Havasu_Dreamin
09-11-2003, 06:58 AM
Ontario company plans Utah move
Business climate blamed
By JASON NEWELL, STAFF WRITER
Nearly 34 years after founding a plastic bottle manufacturing company with his father in Ontario, Kjeld Hestehave says he has no choice but to pack up and take his 100-employee operation elsewhere.
Blasting inept California lawmakers for creating a hostile business climate, the president of Bomatic Inc. will join an increasing number of small business owners to leave the state or risk going under.
"Basically, California is running us out of the state," he said, rattling off a list of legislative missteps that have hurt businesses across the state.
Escalating energy and workers' compensation costs during the last three years will force Bomatic -- one of the oldest local manufacturers of shampoo, water and food bottles -- to move at least one of its two manufacturing plants to St. George, Utah, next year.
After the state's energy crisis two years ago, Bomatic's monthly energy bills skyrocketed from $30,000 to $110,000. Workers' compensation, once $87,000 per year, now costs the company about $340,000 annually, with signals of another increase in sight.
In Utah, the electricity bill will be a little more than $15,000 a month -- about 15 percent of what the company now pays. Workers' compensation will drop to $30,000 a year.
With the move, the company becomes among the first of what some California economists fear may turn into a widespread trend of businesses opting for lower operating costs in other states.
"We're finding there is just incredible pressure on businesses on the cost side," said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp.
California businesses are not only dealing with the higher costs of energy and workers' compensation but also face a gloomy horizon of mandated health care, paid family leave, higher vehicle licensing fees and increased contributions to the Unemployment Insurance Fund, he said.
To this point, the situation has created a slow trickle of businesses fleeing the state.
"We're nervous that without some corrective action from Sacramento, the trickle could turn into a flood," Kyser said.
Bomatic is the first intact company to leave Ontario for a different state, although another went bankrupt, then re-formed and moved to Arkansas, said Mary Jane Olhasso, the city's economic development director.
Companies are choosing to stay in the city because of the costs and hassles of leaving and because of Ontario's competitive rent prices, she said.But the state's business climate has made it more difficult to attract new companies to the area, she said.
For Hestehave, the move means he will no longer have to struggle just to break even. Were it not for anti-business legislation, he said, the company would have made hundreds of thousands of dollars each of the last few years.
Editorial: This is what the current administration has done to the small businesses in this state. Without a change in the way of thinking and how business is done in Sacramento this will only get worse! And BustYOURTAXESmante is nothing more than a Davis clone!
[ September 11, 2003, 07:59 AM: Message edited by: Havasu_Dreamin ]
Business climate blamed
By JASON NEWELL, STAFF WRITER
Nearly 34 years after founding a plastic bottle manufacturing company with his father in Ontario, Kjeld Hestehave says he has no choice but to pack up and take his 100-employee operation elsewhere.
Blasting inept California lawmakers for creating a hostile business climate, the president of Bomatic Inc. will join an increasing number of small business owners to leave the state or risk going under.
"Basically, California is running us out of the state," he said, rattling off a list of legislative missteps that have hurt businesses across the state.
Escalating energy and workers' compensation costs during the last three years will force Bomatic -- one of the oldest local manufacturers of shampoo, water and food bottles -- to move at least one of its two manufacturing plants to St. George, Utah, next year.
After the state's energy crisis two years ago, Bomatic's monthly energy bills skyrocketed from $30,000 to $110,000. Workers' compensation, once $87,000 per year, now costs the company about $340,000 annually, with signals of another increase in sight.
In Utah, the electricity bill will be a little more than $15,000 a month -- about 15 percent of what the company now pays. Workers' compensation will drop to $30,000 a year.
With the move, the company becomes among the first of what some California economists fear may turn into a widespread trend of businesses opting for lower operating costs in other states.
"We're finding there is just incredible pressure on businesses on the cost side," said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp.
California businesses are not only dealing with the higher costs of energy and workers' compensation but also face a gloomy horizon of mandated health care, paid family leave, higher vehicle licensing fees and increased contributions to the Unemployment Insurance Fund, he said.
To this point, the situation has created a slow trickle of businesses fleeing the state.
"We're nervous that without some corrective action from Sacramento, the trickle could turn into a flood," Kyser said.
Bomatic is the first intact company to leave Ontario for a different state, although another went bankrupt, then re-formed and moved to Arkansas, said Mary Jane Olhasso, the city's economic development director.
Companies are choosing to stay in the city because of the costs and hassles of leaving and because of Ontario's competitive rent prices, she said.But the state's business climate has made it more difficult to attract new companies to the area, she said.
For Hestehave, the move means he will no longer have to struggle just to break even. Were it not for anti-business legislation, he said, the company would have made hundreds of thousands of dollars each of the last few years.
Editorial: This is what the current administration has done to the small businesses in this state. Without a change in the way of thinking and how business is done in Sacramento this will only get worse! And BustYOURTAXESmante is nothing more than a Davis clone!
[ September 11, 2003, 07:59 AM: Message edited by: Havasu_Dreamin ]