Pitch­ing a high-cost county

Busi­ness pro­mo­tion chief says L.A. area isn’t cheap but of­fers top value

Los Angeles Times - - BUSINESS - By James F. Peltz

It’s Bill Allen’s job to per­suade you to set up busi­ness in Los An­ge­les County — or to stay put if you’re al­ready here.

Allen is pres­i­dent of the Los An­ge­les County Eco­nomic De­vel­op­ment Corp., a non­profit sup­ported by pri­vate and county funds that pro­vides con­sult­ing, re­search and other ser­vices to pro­mote busi­ness in the re­gion.

The county has a $640bil­lion econ­omy, larger than many na­tions’. But it was hard hit by the Great Re­ces­sion, and the county only now is fin­ish­ing re­plac­ing the roughly 300,000 jobs that were lost in the down­turn.

The county’s job­less rate, at 7.6% in April, re­mained well above the na­tional job­less rate of 5.4%. Man­u­fac­tur­ing jobs in the county have dropped from 450,000 in 2007 to 350,000 to­day.

Allen, 57, came from one of the county’s top in­dus­tries: en­ter­tain­ment. Son of the late co­me­dian Steve Allen, Bill Allen for­merly ran MTM Tele­vi­sion and was a CBS ex­ec­u­tive.

We asked Allen about the L.A. County econ­omy’s out­look. A move by the city of Los An­ge­les to lift the min­i­mum wage to $15 an hour by 2020 is a key el­e­ment in that out­look. But the county has asked the eco­nomic de­vel­op­ment group to study the is­sue, so Allen said he had to limit his com­ments. Here is an edited ex­cerpt:

How valid is the oft-heard com­plaint that L.A. County and Cal­i­for­nia aren’t busi­ness-friendly enough, start­ing with taxes?

It’s fair to say that nei­ther Cal­i­for­nia nor the Los An­ge­les area are the low­est­cost places in this coun­try in which to do busi­ness. But we be­lieve they are some of the high­est-value places.

High­est-value? No other re­gion in the U.S. pos­sesses the size, scale and di­ver­sity of our

‘No other re­gion … pos­sesses the size, scale and di­ver­sity of our … in­tel­lec­tual and phys­i­cal as­sets.’


col­lec­tive in­tel­lec­tual and phys­i­cal as­sets. This is the best re­gion in the coun­try to re­search, de­sign, cre­ate, pro­duce and ex­port both prod­ucts and ser­vices. We have an enor­mous la­bor force here, world-class re­search in­sti­tu­tions and a world-class con­nected in­fra­struc­ture to the global econ­omy. Mean­ing?

The Port of L.A. and the Port of Long Beach are the two largest sea­ports in the Western Hemi­sphere. More than 40% of all the wa­ter­borne cargo en­ter­ing the U.S. comes in through these ports. L.A. In­ter­na­tional Air­port is the largest ori­gin-and-des­ti­na­tion air­port in the world. The fastest­grow­ing mar­kets are along the Pa­cific Rim, and we have the cul­tural con­nec­tions to ev­ery coun­try along the Pa­cific Rim. A num­ber of big com­pa­nies have moved out of L.A. in the last 20 years. Does it mat­ter?

It is im­por­tant for us to do ev­ery­thing in our power to pre­vent those sorts of moves. Large em­ploy­ers, par­tic­u­larly head­quar­ters com­pa­nies, are very valu­able to a re­gional econ­omy and its so­ci­ety be­yond the eco­nomic ben­e­fits they pro­vide.

They at­tract sup­pli­ers and ven­dors but also they tend to be good civic stew­ards. Head­quar­ters com­pa­nies tend to in­vest in the cul­tural and hu­man-need ser­vice or­ga­ni­za­tions in the re­gion. There was a lot of pub­lic­ity about the loss of Arco’s very gen­er­ous char­i­ta­ble con­tri­bu­tions to the re­gion when Arco was ac­quired by Bri­tish Petroleum in 2000. And that was quite real. Other than merg­ers, why do com­pa­nies leave?

Some of the high­est­pro­file com­pa­nies that re­lo­cated their head­quar­ters didn’t do it for a cost rea­son. For in­stance, Northrop Grum­man did not re­lo­cate its head­quar­ters from L.A. to Vir­ginia in 2011 for cost rea­sons. It did so to be closer to its prime buyer: the United States gov­ern­ment. We still have more than 20,000 peo­ple work­ing at Northrop Grum­man fa­cil­i­ties in L.A. County. What other ob­sta­cles do you face in re­cruit­ing or keep­ing com­pa­nies in the county?

Bil­lion-dol­lar in­cen­tives are of­fered by other states to large com­pa­nies to re­lo­cate, par­tic­u­larly to south­east­ern U.S. states. Those states find Cal­i­for­nia to be the most at­trac­tive fish­ing pond. What’s one of your re­cent suc­cess sto­ries?

A Chi­nese man­u­fac­turer called BYD, which makes cars, buses, so­lar sys­tems. We were suc­cess­ful in at­tract­ing its North Amer­i­can head­quar­ters to Los An­ge­les and its North Amer­i­can man­u­fac­tur­ing fa­cil­ity for its elec­tric transit buses to Lan­caster. BYD em­ploys about 60 or 80 there to pro­duce its ini­tial bus or­ders. What’s the im­pact of the higher min­i­mum wage in Los An­ge­les?

Many peo­ple who have been low-wage earn­ers will ben­e­fit. But there also are po­ten­tial neg­a­tive im­pacts to some of those in­di­vid­u­als and to some of the com­pa­nies that em­ploy them. Be­cause busi­ness’ la­bor costs will climb, and that could lead to less hir­ing or lay­offs?

The city of L.A. has to be very care­ful be­cause over the last 35 years it has un­der­per­formed the rest of the county in job cre­ation. Thirty-five years ago the county had a 7.5-mil­lion pop­u­la­tion. To­day it has 10 mil­lion. But with that ex­tra 2.5 mil­lion peo­ple we’ve only cre­ated a few hun­dred thou­sand jobs coun­ty­wide. The city of L.A. alone has added 1 mil­lion peo­ple to its pop­u­la­tion but ac­tu­ally lost jobs in that pe­riod, so the city has to be very care­ful as they en­act these poli­cies. What’s the “Strate­gic Plan” you started to im­prove mat­ters?

It’s a plan in which we’ve built some of the strong­est con­sen­sus I’ve seen be­tween busi­ness, la­bor, gov­ern­ment, ed­u­ca­tion and the en­vi­ron­men­tal com­mu­nity about a path for­ward for the econ­omy. Now we’re go­ing to be talk­ing even more about in­vest­ing in hu­man cap­i­tal, start­ing with early child­hood ed­u­ca­tion. The great­est pre­dic­tor of one’s earn­ings abil­ity is one’s ed­u­ca­tion. And now you want the public’s in­put?

There will be a se­ries of public meet­ings. We also want peo­ple to com­mu­ni­cate with us through so­cial media with their ideas on how we grow this econ­omy.

Allen J. Schaben Los An­ge­les Times

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