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Wooing the West Coast: Little Rock recruiting team entices California industries.

LITTLE ROCK LEADERS have done a lot of California dreaming, but their thoughts are of luring large West Coast manufacturers to the capital city, not of lolling on a sunny beach.

A targeted-industry recruiting team has made two trips to Southern California since October. The group has made presentations to about 41 different manufacturing businesses expressing an interest in Little Rock. A third trip is planned later this month to make follow-up visits and additional contacts.

The essence of the team's message is this: "The business atmosphere for growth is terrible in California, and it's great in Little Rock, Arkansas," says Nolan Fleming, director of industrial development for the Greater Little Rock Chamber of Commerce.

Fleming is a member of the California recruiting team, along with seven other representatives from the chamber and city, the Arkansas Industrial Development Commission, the Little Rock Port Industrial Park, the University of Arkansas at Little Rock and Arkansas Power & Light Co.

Fleming and E.W. "Bill" Strange, retired general manager of the AT&T Co. manufacturing plant in Little Rock and the head of the recruiting team, say many of the obstacles California businesses face came to light in early 1992. That's when R&G Sloane Co. of Sun Valley, Calif., announced the consolidation of its operations in Little Rock.

City leaders weren't responsible for recruiting R&G Sloane, a manufacturer of plastic pipe fittings and related products. But that announcement drove home the point that the California bureaucracy is choking the growth efforts of businesses there. Not surprisingly, California companies are looking for escape routes, and the Little Rock recruiting team organized to offer them alternatives.

Favorable Climate

Bill Smith, president of R&G Sloane, points to a "favorable business climate" in Little Rock as the No. 1 reason for his company's move. A good labor force with a strong work ethic and an opportunity to improve cost structure were other considerations, he says.

California companies repeatedly cite two main problems of doing business there: excessive environmental laws that lead to long delays in getting expansion permits and skyrocketing workers compensation coverage.

Strange recalls some business horror stories related to him on the recruiting trips.

One businessman told of getting notice that his workers compensation costs would increase by $10,000 a month. Another explained how, after seven months, he was still awaiting approval to expand his plant's operations. When Strange told him he could probably get the same type of expansion approved in three weeks in Little Rock, the man was dumbfounded.

Besides an entrenched bureaucracy and workers compensation problems, California businesses contend with other problems such as water shortages, traffic congestion that increases transportation expenses and high energy costs.

So to sell Little Rock and Arkansas, recruiters emphasize all the things Arkansas has in abundance that California does not. Among them are:

* a pro-business climate, which includes accelerated permitting for expansions, strong government-business relations and a favorable corporate tax structure.

* financial programs such as revenue bonds, state guaranties, sales and use tax exemptions, income tax credits and the state free port law for goods-in-transit exemptions.

* an available labor force with a strong work ethic. Arkansas' position as a constitutional right-to-work state is also played up. Recruiting literature puts the state's manufacturing unionization rate at 11.28 percent, compared with a national average of 18.27 percent.

* a central location and strong transportation network and the availability of energy, water and water-treatment facilities.

Target Companies

The recruitment team has targeted California manufacturing industries with at least 100 employees and a minimum of $10 million in sales. The team finds companies based on leads and inquiries received from a variety of sources, including the businesses themselves.

Fleming and Strange are keeping the identities of their various corporate contacts under wraps for now, and they downplay the hope of immediate results, although several companies are expected to visit Arkansas later in the year.

Competition for manufacturing companies is intense, they say, and Little Rock faces some formidable challengers such as Nashville and Memphis, Tenn.; Jackson, Miss.; Shreveport, La.; Austin, Texas; and Tulsa and Oklahoma City, Okla.

But with an Arkansas in the White House, Little Rock has had a leg up on the competition lately.

"Without a doubt, it has opened doors for us," Fleming says. "|Businesses~ have an interest in Little Rock. Before they didn't know anything about Little Rock. It wasn't a bad image. It wasn't necessarily a good image. It was more of a non-image. Now they have a good image of Little Rock and Arkansas."

The recruiting trips are a new way of marketing Little Rock, and their impact may not be felt for a while. But Strange believes the team is succeeding in sowing seeds for the future.

"I don't want anyone to think that because we're making these trips, we're going to be able to see four or five industries pop up tomorrow," he says. "It just doesn't work that way. "But I think the relationships we're building with these people will pay off for Little Rock one of these days."
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Title Annotation:Industry Report Supplement
Author:Walters, Dixie
Publication:Arkansas Business
Date:Jul 5, 1993
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