Change at Top Lifts Hope for Better Times

He talked the talk on whipping California’s business climate into shape. But can Gov.-elect Arnold Schwarzenegger walk the walk?

Businesses leaders were generally upbeat Wednesday about the prospect of a tough-talking, tax-chopping, red-tape-terminating presence in the governor’s mansion who has chosen economic development as his No. 1 priority.

“I look at the state as a very, very large business, and I know that a new person at the helm can change the tempo and outlook,” said Dave Conant, president of Conant Auto Retail Group in Cerritos, which owns eight dealerships. “Arnold is upbeat, and he can have a tremendous impact on California, psychologically.”

Still, most were circumspect about the former bodybuilder’s ability to deliver in the face of the herculean obstacles confronting him.

They noted that a slew of factors weighing heavily on the state’s businesses, from the sluggish national economy to globalization to high land costs, are out of the governor’s control.

Key planks of Schwarzenegger’s agenda for his first 100 days in office, including wringing more revenue from Indian gaming and wresting concessions from state employee unions, target groups that aren’t legally bound to negotiate with him at this time. Meanwhile, the Republican is facing a Democratic-controlled Legislature, whose cooperation he’ll need.

“On the one hand, we’re really apprehensive,” said Arthur Pereira, owner of Los Angeles clothing maker Kymsta Corp., which like many other manufacturers has struggled with spiraling business costs. “On the other hand, if this guy can do what he says he can do, then the state will benefit from this and small business will benefit .... How can that many people be wrong?”

Many, in fact, acknowledged the morale boost that comes with putting a business champion back in the governor’s office, particularly one whose international celebrity will give him a powerful bully pulpit to push his agenda and send a message that California is serious about shoring up its industrial base and protecting jobs.

In Hollywood, for example, union officials believe Schwarzenegger may be influential using his relationships and persuasive powers to help keep movie and TV productions in the state.

Although Schwarzenegger himself shot movies in Canada and Mexico, Hollywood unions credit him with a deal that kept the production of “Terminator 3: Rise of the Machines” in Los Angeles after it was scheduled to be shot in Canada.

The new governor also may use his popular appeal to campaign for change through voter-approved initiatives. One highly anticipated target is California’s unfair competition law. Better known by its numeric place in the state’s business code as “17200,” the law is the oft-scorned source of a cascade of lawsuits that business groups decry as frivolous legal shakedowns.

Schwarzenegger has vowed to make that law the top priority in his litigation reform platform, even though the Legislature has blocked every such attempt since 1996.

The business community is also confident that veto power in the hands of a Republican will snap a string of perceived anti-business legislation winding out of Sacramento over the last few years, from costly wage and overtime rules to a new mandate requiring many California companies to provide health care for their workers.

“I think there is potential to change anti-business legislative environment to a neutral environment,” said Dwight Decker, chief executive of Conexant Systems Inc., a Newport Beach-based chip maker.

Decker said he and other members of a business group “identified 73 bills that would reduce jobs” in the state. “Think if you changed that to 73 bills to promote jobs -- that’s a mind-set that could be brought in by the next administration.”

Others, however, said the former actor’s star power would not be enough to stop companies from looking elsewhere to grow their firms if the political novice can’t find a way to work with the Legislature.

Daniel L. Villanueva, the head of Fontis Ventures, a $100-million-plus fund that invests in entrepreneurial Latino businesses, said he knew of four California firms now in negotiations to relocate or expand in other states.

“One thing that didn’t go down well with businesspeople on [election] night is when Democratic legislators said on the news shows that they would get Schwarzenegger up to Sacramento and show him a thing or two about governance,” he said.

Democratic legislators aren’t the only group that may not be keen on working with the new governor. The state’s Indian tribes have been offended by Schwarzenegger’s strident attacks on tribal gaming and his repeated assertions that the state deserves a bigger cut of the action. Schwarzenegger won’t be able to run roughshod over the tribes, however. The state’s 61 compacts with the tribes don’t expire for years.

State employee unions aren’t inclined to cozy up to Schwarzenegger, either. His agenda includes renegotiating state employee union contracts “to get a better deal for taxpayers.” But like the Indian tribes, many of California’s public employee unions aren’t bound to negotiate with Schwarzenegger until their contracts expire.

Still, many executives said they were confident that the change in Sacramento will be good for California’s economy and its business climate.

“He’s focusing on the side of the equation that nobody likes to focus on, which is cost,” said Robert A. Kotick, chief executive of Activision Inc., a video game publisher in Santa Monica. “He’s taking a businessman’s approach to running the state.”

*

Times staff writers Terril Yue Jones, James Bates, Lisa Girion, Alex Pham, Joseph Menn, James S. Granelli, Peter Pae and Nancy Rivera Brooks contributed to this report.