Port Spells Out Its Role in Creating New Jobs : Economy: The Los Angeles Community and Economic Development committee listens as harbor officials and others suggest ways to improve the city’s business climate.

Officials from the Port of Los Angeles and other business owners participating in an economic development hearing this week spent about three hours explaining an old adage to city officials: The customer is always right.

And then they explained that the City of Los Angeles is not the customer. Business is.

Businesses--international and local--have become choosy, frugal customers bent on finding the best service, prices and product for their money. And the city had better provide it, they warned, or businesses will go elsewhere.

This was among the recommendations made by a group of city, corporate and port officials who went before the city’s Community and Economic Development committee on Monday at the second of six hearings to take place throughout the city.

The goal: a long-term plan to revitalize the city’s economy by luring new businesses into the city and keeping others from leaving Southern California.

“We approach this task of creating a comprehensive economic development plan with a sense of urgency,” said Councilman Mark Ridley-Thomas, committee chairman. “The city must step up its efforts to play a proactive role in creating the business and jobs our citizens desperately need. . . .

“The effects of a national recession, defense industry cutbacks, the cyclical nature of the construction industry and an unfriendly business environment have contributed to the downturn in our local economy.”

Seven speakers made a broad range of recommendations, including proposals to offer incentives to new industries such as recycling manufacturers to advertising Los Angeles’ attractions on television.

But all agreed that for a citywide economic development plan to succeed, the city must change its attitude in dealing with businesses.

“It’s my job here at the port to be blunt, so that’s what I’m going to do right now,” said Al Fierstine, director of marketing for the port. “It’s time for a reality check. It used to be that the Port of Los Angeles would remain No. 1 because of our location, but that’s not true anymore. Now what matters is the bottom line.”

Fierstine said that when the city took $44 million from the port last fall to help offset its $67-million budget deficit, shipping lines worldwide trembled, concerned as much by the message as the actual money taken away.

“Shipping lines have a major concern in that they are beginning to think that the port won’t be well-maintained,” Fierstine said. “They are reluctant to enter into long-term leases,” he said.

Like Fierstine, Port Executive Director Ezunial Burts said the city must not forfeit its long-term international relationships while trying to balance its yearly budget. Shipping lines always have the choice of moving their cargo, he said.

“International trade has been healthy, but not because of growth in Southern California’s economy, but because of growth in certain parts of the United States,” Burts said. “More than half the cargo that comes here doesn’t have to stay here. That means it can be rerouted to other ports. That means we have to compete.

By contrast, he said that while Los Angeles took $44 million from its port, the Port of Seattle was given a $35-million tax subsidy by its government.

Another bad signal to businesses was the state’s legislation banning gambling on cruise ships between California ports, Burts said. Cruise lines already have begun pulling out of some California ports. The Los Angeles City Council has joined with other cities in an effort to repeal the legislation, but the damage to the business climate has been done, Burts said.

For the port’s part, it will try to encourage small businesses to enter the international trade arena, a lucrative area virtually unexplored by many local entrepreneurs, Burts said.

Also, the port is looking into creating a free trade zone that could bring more than 200,000 jobs to the region. Although still under review, the idea is to establish a trade zone giving manufacturers who locate there substantial tax incentives, leading to jobs and economic growth.

And port and city officials joined in praising the Alameda Corridor project, which will create a rail and highway system providing rapid access between the port and downtown.

“There are images of this state that we have to overcome. I cannot stress the importance of a business-friendly environment,” Burts said.

One way to create a friendly business environment would be for the city to target certain businesses and tailor financial assistance to their needs, said Lupe Vela of the city’s recycling market development office.

She said most businesses that approach her office want the city to provide some financial aid to help offset the cost of workers’ compensation and insurance costs. They also want preference in the city’s bidding process and general “hand-holding” throughout the relocation and permitting process, she said.

When they don’t get it, businesses go to other cities, she said, citing the example of Louisiana-Pacific, a building materials supply firm that wanted to settle in Los Angeles but “couldn’t find any assistance, and now they’re in San Diego with 150 employees.”

Steven Nostaja, vice president of marketing for Universal Studios, asked that the city join Universal in an advertising campaign to boost tourism.

Gently chiding the city for neglecting one of its major industries--tourism--Nostaja said Universal Studios would like the port, LAX, the city and Universal to pay for a television ad campaign.

Research has shown that consumers in several target cities respond well to advertising, Nostaja said, and even incremental increases in tourism have large benefits for Los Angeles’ economy.

For each 1% increase in visitors, an extra $200 million is pumped into the economy, Nostaja said.

“Los Angeles spends no money attracting visitors to city events,” Nostaja said. “And let’s face it, after last April’s riots, the image of our city was left tarnished.