Study Cites Reasons Firms Quit the State : Economy: SDG&E; survey gives tax burdens, red tape and hostile business climate as causes.

Results of a recent survey funded in part by San Diego Gas & Electric confirm that companies leaving San Diego County do so largely because of California’s heavy tax burden, regulatory red tape and a general climate that is perceived as hostile toward business.

The survey, which included interviews with executives at 1,035 California-based firms that opened new operations out of state between 1980 and 1991, incorporated responses from 120 San Diego-based companies.

SDG&E; is reviewing the statewide survey results to determine if there are specific reasons for companies that moved operations from its service territory in San Diego and southern Orange counties, said SDG&E; Senior Research Analyst Glen Breed.

The survey suggests that out-of-state moves and expansions resulted in the loss of 92,000 jobs statewide between 1980 and 1991. SDG&E; has yet to determine how many jobs were lost locally through moves or out-of-state expansions, Breed said.

The survey proved difficult to complete “because this is one of the first attempts anyone has made to do this kind of thing,” Breed said. “Documenting who has left proved to be a real detective process . . . we had to verify if they moved and if they did move, what was the business decision that led to them pulling up and out.”

While the survey wasn’t all-inclusive, it verifies complaints voiced by individual companies that are moving all or part of their operations out of the state, said Kelly Cunningham, a research analyst with the Greater San Diego Chamber of Commerce’s Economic Research Bureau.

As such, the survey “is going to be helpful. . . . Clearly, several major companies have left California (in part) because of regulations and taxes, but it’s largely been an ambiguous, anecdotal kind of thing,” Cunningham said. “It will be very helpful to have an overview. . . .”

California’s high costs of doing business were cited last week by Hughes Aircraft, which intends to relocate its California-based missile division operations, including San Diego-based Tomahawk production lines, to Tucson, Ariz.

And, executives at Chula Vista-based Rohr Inc. said that all future production expansions will occur out-of-state because of regulatory red tape and resulting high costs in California.

In addition to high costs, the survey suggested that executives “seriously questioned” another long-standing idea: That to be successful, companies must maintain a manufacturing presence in California if they are to enjoy access to the state’s large market place.”

For the most part, San Diego firms’ rationale for moving operations out-of-state mirrored results elsewhere in the state, Breed said.

Major reasons for firms’ outward migration included:

* High business costs, which were cited by 66% of company executives interviewed.

* A hostile attitude among California’s regulators and elected officials, according to more than 60% of executives.

* Ineffective bureaucrats, who, according to more than half of executives surveyed, hinder businesses’ attempts to do business in California. In contrast, more than half of the executives interviewed claimed that agencies in other states actually helped them to do business.

As was the case statewide, Mexico proved to have the strongest attraction as a destination for San Diego-based companies, Breed said.

Statewide, 26% of companies that relocated or opened new operations elected to do so in Mexico. But given the maquiladora industry’s growth during the 1980s, “we think there will be even stronger ties between (San Diego) and Mexico,” Breed said.

Most of the companies that made out-of-state moves left their research-and-development headquarters in California, Breed said. Manufacturing operations were most likely to be moved out, Breed said.

Moving On

These are the top four industries, in a statewide survey by utilities, in which companies were found to be most likely to leave California, from 1980 to 1991.

Who’s leaving:

Electronics: 19%

Industrial machinery & computers: 14%

Fabricated metal products: 11%

Medical, optical & photographic instruments: 8%

Where they’re going:

Mexico: 26%

Texas: 9%

Nevada: 9%

Arizona: 9%

Source: San Diego Gas & Electric