Officials, businesspeople putting focus on job losses.

PICTURE the Valley's ability to retain jobs as one massive tug-of-war. On one end of the rope are the twin 800-lb. gorillas of sky-high workers' compensation costs and an intransigent state legislature. At the other end of the spectrum lies brawny former Mr. Universe, Gov. Arnold Schwarzenegger and dedicated local business activists.

Ultimately, while many businesspeople acknowledge the aid of Schwarzenegger and the activists in stemming the loss of jobs, California still has obstacles that impede commerce. Yet with the rejection of recent legislation unfriendly to business interests such as health care mandate, Prop. 72, and the passage of business tax reform, progress on the issue seemed to creep forward in 2004.

"(Schwarzenegger) gave us a huge boost when he came to office," Bruce Ackerman, president and CEO of the San Fernando Valley Economic Alliance, said. "I think the buzz over Arnold is still there. Optimism remains but the state is going to have to solve the budget issue sooner rather than later. The business community likes what it's seeing. We like how the governor works with or bullies the legislature depending on the nature of the issue."

It's unavoidable to discuss the business climate in California without hearing someone bemoan the anti-business forces treading through the halls of the state's capitol. Despite the passage of term-limits reforms aimed to mitigate extremist legislators, the climate in Sacramento remains polarized.

"The state legislature is responsible, to some degree, for the negative business climate. Schwarzenegger has created hope and a more favorable attitude towards doing business here. With the workers' comp reform, the reforms have been passed but the benefits weren't the size that businessmen had hoped," Greg Whitney, vice-president of business development at the Los Angeles Economic Development Corp., said. "The reforms haven't been less than advertised, but they're taking a while to get filtered into the process. There is definitely the concern that we have a unique governor now Employ: Keeping job.= and if he were to go away, the legislature would still be here."

In all likelihood, California's astronomical workers' comp costs act as the most severe burden hindering business. Manufacturing, in particular, has been hit the hardest, causing many companies to outsource jobs to other countries or states. Most recently, San Fernando-based manufacturer, Precision Dynamics Corp., trimmed 16 lower-level assembly positions, shifting the jobs to its Tijuana plant. Angelo Mozilo, chairman and CEO of Calabasas-based mortgage lender, Countrywide Financial, has gone on record to state that he will not expand in California, citing the state's deleterious business climate.

"It's frustrating. When we're dealing with problems with local government, we're often able to help retain jobs in the Valley," Ackerman said. But when it comes to the state level, the big 900-lb. gorilla over the past year was workers' comp and employee-mandated health care. Eventually we go out with a certain bag of tricks but we're going to exhaust those eventually. We can't get around the fact that businesses pay 500 percent more for workers' comp insurance than in neighboring states."

Forming 'red teams'

Ackerman, Rosas and the Economic Alliance have been instrumental in the formation of "red teams" designed to keep jobs in the Valley. Along with the LAEDC, various civic officials and other business representatives, these red teams have been able to cobble together packages of tax credits and other cost-saving measures that have enabled companies to remain put. However, all parties involved are quick to admit that sometimes the jobs cannot be saved.

ACI Billing, a telecommunications billing company, formerly located in Northridge, found the costs of doing business in California too steep, particularly after they were purchased by a company in Texas. Starting in July, the company began shifting its operations to the Lone Star State, swayed by cheaper workers' comp and lower salary demands. Acknowledging the credibility of the efforts of the Economic Alliance-led red team, Harvey Berg, the former vice-president and general manager of ACI, confirmed that dollars were the deciding factor.

"When the business' new owners looked at California's minimum wage, coupled with things like workers' comp and the specter of SB-72 hanging over their heads, it was just too onerous," Berg said. "If you look only at the call center employees that we employed, there were 45 people working 2,000 hours a year. Shifting the jobs to Texas meant a savings of $2.50-$3.00 per hour. That's $225,000 to $270,000 a year."

More effective job training was another weapon that business representatives found effective in halting job loss. Lenny Ciufo, director of job training at Los Angeles Valley College, is responsible for coordinating and directing the regional workforce collaborative which is made up of Valley College, the four city of Los Angeles Work Source Centers and the Economic Alliance. In spite of the businesses that have left the area, Ciufo was optimistic about employment prospects in the Valley.

"There's a lot of opportunities in the Valley. Unfortunately, we're losing some businesses but our goal as a job training office and as a collaborative remains clear. We can't do anything about businesses leaving but we're trying to maintain those employees," Ciufo said. "We've done a pretty good job of trying to network the employees to other companies in the area. The city of Los Angeles is stretching out their hands and the local government is too. We have to get the word out, people just need to listen to the things we have to offer."