LOS ANGELES - California needs to make its business climate more attractive, even though only 2% of the state's manufacturing firms have left since 1980, a new study says.
The "California Industry Migration Study," which was commissioned by the state's five largest utilities, pokes holes in claims that businesses are fleeing California for neighboring states and Mexico. But the report finds that industry is "increasingly disenchanted with California as a manufacturing locale," which means officials need to take steps to keep manufacturing-jobs in the state.
Those steps include a statewide marketing effort to retain and create manufacturing jobs, a more clearly defined regulatory process, and more job training, according to the study, which was released this week.
"California is being out-marketed," the report says. "While Californians debate the relevance of manufacturing to the state's economy, other regions have mounted well-organized and aggressive recruitment efforts focused on the perceived financial benefits to firms which move manufacturing operations to their respective areas."
The report also blames state and local governments for some job losses and California's worsening business climate. Governments are increasingly seen by business as "adversaries rather than business partners," the study says.
It adds that "many firms feel that government officials view business and industry as a ~cash cow' in their attempts to solve budgetary matters and fund new programs and services."
The study was commissioned by the Los Angeles Department of Water and Power, Pacific Gas and Electric Co., the San Diego Gas and Electric Co., Southern California Edison Co., and Southern California Gas Co.
California utilities should "play a leading role in formulating, coordinating, and implementing this statewide marketing effort to retain and create manufacturing jobs." because a large share of utility revenues are derived from businesses, the study concludes.
The survey covers 1,035 manufacturers that have moved at least some of their facilities out of the state. Over 30% plan further relocation or expansion of operations within the next three years, with 85% of that group saying this activity would take place outside California.
More than 50% of the surveyed firms were involved in high technology industries such as semiconductors, computers, and aerospace, the study says.
An estimated 72% of the firms relocated to other states, with Texas, Nevada, Arizona, Colorado, and Oregon topping the list. Mexico accounted for 26% of the relocations, the report says.
The firms that left cited business costs, with real estate and labor mentioned most often. But issues of business climate, such as environmental regulations and business taxes, also raised concern.
Another study, which was released last Thursday by a finance commission, projected that the state's economy will stay stagnant through 1994 due to "a weak national economy and the compounding negative impacts of defense cutbacks, a sick, construction industry, and debilitating contractions in Southern California's manufacturing base."
The Commission on State Finance said overall reforms are considered crucial for California's economy to put the state back on sound fiscal footing.