California Was Built to Build

[NOTE: I drafted this before Trump announced all the new tariffs … if you’re looking for an in-depth analysis on why tariffs will either destroy modern capitalism or totally reinvigorate the American industrial base, this isn’t your post! I’m here to talk about California and California only. With that, I hope you enjoy.]

Three times a day, the streets of Burbank erupted in bedlam. Thousands of workers streamed through the gates of Lockheed's facilities at the shift change, flooding the streets with a small city's worth of people keeping the wartime factories running around the clock.

This scene played out across hundreds of facilities throughout California during World War II. In Southern California alone, over 5,000 new industrial plants sprouted between 1940-1944, employing over 2 million people to produce more than 300,000 planes for the war effort.

The image of factory workers with calloused hands feels at odds with our modern vision of the California worker. Today, we picture Hollywood creatives and Silicon Valley engineers in black t-shirts. But for much of its history, California was an industrial powerhouse that assembled ships, forged steel, pumped oil, and fabricated semiconductors.

For decades, California wasn't just the place that dreamed up the future. We were the place where we built it. That industrial muscle may have atrophied as factories moved to cheaper shores, but a new generation of deep tech founders believes they can merge Silicon Valley's innovation with the state's manufacturing heritage. In the same industrial corridors where California once built warplanes and semiconductors, they're now building rockets, robots, and fusion reactors. The question isn't whether California can innovate, but whether it’s even possible, for California to once again reclaim our former industrial glory.

California's Industrial Roots and Decline

California was birthed through waves of industrial booms. The original gold rush that quadrupled the state’s population from 1850 to 1860 and led to the state joining the union. The completion of the transcontinental railroad in 1869 connected California to eastern markets, while the Port of San Francisco became the West Coast's dominant shipping hub. In turn, this connectivity and population boom sparked a timber industry centered in Humboldt county, which invented the use of steam engines to move lumber and circular saws to cut down trees.

Further south, the arrival of the Southern Pacific Railroad in Los Angeles in 1876 and the development of the Port of Los Angeles in the 1890s set the stage for the region's industrial growth. The discovery of oil in LA and Kern County capitalized on this infrastructure, helping California lead the nation in oil production by 1903. Just a few years later in 1910, Los Angeles hosted the nation’s first major air show, laying the foundation for SoCal to serve as America’s aerospace hub.

By World War II, California's abundant labor, cheap land, and manufacturing infrastructure led to an unprecedented industrial boom to meet the wartime effort. This infusion of defense spending kicked off California's golden era of industrial leadership, fueled by over $100 billion in federal dollars spent in California between 1940 and 1970.

While manufacturing occurred throughout the state, the booming Southland emerged as California's industrial heart. By 1956, Southern California housed more than 90 percent of the state's aircraft and parts, rubber and tire, and scientific industries. The region also was home to approximately 80 percent of the apparel, furniture, electrical machinery and equipment, and motor vehicle industries.

This industrial might didn't just create products, it created prosperous communities. The city of Lakewood offers a telling example. Built around the Douglas Aircraft plant in Long Beach, it became the template for post-war suburban life. Workers could walk from their factory jobs to affordable homes, creating a new vision of middle-class life that would spread across the nation. These weren't just places of production, they were engines of social mobility and models of the postwar American lifestyle.

Beyond aerospace, the state was a powerhouse in semiconductors, with Intel's first chip plant in Mountain View and National Semiconductor's sprawling facilities in Santa Clara. The Kaiser Shipyards in Richmond employed 100,000 workers during WWII, while US Steel's Fontana plant produced millions of tons of steel annually. In Oakland, General Motors' assembly plant churned out Chevrolets, and Firestone's factory in South Gate produced millions of tires. The state wasn't just a producer—it was an innovator, leading the world in everything from aircraft to microchips to consumer electronics.

California's manufacturing prowess peaked in 1980, with 1.9 million manufacturing jobs across diverse industries. But it wouldn’t last. The combined wind-down in defense spending and off-shoring of manufacturing decimated industry jobs. Statewide manufacturing jobs declined by 32% between 1990 and 2019. LA County aerospace jobs dropped from 250,000 at the end of the Vietnam War to just 37,000 by 2009.

The factories that once employed thousands became empty lots or were converted into creative offices, leaving behind a generation of workers and a gap in the state's economic fabric. The state that once housed America's manufacturing backbone became better known for designing products than making them. The slogan for the current state of affairs is best captured by the words printed on the minimalist case of the Apple headphones on my desk, “Designed by Apple in California; Assembled in China.”

This separation between innovation and production represents a fundamental shift in California's industrial identity. While the state continues to lead in research, development, and design, the crucial connection between conception and creation, the hands-on knowledge transfer that once made California's manufacturing sector so dynamic, has largely been severed.

The Deep Tech Renaissance

California's manufacturing question is part of a larger national reckoning. The Trump administration's tariff plans and emphasis on "New American Industrialism" have made domestic manufacturing a central political issue. Vice President JD Vance has even framed it as fundamental to American identity: "if we do not protect our nation's manufacturers, we lose a fundamental part of who we are as a people. Making things, building things, working with our hands is America's heritage." There’s a growing recognition of the economic, national security, and cultural importance of maintaining domestic production. 

But while national policy focuses on protecting and restoring traditional manufacturing, California's innovation ecosystem is spawning a different kind of industrial renaissance. Just as the state's first manufacturing wave grew from the infrastructure of ports and railroads, today's revival is emerging from our unmatched network of research institutions, talent pools, and industrial expertise.

This revival is being led by "deep tech" startups, companies building physical solutions to humanity's biggest challenges rather than just software. Companies like SpaceX and Anduril are building rockets and advanced defense systems a few miles from the beach. These companies are archetypes for a wave of founders looking to build the hardware of the future. The market has noticed: Deep Tech now represents 20% of all global venture capital investment, and A16Z's American Dynamism fund has made domestic manufacturing investment fashionable again in Silicon Valley.

Last week's interview with Casey Handmer illustrated how this new wave of manufacturing is taking root in Californian soil. His company, Terraform Industries, is working to produce cheap natural gas using solar power and air, the kind of ambitious manufacturing innovation that once defined California industry. Fittingly, his castle-shaped office sits across the street from one of the old Lockheed plants, a physical reminder of how California's industrial past might shape its future.

This concentration of deep tech activity in Southern California isn't accidental. The region's aerospace heritage created a dense ecosystem of engineering talent, specialized suppliers, and research institutions. Just as Casey was drawn from Australia to CalTech and NASA's Jet Propulsion Laboratory, today's hardware innovators are attracted to this unique combination of technical expertise and manufacturing knowledge. SpaceX's success has shown a new generation of founders that California can still be a place where ambitious hardware companies thrive at scale.

While this manufacturing renaissance might seem at odds with California's software-dominated present, it actually represents a return to Silicon Valley's roots. The Valley wasn't built by coders but by manufacturers. Companies like Fairchild Semiconductor and Intel designed and built their products locally, creating an ecosystem where innovation and production reinforced each other. But if we want to stoke this new generation of industrial pioneers into a broader manufacturing resurgence, it will require confronting California's current challenges head-on.

Envisioning a Resurgence in Manufacturing

There's no returning to California's post-war mass-manufacturing heyday. We are no longer the state with cheap land and a booming population, and today's advanced manufacturing creates fewer, more specialized jobs than the assembly lines of the 1950s. But while we won't see new Lakewoods filled with blue-collar factory workers, California can pioneer a different kind of manufacturing future.

Our industrial foundation is still here. In the shadows of old aerospace facilities, a new generation of manufacturers is emerging. SpaceX employs 6,000 Californians at its Hawthorne headquarters, while hundreds of deep tech startups are blossoming in its wake across the South Bay. These companies represent a new model of manufacturing: highly automated, technically sophisticated, and tightly integrated with research and development.

While coastal California's costs remain prohibitive for traditional manufacturing, the state's inland regions offer promising alternatives for companies looking to scale. The Inland Empire (where I’m from), Central Valley, and northern interior counties provide significantly lower operating costs while maintaining proximity to coastal innovation hubs. Just as the Inland Empire became the epicenter of California's warehouse and logistics boom, these regions could become the natural home for deep tech companies transitioning from R&D to large-scale production.

California has substantial advantages in this new manufacturing era. We don't need to convince companies to come here, we just need to convince them to stay here as they scale. If we’re able to be home to the most innovative hardware companies in the country while ranking 48th in the State Business Tax Climate Index, imagine what we could accomplish if we actually worked to help our homegrown companies scale here.

Of course, that requires being a state that lets businesses build. You can give companies tax credits, but it won’t matter if they aren’t allowed to build in the state. For example, last week Casey spoke about how environmental rules like CEQA made it difficult to build large-scale solar in the desert. Thankfully, he said he’ll do whatever it takes to build in California, but other entrepreneurs be so loyal to the Golden State when they have better chances of succeeding in states who champion building.

Perhaps no story better illustrates the state of California's manufacturing than Elon Musk’s departure. He proved that ambitious hardware companies could still thrive in California. Tesla's Fremont facility, ironically housed in the shuttered GM plant, employs over 20,000 workers, while SpaceX maintains its innovation hub in Hawthorne. Yet Musk's highly public feuds with state lawmakers politics led him to relocate both companies' headquarters to Texas. He still is a major employer in the state, but it’s clearly a problem when the godfather of deep tech feels the need to leave the state over our political leadership.

California's story has always been one of reinvention. From the Gold Rush to aerospace, from semiconductors to software, we've repeatedly transformed ourselves while being the place where the future takes shape. Today's deep tech renaissance offers a chance to write the next chapter. While California's first industrial age was built on gold, oil, and wartime production, its second can be built on fusion reactors, autonomous systems, clean abundant energy, and advanced manufacturing.