California companies packing up, moving out-Political missteps in that state already paying dividends in Northwest

If Inland Northwest business men and women feel wronged by Olympia or Boise, they should try swapping places with their co-sufferers in California’s Inland Empire.

Bert Caldwell
The Spokesman-Review

The fury there among small- and medium-sized manufacturers, suggests consultant John Husing, easily trumps the resentment voiced by Spokane-area small- and medium-sized businesses.

Many companies like Buck Knives, which in January announced it will move to Post Falls, are fed up, says Husing, who keeps a Buck knife in his desk.

Husing, founder of Economics & Politics Inc., has been working with businesses and economic groups in the Riverside area east of Los Angeles for more than 30 years. Business owners there are accustomed to California’s business cycle, which has encountered the same head winds buffeting the entire U.S. economy, he says.

But actions taken by Gov. Gray Davis and the California Legislature have generated more turbulence, Husing says. His surveys indicate unprecedented unrest within the business community.

"I find almost a lethal anger out there," Husing says. "It’s all about Sacramento."

He says the first bold misstep was the 1996 decision to deregulate California’s electricity markets. Because the plan was implemented during a modest economic slowdown, power prices eased. But when an economic rebound coincided with drought in the Northwest, prices rebounded, and then some.

Although utilities across the West were affected, Southern California Edison was among those hardest hit. Manufacturers are paying rates 50 percent to 100 percent higher than those of a few years ago, Husing says.

Buck Knives officials said potential 60 percent savings on energy bills were a big factor in their decision to relocate.

Workman’s compensation premiums are another irritant that also afflicts local businesses. But the 29 percent increase imposed in Washington earlier this year pales against the doubling of premiums Husing says many in California must shoulder.

He says business owners have not forgotten the hit they took when similar increases were imposed 10 years ago.

And the Legislature has heaped on more costs by imposing new mandatory family leave requirements and starting the clock on overtime after an employee works an eight-hour day instead of a 40-hour week.

Husing says those burdens have businesses in his area reassessing their futures.

Buck, he says, is unusual because the whole company will be uprooted. The owners of most businesses feel they cannot afford to leave California entirely — "This state is a gigantic economy" — but will look elsewhere when the time comes to expand.

Among the industries that are leaving are printing, which has set up shop in Las Vegas, and plastic-injection molding, which can no longer absorb soaring energy costs.

A Democrat who has managed dozens of political campaigns, Husing blames his own party, the governor and legislative leaders in the state capital for businesses’ unrest.

The suburban/environmentalist wing that controls the party has enacted laws that were not intended to be anti-business, but that is their effect, Husing says.

"The group of people we have up there is deaf," he says.

To get their attention, he says he tells clients they must put pressure on lawmakers, and keep it there. Businessmen do a poor job of articulating their concerns, he says.

Husing, dismissing California Republicans as would-be theocrats, says minority and ethnic groups more concerned with job growth will have to rein in other factions within the Democratic Party.

California, which lost 150,000 jobs in 2002, cannot stand more of the same, says Husing, sounding a message that will ring true with Washington business owners.

"The rules have got to change," Husing says. "We’ve got to put pressure on the Legislature."

•Business columnist Bert Caldwell can be reached at (509) 459-5450 or by e-mail at [email protected]

http://www.spokesmanreview.com/news-story.asp?date=031103&ID=s1316636&cat=section.business