Growing the Economy: The View From Here : Recession: Valley and Ventura County businesses offer advice to Riordan, Wilson and Clinton.
Los Angeles Mayor Richard Riordan ran on a strong pro-business platform in last spring’s election. The Times asked a group of executives and small-business owners in the Valley and Ventura County what kind of action they would like to see the new mayor take.
Not surprisingly, they gave Riordan an earful about why so many companies are leaving or expanding outside of Southern California, and had suggestions about what the new mayor can do about it. They also have some ideas for Gov. Pete Wilson and President Clinton.
William Rex, chief executive of Rexhall Industries Inc., a Saugus motor-home manufacturer.
“Throw all the workers’ comp lawyers out of town,” was Rex’s first piece of advice.
Last month’s state legislation aimed at curbing abuses in the workers’ compensation system comes too late for Rexhall. Instead of adding to motor-home production here, Rexhall recently bought a plant in Elkhart, Ind., which will employ about 100 workers.
The decision to expand outside of California was made, Rex said, when the company was bombarded by workers’ comp claims after it laid off nearly 400 employees as business dropped off starting in 1990.
Workers’ comp expenses are much lower in Indiana, Rex said. “There, it runs about $3.70 for every $100 you pay an employee. In California, workers’ comp costs us between $15.50 and $19.50.”
Rex said the state of Indiana will also help Rexhall with the cost of training new workers. “I was so impressed with what they were willing to do for us,” he said. “You can just tell the attitude is, ‘What can we do to help you?’ Whereas here in California, it’s “What permit can we make you get?’ ”
Don Gevirtz, chief executive of Foothill Group Inc., an Agoura Hills and Los Angeles financial-services company.
Gevirtz and other California executives met with President Clinton two weeks ago to discuss the state’s economic woes.
Gevirtz said he recommended that the President do two things right away that would not require legislation. The first would be to ease what Gevirtz feels are overly strict requirements on 70% of small Southern California banks about how much capital they must maintain.
The current requirements are based on regulators’ speculation that “Southern California’s economy will spiral downward even further,” he said. “When you force small banks to stop lending, that almost becomes a self-fulfilling prophecy.”
Gevirtz also suggested that Clinton divert some Small Business Administration loan-guarantee funds to Southern California from other parts of the country that are doing better economically.
Carole Lombard, president of Electronic Seals Co. in Van Nuys, which makes hermetically sealed devices for airplanes.
“Environmental laws in this state are getting out of hand. Tell me why we need Cal-OSHA (the state Division of Occupational Safety and Health Administration) when we have the federal OSHA. We’ve practically regulated ourselves right out of business in this state.
“It really frosts me.”
Brian McDermott, chief executive of Leslie’s Poolmart, a supplier of swimming-pool products and equipment in Chatsworth.
“Being a retailer that opens stores all over the country, I can tell you that because of the bureaucracy in California it takes us twice as long and costs us twice as much to put in a store here as anywhere else,” McDermott said.
He suggests a “triage system” of regulatory review that would speed the process for experienced companies with good safety records. “Right now, everyone gets the same extensive degree of review.”
Roger Greaves, chief executive of Health Net, the state’s second-largest health-maintenance network, based in Woodland Hills.
The Los Angeles City Council “hasn’t been pro-business for the last 20 years,” Greaves said. “It’s not fair to paint the whole council with the same brush, but the majority haven’t done anything but dig in their heels against development. The mayor ought to demand that of his colleagues on the council.”
As for the Administration’s forthcoming health-care reform plan, “the federal government is trying to apply a political solution to an economic problem, so I don’t hold very high hopes” for a positive impact on business, Greaves said. If all small businesses are required to provide health care for employees, “it will have a negative impact.” In any case, “it will have to be phased in over at least three to six years with tax incentives built in.”
Linda Wachner, chief executive of sportswear maker Authentic Fitness in Van Nuys.
“I’m happy to see Mr. Riordan in his new position,” Wachner said, because of his background as a lawyer and businessman. However, “now we have to see results. I hope he has a plan to deal with the crime.”
As for creating new jobs, “I think basically we need some government projects. I don’t think it’s going to happen out of the private sector, unfortunately. I’m still seeing a recession.”
Clinton’s new budget plan won’t help, Wachner added: “No business is going to be anxious to add to its employment ranks unless consumers start spending--which they aren’t likely to do because of the increased pressures on them for the payment of new taxes and funding of health-care expenses.”
Ivan Holmoe, owner of Ivan’s Barber Shop in Glendale.
“We’re quite upset with illegal immigration. It’s totally out of control,” said the 71-year-old Holmoe, who has had his shop on West Glenoaks Boulevard for 45 years. “Right now, it’s the biggest problem in the country.
“I think they ought to move Camp Pendleton down to the Mexican border and let the soldiers and Marines stand watch,” he said. “They can stand watch over the border just as well as standing watch over a clothesline or a barracks at 2 a.m.”
David Harmon, president, El Camino Resources International, a computer-leasing company in Woodland Hills.
Harmon supports the North American Free Trade Agreement, the proposed trade pact between the United States, Mexico and Canada. El Camino does “quite a bit” of business with Mexico, he said.
“If the economy were stronger in Mexico,” Harmon said, “fewer people there would want to come to Los Angeles.” Nonetheless, “every worker in this country should have an identity card. We shouldn’t be paying for everyone who comes across our borders--their health, education. If they’re illegal, send them back.”
Richard Cupp, chief executive of Ventura County National Bancorp in Oxnard.
“I have two watchwords for Mayor Riordan: public safety, public safety, public safety,” Cupp said.
It shouldn’t be necessary to raise taxes to fight crime. “I’m convinced there’s room in state and local budgets to dedicate more resources not just to police and fire, but also programs dedicated to gang-resistance efforts. There’s no greater issue facing us today.”
Robert Solomon, chief executive of Dakin Inc., a toy company in Woodland Hills.
“The crime in Southern California is making it more and more difficult to recruit people who live in other parts of the country to come here,” Solomon said. Besides Dakin, Solomon has investments in Truly Yours restaurants in Northridge and Tarzana. Since last year’s riots, the restaurants have had to offer more specials to draw customers.
“If I were speaking with Gov. Wilson, I’d also agree with him that we need to taper and control the amount of illegal immigration. Not that I’m not a believer in the Constitution, but not when the laws start to work against you. We’re facing an immigration crisis.”
Steven Nichols, chief executive of athletic-shoe maker K-Swiss Inc. in Chatsworth.
“To attract new jobs, California has to act more like a business: assess what its market is and how this state can compete with the 49 other states. What is our business plan?”
On the local level, to address the disappearance of many aerospace jobs, “retraining people to be productive in new industries is key.”
Nichols added: “Maybe we should also suspend antitrust rules to let defense companies get together and plan how they would efficiently convert their businesses to consumer-related products. Maybe one defense contractor would intelligently work on a monorail and another would work on school buses or the electronic aspects of something else.”
