Saturday, January 27, 2001
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Posted on: Saturday, January 27, 2001

Business recruiters target California

Associated Press

Bob Shriver, whose job is to attract business to Nevada, held back when California was rocked by earthquakes. He bit his tongue through fires and floods. But California’s power crisis is just too good an opportunity to resist.

"This is a much different issue," Shriver said. "It’s man-caused."

Shriver’s office in Carson City is gearing up a new ad campaign to target businesses in the San Francisco Bay area and Southern California.

Other states, including Utah, Washington and Texas, are planning similar efforts to tout the economic benefits of moving — chief among them being access to reliable supplies of electricity.

Even far-off Tennessee will launch a campaign promising abundant power from the Tennessee Valley Authority. Over the next couple of weeks, a thousand California companies will receive a rectangular box with the message "The lights are always on in Tennessee ..." emblazoned on the outside. Inside will be something handy to have during a rolling blackout: a flashlight.

The business poaching comes as the state’s economy, already reeling from the dot-com downturn, is wrangling with a power crisis that has driven two major utilities to the brink of bankruptcy, forced many businesses to interrupt production and inconvenienced millions with rolling blackouts.

Should I stay?

The overtures are sure to appeal to many California businesses, especially those already struggling with a shrinking labor pool, skyrocketing real estate prices and a strict regulatory regime.

To be sure, it’s not easy to just pick up a business and go. Companies with large or multiple operations in California may be more inclined to ride out the current energy crisis, especially if relief is anticipated.

But for many small businesses already contemplating a move, blackouts and the specter of rising energy bills may be just enough to push them across state lines.

"If this turmoil persists, we do believe we’re going to have substantial problems holding on to companies," said Barry Sedlik, manager of economic and business development at Southern California Edison, one of the two teetering utilities. "Our customers on our interruptible program are finding it very difficult to operate and they are looking for options elsewhere."

State economists say the longer the power crisis lasts, the more likely businesses will move.

"This is a period where we’re vulnerable," said Tom Lieser, senior economist at the Anderson School of the University of California at Los Angeles. "This, in combination with other situations — such as problems with recruiting — might put a company over the edge. If you’re already thinking about expansion somewhere else, now you will have added to your list, in big, bold letters, ’POWER.’ "

Or should I go?

Companies across the state have either laid off workers, cut production or scrapped plans for expansion because of the crisis.

Santa Clara-based Intel Corp., has said it won’t add any more facilities in the state. California Steel Industries Inc. in Fontana, called workers in on a Saturday to make up the hours they lost when production was shut down during the week.

Miller Brewing Co.’s brewery in Irwindale sometimes ends up paying $60,000 or $70,000 more for power on days when the state’s Independent System Operator declares an emergency and triggers rolling blackouts.

"It’s killing us," said Victor Franco, Miller’s community affairs manager for West Coast operations. "This week, the entire second shift has been laid off."

Franco said the company is not considering closing the plant.

In addition to cheap land and low wages, recruiters in Washington state now tout the region’s low-cost and reliable electricity in its effort to lure California jobs north.

The Spokane Area Economic Development Council is sending a special letter to about 8,000 California companies with which it maintains regular contact.

"Given the energy challenges they have in California, we think it’s time to stress it," council president Mark Turner said this week.

Similar tactics are shaping up across the border in northern Idaho.

"You can always count on California to have some crisis going on at some point," said Bob Potter of Jobs Plus, which recruits businesses to the Coeur d’Alene area. "The power situation is another crisis."

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