States make power plays in California

Md. joins others in attempts to woo companies away

`Been under attack before'

Energy crisis opens an opportunity for development agencies

April 29, 2001|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

At a recent conference of computer game developers in San Jose, Calif., Barry Brown encountered what you could call a fortuitous moment.

While making his come-to-the Free State pitch to lure a Silicon Valley software company to Maryland, the lights suddenly dimmed in the convention center. Without missing a beat, Brown said, "We have plenty of power, too."

It's a message that Brown's employer, the Maryland Department of Business and Economic Development, and his counterparts in other states are selling to California businesses these days as the Golden State suffers through high electricity prices, rolling blackouts and bankrupt utilities. From Baltimore to Spokane, Wash., cities and states across the country have pounced on California's energy crisis by launching aggressive campaigns targeted at high-tech companies in a bold attempt to draw them away from the power-starved state.

In the last four months, Maryland economic development officials have traveled to California nine times to meet with corporate chief executives. The Tennessee Valley Authority mailed about 1,000 flashlights to California businesses with the note, "The lights are always on in Tennessee." Raleigh, N.C., sent 9-volt batteries as bait, and Minnesota bought a huge billboard on Highway 101 near San Jose International Airport that simply said, "White Outs - Occasional. Black Outs - Never."

"We've always focused on California, but nine corporate calling missions in a four-month period is very, very high," said David S. Iannucci, Maryland's secretary of business and economic development. "That's very aggressive for this state. We've always told them that Maryland ranks first among states in the percentage of technically and scientifically skilled workers and that no state can match the federal laboratories found here. The cost of living is tremendous, housing is affordable and the quality of life offers what a company needs to attract young, trendy, tech workers.

"Now you add to that our clear energy advantage," Iannucci said. "A year or six months ago, we probably would not have raised the energy issue at all, but now we're quick to point to it. It's priority for businesses these days."

It's also an issue that probably won't soon go away because analysts predict that more rolling blackouts will hit California this summer. With a 40 percent rate increase approved by state regulators last month and few power plants coming on line soon, that means more service interruptions and still higher prices for residents and businesses.

As a result, several California businesses have had to scrap expansion plans, lay off workers and miss production deadlines and quotas.

But California's crippling misfortune has proven to be an attractive opportunity for others.

"This is not a natural disaster, not an earthquake or a landslide or a volcano," said Kenneth M. Atkins, executive director of the Wake County Economic Development Program at the Greater Raleigh Chamber of Commerce. "It's a man-made problem and an issue they brought upon themselves. We feel like it's very much within our rights to let some of those decision-makers know about what we have to offer."

So the $400 Raleigh spent on the batteries, letters and postage was worth every penny, Atkins said, especially since four California businesses have responded positively.

In response to the vultures circling his state, Lon S. Hatamiya said he's not expecting a mass exodus anytime soon.

"This is not a new occurrence for California," said Hatamiya, secretary of the state Technology, Trade and Commerce Agency. "People are always trying to take shots at California. We're the sixth-largest economy in the world. We're the No. 1 exporter in the country. We've been under attack before.

"But none of this has deterred California from development in the past. We believe we're up to it, and after we face this challenge, we'll be stronger for it. We believe as California goes, so goes the nation. So these other states should be hoping things improve here soon."

But it's not just one-sided.

With electricity deregulation plans looming or started in several states, businesses are quick to ask states whether they can offer enough energy in the future to meet company demands.

What used to be one of the top 20 questions a business might have asked before expanding or relocating to a new state is now one of the top five, according to economic development officers and corporate location consultants.

"Clearly, when you're having brownouts, it makes you stop and think," said Duffy D'Angelo, vice president of commercial real estate specialists Colliers International in San Jose. "I don't think anyone would make a decision solely on the energy issue, but if you are considering a move, certainly, it's a question that's on the table."

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