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Japanese High-Tech Companies Flock to California

Despite its well-publicized problems over the past few years, California continues to be a place where companies can grow and prosper.

  [ 7/8/1997 ]  By: Bill King   Print This Article  Reprint/License This Article  E-mail This Article To A Friend  
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The Victor Company of Japan, Ltd. (JVC) opened its new $35 million manufacturing facility in Elk Grove -- just south of Sacramento -- in early June. The Elk Grove facility will be one of the first locations in California where cutting-edge Digital Video Disc (DVD) technology is produced.

"I'm delighted that high-tech giant JVC has chosen to expand in California, the high technology capital of the world," said Gov. Pete Wilson. "Their actions speak to our revitalized business climate and the significant economic reforms we have enacted since 1991."

Since opening its doors as a manufacturer of records and phonographs in 1927, JVC has been a longtime leader of hardware and software development in the audiovisual field.

"Our Sacramento manufacturing facility will serve JVC's DVD customers all over the world," said Takeo Shuzui, president of JVC. "The tremendous cooperation we found among the public and private agencies involved in our recruitment was very impressive and was a very significant factor in our decision to locate in this community."

Last month's expansion was the culmination of three years of work by state and local economic development professionals. The process began in June 1994, when JVC contacted the California Trade and Commerce Agency for assistance with its West Coast investment project. Competing with an alternative location in Nevada, a "Red Team" was formed to provide assistance on site location and tax incentives, as well as to organize negotiations to address JVC's utility and incentive issues.

JVC is not the only Japanese company investing in California.

House Foods Corp., one of Japan's leading food product manufacturers, recently opened a $25 million plant in Garden Grove. The 130,000 square foot facility produces a variety of products, including spices, oils, sauces, snack foods and Japanese-style fast food products. The company broke ground on the 130,000 square foot plant nearly a year ago.

The investment was facilitated by the Trade and Commerce Agency's Office of Foreign Investment, and the International Trade Office in Tokyo. A Trade and Commerce Agency "Red Team" worked with local government in working through infrastructure and permitting issues to ensure the expansion occured in California.

JSR Microelectronics, Inc. a subsidiary of Japan Synthetic Rubber, Ltd., recently opened a $35 million photoresist solution manufacturing facility in Silicon Valley. Photoresist solution is a specialty chemical used in the manufacture of semiconductors.

As with House Foods, a Trade & Commerce agency-led Red Team was instrumental in ensuring that the various issues relating to the expansion were quickly addressed.

Japan continues to be California's biggest trading partner, with California exporting more than $16.5 billion in goods to Japan last year.

California Gains in Fortune 500 List
Despite its well-publicized problems over the past few years, California continues to be a place where companies can grow and prosper.

There are now 58 Fortune 500 companies headquartered in California, according to the magazine's newest ranking of the largest industrial and service corporations in America. The Golden State continued to gain on New York, to the point where it is now within three companies of surpassing New York as the home to more Fortune 500 firms than any other state.

Among the several new California additions to the list is Santa Ana-based Ingram Micro, the largest worldwide distributor of computer technology products and services. Company revenues grew more than 33 percent from 1995 to more than $12 billion in 1996.

Cisco Systems, the largest computer networking company in the nation, logged in with $4.1 billion in annual revenues last year. The San Jose-based company saw revenues rocket 32 percent in 1996.

Sun Microsystems recently purchased an 82-acre parcel in Santa Clara for a planned one million square foot research and development complex. The new campus is part of an aggressive expansion in California that will add up to 4,000 new jobs over the next several years.

Intel Corp. announced earlier this year that its "FM-6" research facility in Folsom will add 1,200 jobs by 1998. Intel has expanded five times in California since 1992 and now employs 10,000 people in the state.

Regionally, the greater Los Angeles area is home to 24 Fortune 500 companies, including Atlantic Richfield Corp., the Walt Disney Co. and Occidental Petroleum. The San Francisco/Oakland area has 13 headquarters, including Chevron, BankAmerica Corp., PG&E and Wells Fargo & Co., while Silicon Valley features 12 companies, including Palo Alto-based Hewlett-Packard, Seagate Technology and Sun Microsystems.

California also leads the nation in growth companies, according to Business Week magazine. The state is home to 25 of the country's hottest 100 growth firms, according to the magazine's survey.

One of those companies is Irvine-based Powerwave Technologies, which designs and manufactures radio-frequency power amplifiers for wireless networks.

"California's business climate, and the availability of skilled, quality labor, are major engines which have helped drive Powerwave Technologies' rapid growth," said Abbey Kassinove, manager of Marketing and Communications for Powerwave Technologies.

California exports of manufactured goods in 1996 broke the $100 billion mark for the first time in the state's history, totaling $104.5 billion. Exports from California rose 8.16 percent, from $96.6 billion in 1995.

California's leading export sectors continue to be electronics and electronic equipment (up 5.13 percent), industrial machinery (up 16.59 percent), specialized instruments (up 17.57 percent), transportation equipment (down 4.73 percent), and agricultural products (down 5.52 percent).

Deregulated utilities mean lower costs
California is continuing to reduce the cost of doing business in the state.

On May 6, 1997, the California Public Utilities Commission (CPUC) unanimously voted to open California's electrical market to free-market competition beginning January 1, 1998. Utilities around the U.S. have been given permission to begin marketing themselves to California customers beginning July 1, 1997.

With this action, California becomes the first state in the U.S. to open its electricity markets to unrestricted competition. As a result, electricity costs are expected to fall by at least 20 percent for large and medium-size companies, as well as for individual customers and small businesses. Up to this point, California has had among the highest electricity rates in America.

"Reductions in electric rates add another vital economic development tool in which to lure new business to California," said Bill Campbell, president of the California Manufacturer's Association. "There is no doubt that direct access to electric rates will allow business to purchase power more economically. That increases a company's bottom line."

This unprecedented action is the latest in a series of steps California has taken to lower operating costs for businesses operating in the world's seventh largest economy.

Last year, the state cut its Bank and Corporation taxes by 5 percent. A proposal to cut these rates another 10 percent is currently progressing through the legislature with bipartisan support. California also recently expanded its Research and Development tax credit to 12 percent, making it the largest in the U.S. Recent reforms to the workers' compensation system have already saved employers more than $4 billion, with average premiums falling 40 percent.

The CPUC decision accelerates the timetable established by the legislature to deregulate the utility industry. What was scheduled to be a five-year transition now takes immediate effect, bringing relief to consumers as soon as next January.

State markets closed military bases
California recently joined with the California Defense Facilities Marketing Association an organization comprised of facilities and communities affected by defense downsizing to launch a three-year, $1 million campaign to showcase the economic development opportunities of the state's 19 closed military bases.

The campaign, titled The Great California Land Grab, will attempt to generate 500 leads this year that will be given directly to the specific bases for response.

Target industries include motion picture production, general light industry, general back office, aircraft maintenance and repair, fabricated metal products, plastics products manufacturing, wholesale distribution and warehousing, computer and communications equipment manufacturing, and cargo airlines and express package shippers.

The facilities compare favorably with alternative locations. Characteristics such as low occupancy cost, access to transportation arteries, close proximity to the enormous California market, and the availability of both skilled and unskilled labor, are often determining factors cited by businesses when making investment decisions.

 

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