Craig Barrett probably started it all back in January when the chief executive of Intel Corp. said the chip maker wouldn’t expand fabrication facilities in California due to the power crunch.
Recruiters from other states have latched onto those comments and revved up their long-idled marketing machines. Their pitches have included sending flashlights and batteries to energy-sensitive companies and cold-calling businesses to see if they are up for expanding elsewhere or even relocating to another state.
Come April, Orange County and California are again set to come under siege from recruiters, as officials begin the second round of their campaigns. In the next three months, recruiters from at least five different states plan to visit companies in OC and Los Angeles to try to lure companies based here.
“We will intensify our efforts of telling our story,” said Alex Fischer, commissioner at the Tennessee Department of Economic & Community Development.
But the out-of-state recruiters have a hard sell ahead of them. Many executives and most economists say companies are unlikely to leave the state because of the power crisis. If the situation drags on with no sign of action by state officials, only then would relocation be a factor, they say.
That isn’t deterring recruiters. Fischer said he plans to visit Southern California for three days with a team of 30 Tennessee business leaders. During these three days, Fischer said he and his group have scheduled some 45 meetings with area companies to discuss possible expansion or relocation to Tennessee.
The spring visit will be a follow-up to a marketing pitch that Tennessee initiated in February following rolling blackouts and brownouts. State officials sent out 1,000 flashlights to California companies. They also mailed out 2,000 postcards with pictures of flashlights on them. Tennessee has spent $10,000 on its flashlight campaign.
You could say a light bulb, or flashlight, went on over Fischer’s head when he read Barrett’s comments about the California power crisis.
“We brainstormed for a couple of hours on how to make the most from this power crisis and finally came with the idea of a flashlight,” Fischer said.
The Greater Richmond Partnership Inc., an economic development council in Richmond, Va., plans to call on California twice in May. But regional officials aren’t resorting to gimmickry like flashlights and instead are taking a more direct approach.
“With the power situation, we have used it as a way to underscore that we have stable and consistent power in Richmond,” said Greg Wingfield, president of the Greater Richmond Partnership Inc.
In the first week of May, the Greater Richmond Partnership plans to attend a trade show in San Jose, where it hopes to discuss relocation with Silicon Valley companies. It also is planning a trip to San Diego at the end of May to target companies based in Southern California.
While Tennessee is targeting energy-sensitive businesses,including many in technology,the Richmond Partnership mostly is looking for tech companies to set up shop in its area.
“We are targeting Silicon Valley and Southern California because of the concentration of technology companies there,” Wingfield said. “We are asking companies that when you move to the East Cost, think of Richmond.”
Back in February, the Richmond Partnership took a Southern California tour and met companies here to discuss their power problems and other issues.
The Tennessee Department also has been in regular touch with companies in Southern California since January.
Besides flashlights, development councils have come up with other ways to tout their states. Kansas City has launched a special Web site, www.smartkc.com, describing its strong utility climate. Pueblo Economic Development Corp. in Colorado recently carried an advertisement with area business publications that showed a light bulb and a slogan “The lights are on in Pueblo, Colorado!”
Since 1990, California has gone through many near-death-like events that could have threatened its dominance as a technology and industrial hub.
A decade ago, economists predicted that California’s best days were behind it. The end of the Cold War led to huge downsizing in the aerospace industry. By 1995, OC housing prices were down by as much as 40% from 1989. The state was hit with two major earthquakes: one in 1989 and the other in 1994. Yet California emerged stronger from all the problems.
Recruiters now again are saying that the best days for California could be behind it as the state is mired with a prohibitive cost of living, long commutes, poor schooling and education, stringent environmental regulations,and now the power shortage.
“This is the straw that breaks the camel’s back,” said Jeff Moseley, executive director at the Texas Department of Economic Development.
Texas is another state that has been trying to court Golden State companies. One Texas trade council put out an ad in a Bay area newspaper, while the Texas Department of Economic Development itself put out a press release titled “Lights are big and bright in Texas.”
Moseley said that while his department plans to leave no stone unturned in recruiting companies from here, it doesn’t plan to send out flashlights and light bulbs.
While economic development councils in Tennessee, Richmond, Colorado and Kansas City have taken an aggressive approach, recruiters from other states such as Arizona have decided to put the power issue aside and focus on other concerns of companies in the state.
“Our marketing is focused on relationship marketing,” said Rick Weddle, chief executive of the Greater Phoenix Economic Development Council. Weddle said that his council is not sending any flashlights or light bulbs to companies in California as he feels that those tactics merely are “attention gatherers” and do not yield any results.
“Our feedback is that companies in California have been inundated with flashlights,” he said. “We are in the business of making friends, not enemies.”
Weddle said that the council has suspended some of its phone calls to companies in California as a courtesy. Weddle contends Arizona’s relationship-based approach will work in the long run. Since the California power crisis started, “Our prospect activity is up from 20% to 40%,” he said. “I bet you that those guys sending flashlights haven’t seen this kind of surge. Maybe those guys need a flashlight.”
“I am disturbed that my colleagues are treating this (power issue) as a carnival,” echoed Bob Marcus, chief executive of the Kansas City Area Development Council.
But both Marcus and Weddle said that while they have stayed away from gimmickry, they are not taking a back seat in poaching California companies: “We are in California six to seven times a year,” Weddle said.
“We have seen an uptick in our prospect activity,” said Tim Cowden, senior vice president of business development at the Kansas City Area Development Council.
Cowden said that his group has been in talks with many companies in California about relocation.
“We will soon be putting together a visit to California to meet those companies,” he said. “We will also be working with relocation companies in the West Coast” to help companies relocate to Kansas City.
Moseley said that the Texas Department does not have enough money to take advantage of the California power crisis.
“We have not budgeted this year to talk to California companies, but local communities have an open line of communication with California companies,” he said.
But talking with companies is a far cry from closing deals. The third stage for recruiters will be to convince companies here that relocation would indeed be beneficial. And perhaps the hardest sell of all will be in persuading companies that Tennessee, Kansas City and Texas offer a similar quality of life. n
