1 of 4 Firms Planning Out-of-State Relocation : Economy: Companies cite high taxes, anti-business policies as reasons for moving all or part of operations.
With manufacturers and companies based in Los Angeles and Orange counties leading the way, a survey of California business leaders released Thursday shows that nearly one of four businesses intends to relocate some or all of its operations outside the state.
The survey, sponsored by the California Business Roundtable, cited high taxes, what the business leaders describe as “anti-business” policies by state and local governments, the controversial state workers’ compensation system and environmental regulations.
It is the second survey for the business group, and is markedly more negative than the inaugural poll of corporate leaders that was published last year. It was conducted by Mark Baldassare and Associates of Irvine.
Thomas C. Sutton, chairman and chief executive officer of Pacific Mutual Life Insurance Co. in Newport Beach, said: “In 1990, executives from large companies thought California would fare better than the nation in hard times. That view has changed. California business leaders are now more negative about the current economic ‘state of the state’ than ‘the state of the union.’ ”
Sutton said the 23% of the firms that plan to relocate some or all of their operations out of state “is a significant increase from just a year ago when one-in-seven large companies had planned to relocate.”
Once considered “recession proof,” because of its broad-based, expanding economy, California has suffered worse than the nation in the recent economic downturn, losing 380,000 jobs, many in its once-proud aerospace industry.
As bleak as things appear, the survey of 1,462 executives at large and small business firms found that they think 1992 will be better. Only 20% of the firms expanded their work forces in 1991, while 28% reduced their number of employees. Next year, 41% of the firms say they are anticipating expansion, while only 15% are expecting to shrink.
The survey found that 8% of the companies have plans to relocate all of their operations outside the state, while 15% said they plan to move some of their operations elsewhere. But 37% of the manufacturers and 28% of the firms surveyed in Los Angeles and Orange counties said they planned to pull out all or parts of their operations.
In an earlier survey of 100 high-technology companies in Southern California, 53% said they planned to reduce manufacturing in the region, either by moving plants or expanding elsewhere.
About 80% of the respondents to the survey, unveiled by KPMG Peat Marwick accounting firm in February, were from Orange County.
Data-Design Laboratories Inc., a circuit board manufacturer with its headquarters in Anaheim, shut its Anaheim plant and laid off 185 workers last month. The company moved the work to another plant in Portland, Ore.
Loral Aeronutronic, an aerospace firm in Newport Beach, is the now searching for a site to relocate its missile production plant, which employs about 1,000 workers. Sites being considered are in California, Texas, New Mexico and Arizona.
Other Orange County businesses that have recently announced plans to move out of the state include Panel Concepts, a furniture maker in Buena Park that is moving its wood products division to North Carolina and has offered transfers to all 58 employees, and Advantage Boats Inc., an Anaheim powerboat maker that is weighing anchor and heading for Arizona with 10 of its 13 employees.
In both cases, company officials cited California’s tough environmental laws as the major reason for the moves.
Business executives responding to Thursday’s survey said they hope they can use the its results to press for changes in state policies to help retain business in California: streamlining permit approvals, reforming the workers’ compensation system, restructuring the public education system.
Tough air quality management regulations were cited as one of the key factors explaining why business leaders in Los Angeles and Orange counties had a more negative perspective than companies elsewhere in California.
Bill Livingstone, a spokesman for Gov. Pete Wilson, said he hopes the report puts pressure on the Legislature to enact meaningful workers’ compensation reform. “This is further evidence that California business is in trouble,” he said.
State Controller Gray Davis, reacting to the report, said, “It’s one thing if a business doesn’t move to California; it’s quite another to lose a company that is already here. That means something is wrong. California has to wake up. We can’t just take our economic well-being as a birthright. We have to earn it.”
