Haas Machine Tool Company to Leave Area : Relocation: Fed up with crime and government bureaucracy, the president says the Chatsworth firm will move within two years.

Gene Haas was working late in his Chatsworth office one night in November when the window abruptly shattered and a shot zinged over his head. One more reason to leave Los Angeles, thought Haas, founder and president of Haas Automation, a booming machine tool manufacturer.

Eight months later, Haas has made up his mind. Haas Automation will leave the area within the next two years. The company is searching for a new site to lease or purchase. Several states have been discussed, including Oregon, Nevada, Kansas and Colorado, while other parts of California have not been ruled out.

Crime is just one reason. Haas said he is also fed up with the city government, unresponsive officials and a building permit process that he says hinders business growth. “If you run into any kind of problem with the city, they just say, ‘Well, that’s the way it is,’ ” Haas said. “Well, we are leaving, and that’s the way it is.”

When Haas goes, the Valley will lose one of its brightest players. Haas has more than tripled its sales during the last three years, while many local firms were cutting back. The company won’t disclose its earnings, saying only that it has been profitable since it was founded 11 years ago. But Haas said revenues for the first six months of 1994 were $35 million, up 84% from $19 million in the same period the year before.

Haas employs 216 people, up from three in 1983. About a quarter are college-educated, including many engineers. Others are machinists or assemblers earning $12 an hour or more. Although the company has made no decision about whether to offer workers relocation assistance, managers say they expect many employees will move with the company.

The company makes high-precision machine tools used for cutting and shaping metal. Most Haas machines, which include what the industry calls vertical machining centers, cost between $50,000 and $100,000, placing them at the low end of the market for manufacturing machine tools. Haas’ customers use the devices to make metal pieces for everything from prosthetic limb joints to golf clubs, wing spars and braces for teen-agers’ teeth.

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Haas General Manager Dennis Dupuis estimates that 5,000 machine tools of the type Haas makes are sold in the United States each year. Haas contends it has cornered a large portion of this market and will sell 1,400 machines this year. Coincidentally, Haas’ toughest competitor, Fadal Engineering Co. Inc., is next-door. Fadal is the larger of the two, claiming sales of $135 million in 1993, up 23% from $110 million in 1992.

Haas’ success represents a shift since the mid-1980s, when American companies were crowded out of the market by low-priced Japanese and German imports, said Ian Rogers, a partner and portfolio manager at Strong Funds in Milwaukee, a fund management firm. A weak yen relative to the dollar helped give imports an edge. “One (American) company after another was going into bankruptcy,” Rogers said.

Things changed after the Reagan Administration took steps to restrict imports of machine tools, and the dollar began to fall, thus making Japanese goods more expensive here. By 1989, when Haas introduced its machining centers, there was plenty of demand for low-priced machines, and few competitors, said Dupuis.

Companies such as Haas and Fadal are also benefiting from an economic recovery in manufacturing, and from a trend away from mass production, said Alexander Blanton, an analyst and limited partner at Ingalls & Snyder in New York City. “The trend is toward much more flexibility,” Blanton said.

Haas’ machines can be programmed to make small quantities of different parts automatically. They make it possible to fill a growing demand for custom-made products at low cost because they require little manual tinkering, Blanton said.

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Demand for Haas products is so great that the company has a two-month backlog and desperately needs more space to increase production, said Dupuis. The company has filled almost all of the 155,000 square feet it now leases, and needs another 100,000 square feet to keep growing, he said.

Gene Haas, 41, a graduate of Cal State Northridge, said at first he considered finding a new location in Los Angeles.

But he was sour about the prospect given his past experience with the city’s building-permit process. Last year, the company built a 16,000-square-foot addition on its leased property in Chatsworth. At first, officials with the city’s Building and Safety Department said it would take six months to a year to get a building permit, Haas said. Haas sought the help of Councilman Hal Bernson and got the permit in about six weeks.

Even then, he contends, constructing the building was fraught with unnecessary hassles: Inspectors didn’t show up on time, or left work early without returning calls. City staffers kept him waiting while they took breaks, and ignored the company’s pleas for haste, he said. And unexpected fees kept accumulating. Haas managers were particularly galled by a 1% tax for art and culture projects. “It leaves you with a very cold feeling,” said Haas.

Add to that the company’s frustration with high state taxes and crime. Last November’s shooting incident--in which a pellet gun was fired into Haas’ office window from a passing car--is just one example. Visitors to Haas must now don special badges since someone brazenly drove away with a forklift in daylight.

Since word of Haas’ proposed move has gotten out, the company has been inundated with offers of free or dollar-an-acre land, use of public buildings, plus industrial bonds and other enticements from job-hungry locales all over the country, Dupuis said. Organizations in Texas, Kansas, and even as far away as Scotland bombard the company with recruitment materials. “There is a box in my office absolutely overflowing with information from economic development councils,” said Dupuis. “I never dreamed. . . they would be so aggressive.”

City officials say that Haas’ decision to move is premature. The city acknowledges problems with its building-permit process, and has promised Haas it will strive for speedy processing of permits in future, said Steven MacDonald, director of business assistance for Los Angeles Mayor Richard Riordan. But, he said, “Can L.A. step up to the plate and give out 15 acres of free land? That’s not likely.”

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The city is bound by charter restrictions from offering many of the incentives that Haas said it has been offered elsewhere, MacDonald said. And the enticements Los Angeles can offer--such as industrial bonds and tax breaks for relocating in enterprise zones--are not well-marketed, he said. A committee has been appointed by the mayor to streamline the permit bureaucracy and improve business retention; its report, due out within two months, is expected to address many of the concerns Haas has voiced.

Meanwhile, the city is working with businesses individually to help them stay in Los Angeles, MacDonald said.

All this, however, is dismissed by Haas as too little, too late.

Enterprise zones aren’t appealing, said Dupuis. “We want to move someplace safe. Someplace where the skies are less smoggy, and the people are friendly.”