Oct. 14--The hardships of running a business in California make for an all-too-familiar tale, and Charles Hewett can recite it as well as anyone.
"The price of labor is a lot higher in California," said Hewett, chief operating officer at a genetics research firm called the Jackson Laboratory. "The hurdles we have to work through, in terms of permitting, are more challenging and more expensive."
Jackson isn't going anywhere, though. Just the opposite: It's spending $27 million to expand its Sacramento lab and create another 60 to 80 jobs.
Jackson is growing because of the region's skilled workforce and wellspring of scientific knowledge. "UC Davis is a terrific source of employees for us," Hewett said.
What's happening at Jackson speaks volumes about that complicated creature known as the California business climate -- and illustrates how the economy is evolving.
The state's undeniably high cost structure is creating gaping wounds in the job market. Comcast Corp. just announced it will close its California call centers; Campbell Soup Co. is closing its Sacramento plant. Campbell's shutdown is especially painful, eliminating 700 high-paying blue-collar jobs that will be difficult to replace.
That doesn't tell the whole story, though. On the whole, California is creating jobs faster than the national average. There are legions of companies that are prospering in the state, high costs and all.
Many of them are newer, "knowledge-based" companies that tend to rely on brains more than brawn. They make specialized products and provide services not easily duplicated elsewhere, such as the research mice with designer DNA produced at Jackson Laboratory.
The cost equation for these companies is different. They pay higher wages and don't have to watch their pennies as closely as, say, Campbell Soup. Like Jackson Laboratory, which is headquartered in Maine, they come to California because it's a state where technology thrives.
"There are very definite attractions that cause companies to start up or come to California," said Jock O'Connell, an economic consultant in Sacramento. "The companies that are attracted to California ... need a highly educated, technically oriented workforce."
Often these companies cluster together -- most famously in Silicon Valley, but also in places like the Grass Valley-Nevada City area, home to a group of companies that make sophisticated routers, which are the switchers for TV broadcasters.
One such company is Ensemble Design Inc., whose 50 employees include high school graduates and college-educated engineers. Customers pay as much as $5,000 for a piece of equipment the size of a paperback, and Ensemble president David Wood doesn't mind paying production employees as much as $24 an hour.
"Do people here make more than people in other places? Yeah," Wood said. "However, if we have done a good job stepping up to our role as an employer and provide them with the tools and the training ... they are worth that much money.
"I just don't go for the 'California's too expensive,' " Wood added. "But I'm not making cans of soup."
Manufacturing jobs fall
That's exactly the point: What's good for some companies isn't so good for others.
