COLUMN ONE : Can State No Longer Compete? : Fed up with high costs and red tape, some employers are leaving California. Other states are eager to welcome them.

A soy sauce maker quits Los Angeles County and opens up shop in Nevada. A Glendale fiber company shutters a 40-year-old factory and heads for Colorado. An Orange County auto parts firm plans its future over the border in Arizona.

California, long seen by business as a place to get rich, is facing an unusual insult: An assortment of employers, fed up with high costs, red tape and other frustrations, are quietly giving up on the state and taking their jobs with them.

“We’re going to miss Southern California,” said Burke H. Wright, who just closed his 65-employee Glendale firm, Western Filament, and is reopening in Grand Junction, Colo. “But we just can’t afford to live here.”

You will not find such moves in economic statistics. But some wonder if they are harbingers of a deeper malaise, a creeping, subsurface shift that is making parts of California less competitive than they used to be.

The stakes are high because thousands of people continue to flock here in search of opportunity. California continues to grow, and such areas as the Inland Empire and Central Valley are booming. In national magazine ads, state officials call it “the Land of Now,” and brag that California will gain one out of six new U.S. jobs in the 1990s.

Yet, even as California’s officials trumpet the state’s virtues, nearby rivals act as if they smell blood.

“We love your business climate,” proclaimed Rick Thrasher, president of Utah Economic Development Corp. in Salt Lake City. “As a competitor, we would like very much for nothing to get changed in California.”

The gripes about California are not new: High costs for labor and land, commutes so slow that they cut into working hours, a daunting burden of red tape, insensitive bureaucrats, and a reputation for below par public services.

What is new are hints that this familiar litany is starting to affect investment decisions, especially by smaller manufacturers that can serve the affluent California market from cheaper locations outside it.

Oklahoma--which used to export its desperately poor to California--recently opened an Orange County office to woo business investment and is negotiating with two Southern California manufacturers to shift some production to the Sooner State.

Utah reports more inquiries about expansion from companies in California than anywhere else. Major aerospace employers, such as McDonnell Douglas, Lockheed and Hughes Aircraft have recently moved or expanded facilities throughout the West and South.

“Half our state moved to California in the 1930s, so there are natural ties,” explained John Reid, director of marketing for the Oklahoma Commerce Department.

By all accounts, California remains an economic powerhouse. Its location on Pacific trade routes, its richly varied service sector and its giant consumer base are unmatched assets. It remains the nation’s most prolific producer of new jobs, with several hundred thousand expected over the next few years, according to the UCLA Business Forecasting Project. Los Angeles remains a mecca for employers in need of skilled labor and is the nation’s top draw for corporate offices, according to a new survey by Cushman & Wakefield real estate firm.

“Within 100 miles of downtown Los Angeles, you’re looking at consumer markets that are richer than some countries in the world,” said Lay J. Gibson, a specialist in economic development at the University of Arizona in Tucson.

If the price of admission to the marketplace is higher than elsewhere, it is a price worth paying, goes the argument. Nonetheless, the minuses of a California address now outweigh the pluses for a growing number of companies.

That is why Automotive Parts Exchange, a producer of rebuilt vehicle parts in Orange County and employer of 400, is shifting its operations to Yuma, Ariz., where it expects to save $12,000 a month. “The labor costs are expensive in California, and we’re glad to get an opportunity out of the congestion,” said Greg Jensen, manager of the Yuma plant.

Some ask if Southern California risks the loss of something valuable--the factory base that historically has provided unskilled workers a boost up the economic ladder and created jobs in warehousing, distribution and services.

In the long run, such a change would threaten the region’s economic diversity, the extraordinary range of job possibilities that has been its insurance policy against hard times.

“If you’re just looking at the totals on job growth, you could miss the story below the surface,” said David G. Hensley, an economist at UCLA.

The story told by Donald Staley is of a company that reluctantly abandoned Southern California after a series of bureaucratic hassles. By 1988, his Pomona firm had so much demand for its soy sauce and other food products that it was running 24 hours a day, seven days a week.

Staley bid on a larger space in San Bernardino County. Days before the $1.2-million deal was to close, regional air quality officials told him it would take at least six months to grant approval to open it. Staley next tried to expand on his lot in Pomona, but said he became unhappy with the slow pace of city approval for permits and a $450,000 sewer hookup fee demanded by Los Angeles County.

Then one day he spotted a business recruitment ad for Nevada in a trade journal. In July, Basic Food Flavors opened up in a new state. “It took the city of North Las Vegas less than two weeks to approve all of our plans,” Staley said admiringly. While he was reluctant to leave Southern California, he added, “My wife and myself, we kind of like it here.”

The sewer hookup charge Staley faced in Los Angeles was no higher than for any other industry that discharged the same amount of waste in the county, said Margaret Nellor, head of the county sanitation districts’ industrial waste section.

As California wrestles with the consequences of growth, business is likely to face more regulations and costs.

The South Coast Air Quality Management District plans ever-tightening restrictions on everything from auto exhaust to the use of oil-based paints. Also, a batch of initiatives on the Nov. 6 state ballot could add new layers of rules.

The broadest impact would come from Proposition 128--dubbed “Big Green” by advocates--which would tighten rules over pesticides and food additives, restrict the use of fossil fuels, ban chlorofluorocarbons and toughen water-quality standards, among other things.

“Most major corporations in California have prepared a Plan B for possible relocations in the event of the passage of the initiatives,” said Dan Pegg, president of San Diego’s Economic Development Corp.

Proposition 128 backers retort that business is exaggerating costs, while minimizing benefits--such as improved health and productivity--that come from a cleaner environment.

Others, including air quality officials, make a similar argument: All of society, including private employers, shares in the benefits of purer air and water. “If some firms pollute excessively and refuse to clean up, then sadly we may be better off if they move elsewhere,” James M. Lents, executive officer of AQMD, has said.

Sometimes a state’s attitude toward new employers can be more important than regulations on the books: Employers like to feel welcome in a community. The lack of such a welcome is why a large can recycling plant, owned by a subsidiary of Adolph Coors Co., is scheduled to open next August in San Antonio and not California.

The firm, Golden Aluminum Co., wanted to build the plant in a major California city. But state officials--whom company President Joseph S. Lamb declined to identify--steered Golden toward sites in Central California and near Sacramento that Golden considered too far from its sources of scrap and its customers.

“The impression, if not the exact words were, ‘Well, these are about the only choices you have,’ ” Lamb recalled being told. The plant will bring 250 jobs and a $150-million investment to Texas.

By contrast, California’s competitors go out of their way to make a potential business investor feel welcome--offering inducements that might prove controversial in California, where past growth has harmed the environment and stretched government services to the maximum.

Oklahoma courts potential investment with promises of tax breaks, lower costs and less environmental regulation.

New Mexico--which promotes its cheaper costs and non-adversarial approach to business--has lured California companies that make plastics and medical equipment, including Avonite Inc., a 140-employee maker of material used in countertops. It was located in Sylmar until last year.

Some manufacturers find it cheaper to produce goods in Albuquerque and truck them 760 miles to Los Angeles than to be based in Southern California, said James A. Covell, executive vice president of Albuquerque Economic Development Inc.

The typical firm that shows interest in New Mexico, he said, is “simply not looking at a California location, and the primary reason is the cost of doing business.”

California’s rivals hammer at this point. In Salt Lake City, fringe benefits and other costs add about 22% to a worker’s base pay, compared with an add-on cost of more than 30% in much of California, said Thrasher of Utah Economic Development Corp.

He was in a particularly good mood last week: Fortune Magazine had pronounced Salt Lake City to be the nation’s best city for business. Sacramento, which ranked fourth, was the only California city in Fortune’s top 10. “We’ll probably mail 50-million copies into California,” he said.

There is more at stake for California than the loss of polluting industries. Increasingly, aerospace--a basic element in California’s economic foundation--has been staking its future in regions that are hundreds or thousands of miles away.

In recent years, nearly every major aerospace firm doing business in the Los Angeles area has moved some facilities out, citing such factors as high housing costs, an inability to recruit new workers to the area, stronger political support in other states, and environmental compliance burdens.

Lockheed announced earlier this year that it would vacate its Burbank manufacturing complex, relocate some production in Marietta, Ga., and eliminate 6,000 jobs in the process. Environmental compliance cost was a major factor in fleeing Burbank.

“We were still using the original buildings that Allan Loughead moved into in 1928 and to keep those buildings in environmental compliance was extremely expensive,” said company spokesman James Ragsdale.

When Rohr Industries of San Diego County needed to expand quickly a few years ago, the aerospace firm concluded that it would take months to get the various approvals to expand its Riverside plant. So it bought a factory in Hagerstown, Md. Today, the factory employs 520 workers.

Similarly, Rohr is completing a plant in San Marcos, Tex., that may someday employ hundreds of workers--many of those jobs being shifted from California. Rohr chose the Texas site in large part to take advantage of power rates that are considerably cheaper than San Diego’s, company spokesman Roger Renstrom said.

As California’s boosters would point out, none of this activity suggests a mass exodus from the state. The shifts are more akin to straws in the wind. Just ask Tom Ellick, a spokesman for Aerojet, a defense contractor near Sacramento.

“We’ve been visited by congressmen and representatives of governors of states like Mississippi, North Carolina, Tennessee and Oklahoma,” Ellick said. “Although we’re not presently planning to move any of our operations out of California, it’s something you have to give serious consideration to when you see how welcome business is in other states.”

In certain industries, an availability of skilled employees continues to make California far more competitive than its pesky rivals.

“All the high-tech guys in the electronics industry say they will not move,” said James H. Renzas, president of Location Management Services, an Irvine consulting firm that advises companies on relocating. “They are here forever because they can get the engineers and technicians who live here.”

There also are signs that California officials are trying to respond to the state’s detractors.

The state Commerce Department is expanding its program of job training--including efforts for aerospace employees--offering tax breaks to companies that go to distressed areas and trying to help potential new employers through the bureaucratic maze they typically encounter in trying to move to the state.

“California’s business climate is quite good,” maintained Janet Turner, the department’s director of business development. “But that doesn’t mean we don’t have problems and challenges we want to address.”

Even the air quality plan, maligned by many factory managers, is “not a hopeless case,” said Joseph E. Haring, chief economist at Pasadena Research Institute, an industry-oriented research firm that has been critical of Southern California’s air pollution control plan.

Haring pointed to a California bill signed into law last weekend that would require a study of the costs, social and otherwise, of any rule imposed by AQMD.

“It shows that the AQMD is finally looking at the economic and job impact of its regulations,” Haring said.

Some point out that companies will prosper or fail based on their own efficiency, and blaming the state amounts to so-much whining.

Consider the maker of rattan furniture that fantasized about profits it would make by leaving Southern California and setting up shop in Mexico. The firm promptly rented too much space, continued its history of business blunders and went bankrupt anyway, said Richard N. Sinkin, managing director of InterAmerican Holdings Co., a San Diego-based firm that advises U.S. companies operating in Mexico.

“This idea that every manufacturer can pick up and relocate in Mexico, and sail off into the sunset, just doesn’t happen,” he said.

Contributing to this story were Times staff writers Leslie Berkman in Orange County, Chris Kraul in San Diego, and Michael Parrish, Ralph Vartabedian, George White and researcher Melanie Pickett in Los Angeles.