Holding on to jobs.

Much has been written in the past few years on the out-migration of business and industry from California to lower cost locations. These articles have been confirmed by a recent California Business Roundtable survey indicating that as many as 41 percent of all California companies have plans to expand outside the state and 14 percent (24 percent of all manufacturers) plan to relocate.

Examples are plentiful (see accompanying article). Larger office and manufacturing facilities have formed a steady exodus of jobs from the state. Recent announcements include an American Airlines reservation center, Bank of America's credit card processing operations, Apple Computer's MacIntosh manufacturing facility, Lockheed's aircraft production facility, McDonnell Douglas' MD-12X production site, and Applied Material's high technology manufacturing facility.

The State of California has recognized the magnitude of the problem and is rushing to play "catch-up" with other states that have long exploited the California business climate to bolster their industrial recruitment efforts.

In a speech to the California Association for Local Economic Development (CALED), Julie Meier Wright, Director of California's Department of Commerce, explained some of the efforts being made to retain jobs.

State Retention Efforts

The Department of Commerce has adopted a number of specific measures to deal with the state's business retention problems.

First, the department has recently undergone a thorough re-evaluation of its role in business retention. Previously, the department had taken a reactive role in meeting the needs of the state's business community. Now, as a result of this review, it will become much more pro-active.

The department recently began several important initiatives which will help create a more favorable business environment in California.

It is planning to take part in an in-depth study of its strongest competitor states, seeking to discover just what other states' messages are, what they spend, and what their key attractions are. Then the department will look at its own product -- the state of California -- to determine what features are truly unique, and what features need to be changed or eliminated.

The department also plans to increase its focus on economic development efforts and hopes to add field staff -- those on the front lines who work on attracting and retaining individual companies.

Retaining Manufacturers

The department intends to spearhead efforts to retain the state's manufacturing industries, in cooperation with the California Chamber of Commerce and the California Association for Local Economic Development.

Together, these organizations have sponsored a variety of statewide conferences to focus on the issues surrounding business retention and to share success stories. Efforts with business and economic development organizations are intended to provide a forum for identifying and resolving problems before relocation or expansion out-of-state becomes an accepted strategy.

California has been criticized for having as many as 21 separate agencies in control of environmental permitting. To California business, the many government and quasi-government permitting and enforcement organizations represent a source of great frustration.

In a recent survey conducted by Southern California Edison, the amount of government regulation was cited as the number one cause of relocation by over 100 companies that moved out of state during the past five years. The department plans to create a single place where businesses can obtain assistance in identifying training programs, financing, permitting, and other critical support.

The department has initiated a link with other agencies across the state, such as the California Air Resources Board, to work together. It is seeking to institutionalize this process so that appropriate resources can be mobilized whenever a potential relocation candidate is identified.

Early Warning System

The department is actively seeking the assistance of others in local economic development, labor, city government, and regional planning to provide an early warning system designed to identify potential relocation candidates. It is planning to implement a network which will electronically link all of the state's economic development resources, thus facilitating communication between these entities.

Local and regional economic development organizations throughout California are refocusing their efforts on the retention of businesses. For example, the Sacramento Area Trade and Commerce Organization (SACTO) is currently distributing materials to educate its members on the financial benefits of manufacturing employment in the Sacramento metropolitan area.

The City of Santa Ana, Alameda County, Los Angeles County, and many other economic development groups are announcing aggressive programs aimed at changing California's business climate and retaining the state's manufacturing base.

These campaigns start with a survey of local businesses to identify companies considering relocating out of the area. After these companies are identified, the local economic development groups work with local officials and business executives to resolve problems which may be causing companies to consider relocation.

Even the South Coast Air Quality Management District is working to improve its image with the California business community. The district has created a small business retention unit which works to solicit business input in new regulations through regular distribution of a newsletter, direct mailings to all affected businesses, and multiple public and business related forums.

In addition, the district works with regulated industry trade groups to resolve technical problems in order to improve air quality. A recent example is the district's work with the dry cleaning industry to resolve technical problems pertaining to solvents used in dry cleaning.

AQMD has also created an Air Quality Assistance Fund to back loan guarantees for small businesses in the Los Angeles area. The loan guarantees will be used to help small businesses obtain loans for equipment to comply with the district's requirements.

Wilson's program

Gov. Pete Wilson has placed a high priority on improving the California business climate. In September 1991, he appointed a blue ribbon commission to examine government red tape and other problems that make California less competitive in attracting and retaining business. The Council on California Competitiveness is focusing on ways to reduce bureaucracy.

Whether these efforts will reduce the outmigration of California industry remains to be seen. One problem is the lack of focus by California businesses on regulations which directly affect them. Government officials, while trying to maintain a cooperative attitude, are often frustrated in finding one or several business groups to explain pending taxes and regulations and in organizing business support in the legislature.

California businesses are only now beginning to see the need to be more vocal in their support for measures which would improve the state's business climate. One such executive is Wilford Godbold Jr., Chief Executive Officer of Los Angeles-based Zero Corp.

Frustrated by high costs and government regulation, Zero recently relocated its Burbank electronics cases and cabinets manufacturing facility to Salt Lake City. In Utah, says Godbold, the company's workers' compensation costs will drop by 60 percent and the benefits to workers will be better. Also, the company obtained a permit to build its factory in only six weeks as opposed to months in Burbank.

Because the company still employs nearly 800 in Los Angeles, Godbold has taken a high profile in organizing the effort by businesses to improve the state's business climate. He now heads a task force on business retention for the California Chamber of Commerce.

James H. Renzas is executive vice president of Paragon Decision Resources, Inc., Irvine.