California’s environmental and other regulations are helping to send manufacturers running, but the state can capitalize on its green image (and should streamline regulations) a new study by the Milken Institute says.

The study found that Golden State manufacturing was already contracting at an astounding rate even before the latest meltdown, and that it was lagging some other Western U.S. states which had seen small upticks in jobs for people who make stuff.

In particular, high-tech manufacturing fell to 485,900 jobs in 2007 in California from 629,400 in 2000, the report said.

The report described the state as having “a regulatory regime that uses limits on production and mitigation of environmental impacts in manufacturing processes rather than encouraging higher, smarter, more sustainable forms of production.”

One solution among many proposed is to give manufacturers who build green a bit of marketing cachet — a Made Green in California designation. “California’s manufacturers can cultivate a high-value brand that emphasizes a sustainable product made through a sustainable process,” it said.

California’s cachet — and perhaps its manufacturing issues — are summed in Apple Inc’s “Designed by Apple in California” tag (one might infer the manufacturing location is NOT California).

Photo Credit: Reuters/ROBERT GALBRAITH