A new breed of corporate raider has been plundering California industries, hoping to eliminate thousands of high-paying jobs in the state.
These predators aren't using leveraged buyouts or hostile tender offers. They're not even looking to control companies - just to get them to relocate or expand outside California."I was driving down the Santa Ana Freeway in La Mirada the other day, and here's this huge billboard that says: `Having trouble doing business in California? If you are, call the Alabama business hotline and we will help,' " said Jack Kyser, an economist for the Los Angeles Area Chamber of Commerce.
The weapons in the industrial war are things like cheaper housing; lower taxes, insurance and utility rates; stable work forces; wide open spaces; less regulation; even something as simple as abundant water.
Where can all of this be found? Places like Mesa, Ariz., Orangeburg, S.C., Park City, Utah, or just about anywhere in Oklahoma.
"You can pay your employees less and they can have nicer homes. They can sell a $200,000 house there and buy a mansion here," says John Reid, spokesman for the Oklahoma Department of Commerce.
Statements like that are causing concern in California. Many leaders worry that the state, blessed with sunshine, stunning scenery, educated workers and a diversified economy, also is crowded, crime-ridden, expensive and overregulated. They fear that the state is becoming too unfriendly to business for its own good.
"Traditionally, we just opened up the door and growth was there. I think in the 1990s we've got to open the door but we've also got to pursue growth," Kyser said.
Especially threatened are better paying manufacturing and service jobs, particularly "economic ladder" positions in which workers with no college diplomas enjoy benefits and promotions.
It's difficult to pinpoint exactly how many companies, and jobs, have moved out of the state because California doesn't track such losses.
The latest big casualty came two months ago when McDonnell Douglas Corp., which has built generations of jetliners in Long Beach, said it would pick another state for a $750 million factory to assemble its new MD-12X.
Last year, Lockheed Corp. announced it was moving thousands of jobs from Burbank to Georgia to save $50 million annually.
Gov. Pete Wilson recently set up a task force to study the aerospace industry. But critics complain California has no formal plan to retain hundreds of thousands of aerospace jobs. By contrast, Utah, for example, has a 100-page blueprint to lure them away.
The ongoing drought also is hampering local expansion for the state's defense companies as well as for other industries. In fact, a study commissioned by the California Urban Water Agencies estimated that 56,000 jobs could be eliminated from California's economy if the drought forced a 30 percent cut in water deliveries.
Corporate defections thus far have ranged from furnituremakers whose sprays and solvents are banned by tough new anti-smog rules to food processors, chain-link fencemakers and financial service workers.
The Bank of America announced in April that it would cut costs by moving its San Francisco and Pasadena credit-card operations to Phoenix, along with nearly 2,000 jobs.
Raids on the entertainment industry also continue. About $5 billion per year in production work remains in California. But another $3 billion goes outside.
Marian Hein, Utah's director of national business development, said the state concentrates recruitment efforts on Southern California because virtually every cost is lower in Utah. This includes real estate, taxes, workermen's compensation and wages. Employers also find Utah workers more loyal and productive, she said.
With all the competition, California companies often invite a number of cities to compete for their business before moving.
Beverly Enterprises Inc., a nursing-home company, invited the Fort Smith, Ark., Chamber of Commerce to compete against Little Rock, Ark., and Virginia Beach, Va., before picking Fort Smith when it left Pasadena last year.
When Hughes Helicopter, now McDonnell Douglas Helicopter, needed space to build Apache choppers, a short list of five states was drawn up, including California. It eventually located in Mesa, Ariz., where it employs more than 4,000 people. The company says city officials were the most accommodating.
"They essentially had just two-lane country roads . . . so the city built roads, expanded the sewer system, made it a very easy place to get in and out of during rush hour," said Ken Jensen, a spokesman for the company, which didn't even consider expanding its Culver City plant on the crowded west side of Los Angeles.
Environmental red tape also is far less snarled in other states. Los Angeles-area businesses have to deal with an array of nearly 80 federal, state and local environmental agencies, said Daniel P. Garcia, a Los Angeles lawyer and city commissioner.
Other states, cities and counties commonly offer extensive tax credits, tax exemptions and other incentives to lure businesses away.
Oklahoma, for example, emphasizes that it picks up the tab to train new workers when companies relocate. And it brags about its central location, ample water supply and low utility costs. Its tax rates also are low.
But the capper is home prices. The California Association of Realtors pegged the state's median home price at $202,470 in March. A nice home in Tulsa, Okla., might sell for around $70,000.
Small- to medium-size companies also have been given the red carpet treatment by out-of-state recruiters.
Computer cabinetmaker Zero Corp. attracted little attention when it decided in January to close the Burbank plant it had owned since 1962, moving 1,000 jobs to Utah. But the company's move was big news for Utah.
"Zero will be one of the largest manufacturing employers in the state," said Wilford D. Godbold Jr., Zero's president and chief executive officer.