SOUTHERN CALIFORNIA ENTERPRISE : The Business of L.A.’s Business Team Is L.A.’s Business : Economy: After six months in operation, the group claims credit for persuading dozens of firms to either stay in the city or move here.
Clothing manufacturer Brenda French prefers to create her colorful custom-knit garments in an airy, luminous setting lined with windows. French even coined a word for it: craftory, a place that would be part crafts workshop, part factory.
But what French had, thanks to rapid growth of her company, was a cramped, sweaty factory that was more like a maze than a studio.
French and her partner, Mile Rasic, knew they had to move their West Los Angeles company, French Rags, but neither wanted to try it in Los Angeles because of previous “nightmare” experiences they had when moving or expanding businesses.
What’s more, New Mexico had come courting and was looking pretty good to them. Then in swooped L.A.’s Business Team, a group of professionals assembled by Mayor Richard Riordan to keep companies in Los Angeles and to attract new businesses to the city.
The team, part of the mayor’s Office of Economic Development, helped French Rags find a new factory in West Los Angeles not far from its old location. It cut through red tape and worked on finding job training funds and equipment financing for the company.
“I never expected anything like this,” said French, who lost only four days of production when the company moved last week. “Usually, when you deal with government, you go in prepared for battle, but everyone was so nice.”
French Rags is one of dozens of success stories L.A.’s Business Team has collected in its six months of active duty. In fact, one client, Armstrong’s The Home & Garden Place, was so happy with its relocation that it took out newspaper advertisements thanking the team members by name.
With little to offer in the way of local tax breaks, L.A.’s Business Team--yes, that’s the formal name--works by cajoling and reassuring anxious business owners, guiding them through the City Hall bureaucracy, bringing together the dozens of elements needed to pull off a deal, and by simply being nice to entrepreneurs accustomed to governmental nastiness.
“The business community has been feeling extremely frustrated, and now they have a friend in City Hall they can call,” said Jack Kyser, chief economist of the Economic Development Corp. of Los Angeles County, a private jobs-promotion agency that frequently works with L.A.’s Business Team to attract and retain companies. “We hope it will create jobs, create tax base for the city.”
L.A.’s Business Team was formed as part of Riordan’s mission to make Los Angeles a better place to do business.
The 18-member group is headed by Allison Keller, a former O’Melveny & Myers lawyer. It revolves around 10 business development specialists who have backgrounds in a variety of private and public sector businesses and who work one-on-one with companies. The group got its initial $1.9 million in funding from the Los Angeles City Council in September, reached full strength in January and was re-funded recently at $1.5 million for the 1995-96 fiscal year.
The idea of a business ombudsman/hand holder/arm twister is hardly new, it just had not been done in Los Angeles, which had become complacent after decades of economic growth, then found itself losing hundreds of businesses and thousands of jobs in the early 1990s.
Nor is it a cure-all. City government can’t do much about state tax burdens, workers compensation insurance, earthquakes, urban unrest, traffic, smog and the various other problems that have helped to drive business out of the region. Yet statistics indicate that flight is slowing as the region’s economy regains strength.
“We’re here to solve problems creatively and get results, and that can mean anything from site selection to knowing about an esoteric financing option,” Keller said. “Government should help or not be an obstacle. The mayor’s motto is to let businesses do what businesses should do.”
Between January and May, the team worked with more than 530 businesses representing about 67,000 jobs, Keller said. Of those, about 220 cases have been completed successfully with those companies deciding to stay in or move to Los Angeles. Those companies represent about 28,000 jobs, she said. About 20 cases, representing about 2,700 jobs, were not successful.
Under Riordan, Keller said, City Hall’s culture is changing and bureaucrats are willing to work with business, but she asserted that that doesn’t mean regulations and controls have been tossed out in the interests of economic development.
“Our job is to figure out how to help the business,” Keller said. “You can say, ‘No, you can’t do this,’ but we complete the sentence with ‘but you can do it this way.’ ”
Pacific Electricord, a 57-year resident of Los Angeles that makes wire and cable, is a happy customer. The 600-employee company was considering moving out of state because of frustrations over regulatory burdens and the cost of doing business in Los Angeles.
The team brought together city, state and federal agencies and representatives of Councilman Rudy Svorinich Jr., whose district is home to Pacific Electricord, to produce a package of permit assistance, equipment financing, energy conservation measures and job training. As a result, Pacific Electricord plans to stay put and to hire another 400 workers in the next five years.
“We didn’t want to leave Los Angeles,” Chief Executive Ed Kanner said. “We have a long and productive history with a loyal and hard-working work force.”
Not every effort ends so well. Keller points to Unocal Corp. as one of the biggest fish that got away.
As part of a corporate restructuring, the giant oil company is closing its downtown headquarters, which it sold last year, and is scattering about 900 employees to El Segundo, Brea, Costa Mesa, Texas and the unemployment office. Unocal is expected to announce today that it has signed a long-term lease for a new headquarters in El Segundo.
Keller allowed that even the most enthusiastic economic development team cannot combat the sort of fundamental overhaul that was behind Unocal’s move.
Unocal spokesman Barry Lane said the company’s operations are focused less on California these days than on the U.S. Gulf Coast and overseas. El Segundo is closer to Los Angeles International Airport, “which is a real attraction for us,” and the 135 employees who will be situated there can work on a single floor, rather than “in a tall tower with your name on the front.”
Over at French Rags, they’re installing new computerized knitting machines in the refurbished 36,500-square-foot “craftory” that was once an Orion Pictures sound stage. The company expects to hire 30 or 40 new workers in the next few months to bolster the current staff of 86.
The relocation process, which French and Rasic had feared would take several months, was pulled off in six weeks--with a mere 24 hours to secure the necessary building permits. Rasic said the last time he moved a company in Los Angeles, it took more than three months to get a permit for an electrical panel.
The team, working with the Economic Development Corp. of Los Angeles County, brought bankers and representatives of various agencies to French Rags, which ended up with a site nearly three times bigger than its old factory, a customized job training program, and below-market equipment financing.
“Mile and I couldn’t quite believe it,” French said.
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Hasta la Vista, Baby
The number of companies leaving Southern California has declined since 1992 for many reasons, including an improving economy, the reform of the state workers’ compensation system, lower real estate prices, various tax incentives and more aggressive business recruitment and retention efforts. In the first six months of 1994, the number of firms fleeing the state dropped to eight, for a total of about 2,085 employees.
Year Firms leaving Employees 1990 75 14,295 1991 85 13,556 1992 140 17,735 1993 44 7,064
Source: Economic Development Corp. of Los Angeles County, based on surveys of real estate brokers and economic development agencies in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties
