Not much to lure local companies away

Alicia Robinson

As California’s economy continues to struggle, other states are

keeping the pressure on businesses to try to lure them away. The

latest, an ad campaign by Nevada, touts that state’s lower worker’s

compensation rates and electricity costs. But local business

officials said they don’t expect Newport-Mesa companies, at least, to

swallow the bait.

A few companies have left the area or shrunk operations here in

recent years. Semiconductor producer Conexant Systems Inc. announced

late in 2003 that it would be moving its headquarters from Newport

Beach to New Jersey as part of a merger. City officials were

concerned early on but calmed when they learned the company’s

manufacturing operations would stay in town, Assistant City Manager

Sharon Wood said.

The city’s biggest employers are in the professional services,

hospitality, medical and education fields, and many firms depend on

the area and its residents for their business, she said.

“We aren’t in that relocation kind of mode because we don’t have a

lot of manufacturing companies for the most part, and I think those

are where there’s the most concern,” Wood said.

BUSINESS HAS TO BE HERE

The hospitality industry is one of the biggest employers in

Newport Beach, and many of those jobs depend on the harbor and the

beaches, which aren’t going anywhere, said Richard Luehrs, Newport

Beach Chamber of Commerce executive director.

“We’re insulated to the extent that [corporate relocation] doesn’t

affect the hospitality industry,” he said.

Costa Mesa has also seen a few corporate departures, such as the

closing of a State Farm Insurance claims center about eight months

ago, city Planning and Redevelopment Manager Mike Robinson said. City

officials try to work with companies to keep them from leaving, but

most economic development efforts are centered on making it easy to

do business in Costa Mesa, he said. For example, the city doesn’t

charge businesses utility user taxes, and it has simplified the

process for seeking zoning and sign approval.

The Costa Mesa Chamber of Commerce works with the city to keep

businesses, but it’s still a challenge because few state resources

are available to help, chamber Executive Director Ed Fawcett said.

Many moves come about because of corporate reorganization,

downsizing or other factors local officials have no power to remedy.

“Oftentimes, we don’t find out about them leaving until they’re

slamming the doors or they’ve already set in motion the move,”

Fawcett said.

LABOR COSTS A PROBLEM

UC Irvine business professor Kenneth Kraemer said that despite

many businesses’ dissatisfaction with how state government is

handling business issues, flight of companies from the area isn’t a

big problem.

A 2003 survey of about 300 Orange County firms showed 17% of

companies polled planned to move all or part of their operations out

of the county, but only 43% of those expected to move out of state,

Kraemer said.

However, companies listed worker’s compensation costs as the No. 1

barrier to doing business in Orange County. Other top concerns were

the cost of housing and the high cost of labor, Kraemer said.

While those factors aren’t driving many businesses away, they may

deter companies from coming here in the first place. The cost to

lease office space can be steep, Luehrs said.

“If you’re looking for a rock-bottom place to set up your shop,

maybe Newport Beach isn’t it,” he said.

The Orange County Business Council on Friday released a survey

that showed that while 93.5% of nearly 140 business leaders polled

are concerned about the cost of doing business in California, 88.4%

of those polled think Gov. Arnold Schwarzenegger’s administration

will improve the state’s business climate.

In Orange County and beyond, state policies have been destructive

to business interests, particularly through high workers compensation

premiums and mandated employee health care, Fawcett said. Until the

budget crisis is addressed, relief will be slow in coming, he said.

“Is Costa Mesa impacted like everybody else? Most definitely,”

Fawcett said. “The only group of individuals I’d like to see move to

Nevada is the state Legislature.”