Palmdale Loses Bid to Draw Packard Bell

A Packard Bell executive said Monday that the computer giant, now temporarily quartered in Westlake Village, has ruled out the possibility of relocating to Palmdale, in part because of the earthquake risk in the Antelope Valley city, and will leave Southern California.

The disclosure puts an end to Palmdale’s yearlong courtship of Packard Bell. “It was kind of a huge shock to us,” said an aide to state Assemblyman R. J. (Pete) Knight (R-Palmdale). Knight has been part of the team boosting Palmdale’s bid with a $40-million incentive package.

But Packard Bell Vice Chairman Jeff Scheinrock told an Assembly panel that if the state passed legislation creating an enterprise zone in Sacramento, his firm would move to that city and end its consideration of relocating to Salt Lake City or Portland, Ore. Such enterprise zones offer tax breaks to companies that hire local residents and make major investments in equipment.

The Assembly Utilities and Commerce Committee, which had been hearing testimony on the creation of additional enterprise zones, subsequently voted 10 to 0 to recommend the creation of such an area in Sacramento.

The personal-computer manufacturer announced in late 1993 that it had outgrown its six Chatsworth facilities and in January announced it was moving more than a quarter of its 1,500-member work force to Salt Lake City.

Subsequently, damage caused by the Northridge earthquake forced the firm to shift its operations to Westlake Village and Camarillo.

During the past year, Palmdale, with help from Los Angeles County officials, put together an elaborate array of incentives worth tens of millions of dollars to lure Packard Bell.

But in testimony Monday before the Utilities and Commerce Committee, Scheinrock disclosed publicly that Palmdale has been eliminated from consideration.

A Packard Bell memo to Assemblywoman Gwen Moore (D-Los Angeles) said Palmdale posed an “unacceptable earthquake risk for (a) sole U. S. manufacturing location.” The memo also claimed Palmdale could not provide Packard Bell with the 400,000-square-foot interim facility it would need. The document identified a former U. S. Army depot in Sacramento as the site Packard Bell is considering.

Monday’s disclosure hit Palmdale leaders hard.

“With good old Packard Bell, the dance is over,” sighed Al McCord, Palmdale’s director of economic development. “We lost, and that’s part of the competitiveness in economic development. We’re glad Packard Bell is staying in California.”

But McCord said the fact that Palmdale learned of Packard Bell’s decision from the news media hurt. “I thought they’d show us more courtesy,” he said.

Among the powerful incentives Palmdale was prepared to offer Packard Bell were a gift of 50 acres of land, valued at $7.5 million; $4 million in housing assistance to help its employees move to Palmdale; $10 million in tax-exempt bonds to help build its facilities, and low-cost financing to help its subcontractors construct plants in Palmdale. Even local businesses agreed to offer furniture and other discounts to Packard Bell employees.

But in the end, it was Palmdale’s proximity to seismologically active areas that was its downfall. That rationale was disturbing to McCord.

“It doesn’t do us any good” to have the earthquake issue publicly aired, he said, “but it is overblown as a problem. In the January quake, we had no damage. Our earthquake insurance also is lower than it is in Los Angeles.”

Knight aide Matt Rexroad said the Packard Bell news, while disappointing, would not stop Palmdale’s aggressive efforts to lure new business. “We’re going to keep throwing our best pitches with what we’ve got,” Rexroad said. “There are a lot of Fortune 500 companies that are in the Los Angeles region, despite earthquakes.”

Rexroad said Knight will continue to press for state legislation to create an enterprise zone in Palmdale to improve the city’s business climate.

Currently, Knight is pinning his hopes on a bill authored by state Sen. Henry J. Mello (D-Gilroy) to create two new enterprise zones in California, with Palmdale reportedly all but guaranteed to be one of them.

Meanwhile, the news that Packard Bell was ready to go to Sacramento was greeted warmly by Gov. Pete Wilson’s office.

“We want to keep Packard Bell in California, and if Sacramento is the only place here under consideration, then we’ll do everything in our power to support that,” said Wilson press aide Paul Kranhold.

The governor has been criticized by his Democratic gubernatorial challenger, Kathleen Brown, for his lack of response to California’s economic decline in recent years.