Palmdale Vying With Portland, Salt Lake as Site for Packard Bell : Economic development: Antelope Valley community makes strong bid to keep computer maker in Southland.

The small Antelope Valley city of Palmdale is battling with Portland, Ore., and Salt Lake City to lure the production facility of personal computer maker Packard Bell Electronics Inc., along with about 1,500 jobs.

Although Packard Bell and officials in each city have refused comment, knowledgeable sources said the computer company has been negotiating with officials from all three locations and will announce its choice by Jan. 15.

Executives at Packard Bell, which is based in Chatsworth, would say only that the company has outgrown its space and is being courted by several municipalities. Sources said Phoenix and an undisclosed Texas site are also being considered, but Palmdale, Portland and Salt Lake City have emerged as the front-runners.

The attempt to recruit Packard Bell is the first major test for Al McCord, Palmdale’s deputy city administrator and head of the city’s recently formed economic development agency.

McCord refused to confirm or deny that Palmdale is negotiating with Packard Bell.

“All I can say is that we’re talking to a major computer company that is presently in the Los Angeles area and (may) move out of state,” McCord said.

Officials in Palmdale and the other cities said Packard Bell had told them that eventually as many as 2,500 jobs are involved, although the company’s PC facility now employs about 1,500 workers.

Optimism for the increase in jobs stems from a recent report by International Data Corp. in Framingham, Mass., that said Packard Bell’s sales increased significantly in 1993. It said the company is now the fourth-largest personal computer maker in the United States, behind IBM, Apple and Compaq.

Liz O’Donnell, spokeswoman for Bohle Co., a public relations agency that represents Packard Bell, said the company will sell about 1.1 million computers in 1993, up from about 685,000 units last year. In addition, Bohle said Packard Bell expects revenues to double to $2.3 billion in 1994, up from about $1.25 billion expected this year.

Packard Bell, which makes IBM-compatible computers, sells its computers at 7,000 retail outlets nationwide, including chains such as Price Club and Wal-Mart.

Despite the company’s fast growth, whichever city lures Packard Bell will be getting a company that has had problems turning a profit.

Ferocious price wars in the personal computer industry have made it tough for many companies to stay in the black.

Privately held Packard Bell does not disclose sales figures. But last year, when the company planned to raise $70 million from an initial public stock offering, it reported that it lost $798,000 on $676 million in 1991 revenue, versus earnings of $1.4 million on sales of $188 million in 1988.

The company withdrew its stock offering, claiming that market conditions were poor. But others said the company’s $93 million in debt--as of 1991--worried potential investors.

In June, however, Packard Bell picked up an estimated $50 million when the big but unprofitable French computer company Groupe Bull bought a 19.9% stake.

Packard Bell has established a niche in the lower end of the IBM-compatible computer market, concentrating on producing affordable models for home use.

“The market segment they’re involved in is extremely competitive and . . . it’s difficult for anyone to be consistently profitable there,” said Bruce Stephen, director of personal computer hardware research at International Data Corp. “But it is our understanding that (Packard Bell) . . . looks to be profitable in 1994.”

McCord and his staff in Palmdale are aggressively pursuing Packard Bell and have met with company officials on several occasions, said a source who did not want to be named. Without confirming any negotiations with Packard Bell, McCord said the city has offered to give a computer company 50 acres of developed land near a Lockheed plant.

The site is part of 120 acres that Palmdale has set aside as an enterprise zone to attract new businesses.

McCord, who has been on the job for about two months, and his three-member staff are trying to persuade several companies, many of them small businesses in the San Fernando Valley and Los Angeles area, to move to Palmdale.

“We’re competing as hard as we can as a small city of 90,000 with limited resources. We’re willing to be a partner in a project. If it involves risk, we’ll risk what we can, realizing that we’re using public funds,” McCord said.

In addition to developed sites, Palmdale is also offering to help relocate employees and assist them in obtaining home loans.

Palmdale city officials are on “pins and needles” waiting to hear “from that computer company,” McCord said. “This is the first major company we’ve presented an offer to.”

Officials in Oregon and Utah see Palmdale as a serious competitor in the bidding war for Packard Bell. Portland Mayor Vera Katz was recently in Palmdale to see for herself what the city was offering the company and to court Packard Bell, a Portland official said. The official confirmed that Katz and the Portland City Council are “doing a full-court press to bring Packard Bell to Portland.”

As for Palmdale, “we’re trying to be the most aggressive economic development program we can be,” McCord said.

“We’ve put together a full-service economic development department in city government that offers everything we can bring to the table to attract new jobs.”

The Palmdale City Council has “guaranteed a fast-track permit process” to any business that chooses to relocate in the city, he added.