserve high-paying jobs across all regions of the state.

If we truly believe in “Made in California,” then it’s time to back that belief with policy. SB 587 gives us the opportunity to do just that.

Lance Hastings is the President and CEO of the California Manufacturers & Technology Association (CMTA), representing more than 400 manufacturing companies and industry partners across the state.