Following are remarks presented by Susan Corrales-Diaz, 2017 chair of the California Chamber of Commerce Board of Directors, at the 92nd Annual Sacramento Host Breakfast on June 1. Corrales-Diaz is president and CEO of Systems Integrated, Orange.
Good morning! Thank you to the Host Committee and the Chamber for putting together this spotlight on California business.
For over 125 years, the Chamber has been the premier business advocate to government—educating legislators of employers’ concerns about new laws and regulations. The Chamber is a resource to employers to educate and provide expert guidance about employment laws and state and local regulations so that business can safely navigate forward.
The Chamber is shaped and guided by the input of our 13,000 companies, employing a quarter of California’s private sector workforce. More than two-thirds of our diverse membership have 100 or fewer employees.
California has 3.8 million small businesses, the most of any state, and provides about half of California’s employment. Small business is a vital contributor to California’s economic health, but our state’s business environment of regulations and taxes disproportionately shifts a greater burden onto small business.
Our policymakers need to seek ways to reduce regulations; suspend adding new taxes or fees on California’s businesses; and seek moderation in the implementation of existing laws in the least disruptive manner.
I have grown a California business that has thrived for 40 years designing solutions which applied computer technology. Systems Integrated started out working with the military, developing test systems—from automated testing of Marine Corps tank engines to underwater research for DARPA [Defense Advanced Research Projects Agency] and the Navy, and have even touched the stars, working with JPL [NASA Jet Propulsion Laboratory] on the development of test systems for the Magellan Satellite.
As the military market waned, we were able to apply our technology to industrial applications which could be exported to markets overseas. Though exporting is normally considered a federal concern, California policymakers had understood the benefits to jobs, and designed a California program for the special finance requirements of exporting. This program opened new markets for my company.
Trade is a valuable component of California’s economic health. In 2016, California exports amounted to nearly $164 billion, maintaining our position as the top exporting state, and accounted for 11% of total U.S. exports. California has a big stake in international markets across all sectors—trade sustains jobs in California and reduces the cost of goods to consumers.
Trade agreements eliminate barriers to international markets and provide a level playing field for small and large businesses. The U.S. has gained tremendous economic benefits through the 14 free trade agreements with 20 countries, which facilitated 47% of U.S. goods exported in 2015.
The federal finance programs of the Export-Import Bank provide the financial tools used in selling goods and services overseas. California wins when more of our businesses are able to participate in exporting, either directly or as suppliers to an export. Our legislators need to press for more trade agreements, and demand that Ex-Im Bank’s quorum be restored to full operation.
Technology Speeds Change
Systems Integrated, like all companies, needs to evolve—and technology is accelerating this process. Technology is changing our lives and how business operates, allowing distributed workforces that are not bound to offices; and has created the platforms supporting the rise of the gig economy.
Business and workers need flexibility to participate in this changing environment. Allowing flexibility with employee work schedules also supports our environmental agenda by minimizing pollution caused by commuting on choked infrastructure and doesn’t punish workers, forced to live in affordable areas, to suffer terrible travel times—reducing the quality of their life.
Twenty percent of our workforce is on the verge of retirement, taking with them their skills and experience, but are willing to continue working if they can control their schedules with flexible hours. Business is trying to adapt to these demands of the workforce, but California’s existing labor laws clash with these changes and need to be updated.
The legislators could affect immediate changes in labor regulations that would reduce the outflow of labor and allow business to better utilize California’s trained workforce.
Our ability to remain on the forefront of technology, is reliant upon the quality of our employees and the knowledge and skills they contribute to building our systems. For decades, California has been a center for innovation and technology fostered by our colleges and universities that provided industry with qualified students with scientific and technical training. But decline in the direct funding of California’s higher education has caused difficult tradeoffs of limiting enrollment and increasing the numbers of nonresident and foreign students, worsening the skills gap for qualified talent.
In 2016, there were over 149,000 foreign students attending California colleges and about a third of these students were majoring in engineering, math or computer sciences. These students contributed to research and our economy while attending college, but after graduation, business has no access to these foreign-born graduates, trained by our universities. This talent pool is lost to California’s business and instead the graduates must return to their home countries.
In the national immigration debate, we should support utilizing these foreign-born students that have earned graduate-level technical degrees in the U.S., by offering them an opportunity for permanent residence so they would be eligible for employment in California. We also need to spur the development of native-born STEM [science, technology, engineering and mathematics] graduates and should consider developing STEM-specific tuition assistance programs to encourage the pursuit of these degrees.
Career Technical Education
Not all students need a university degree to participate in technology fields. Our community colleges have aided in making technical occupations more accessible, by providing training through Career Technical Education and offering vocational degrees. These programs help to solve the skills gap but need dependable funding to maintain availability and meet the demand.
In order for California’s children, regardless of their ethnic or economic backgrounds, to be prepared to pursue technical fields, requires years of background preparation, starting in elementary school, to build the needed foundation.
Figuring out the right approach for dispensing quality education in California is a combative matter, but it is too important an issue to let politics get in the way of meaningful changes.
California invests 40% of the state’s budget in the education of our children and the only way we will know whether our kids are progressing is by objective testing so we can determine whether our resources are achieving the desired outcomes.
Access to Economic Success
California is split between the economic disparities of the very prosperous to those struggling at poverty levels. Business, working with our legislators, can target the areas of priorities for action to bring economic success within reach.
California has great potential, but the benefits need to be accessible across our state so that we are collectively competitive and that there are expanding opportunities for all Californians.