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Thursday, Mar 28, 2024

More Red Teams Try to Stem Flow Of Business Exits

More Red Teams Try to Stem Flow Of Business Exits By SLAV KANDYBA Staff Reporter Some call it the “red team,” but Bruce Ackerman, president and CEO of the Economic Alliance of the San Fernando Valley, refers to it as the “A-team.” He’s talking about the group of city government officials, representatives of utility companies and others who are dispatched whenever a business is considering expanding outside of California or completely moving out of the state. On some occasions, “red teams” are assembled when multiple companies are trying to attract business from the federal government or another entity. Over the past several years, the number of “red teams” assembled has been on the rise, as businesses, especially in the manufacturing sector, have left the state or are contemplating leaving. But they have been successful only half the time, according to officials, because local authorities cannot address state-level issues such as workers’ compensation, rising healthcare costs or high utility bills. The Los Angeles County Economic Development Corp., the county’s business retention arm, conducted a survey last year of all 25,000 companies in L.A. County with more than 25 employers to identify specific business climate issues and “things that were encouraging them to relocate,” said Greg Whitney, vice president for business assistance at LAEDC. The survey helped to identify specific companies who were most determined to leave, and LAEDC assembled 90 “red teams” throughout L.A. County. Thirty of those are still active, Whitney said. The number of the “red teams” assembled has been higher in the last few years, in general, he said. Members of a “red team” are determined on a case-by-case basis, although an LAEDC regional manager, local officials and utility companies’ representatives are usually included. Whitney said LAEDC is involved with about 250 projects requiring “red teams” per year, and “on an annual basis we succeed on about 110.” The retention and expansion projects can take anywhere from several weeks to several months, he added. “My professional opinion would be that we’re more successful at keeping projects than we are at recruiting projects,” Whitney said. Whitney said the “red team” received its name during former Gov. Pete Wilson’s administration, after an aerospace industry term to address high-priority, fast-turnaround projects. Eight years ago, an extensive “red team” was put together when local companies vied for the bid to build a space vehicle to replace the space shuttle. Standard practice Whitney, who has been involved in economic development for 30 years in four different states, said “putting a project together to save a company is relatively standard economic practice.” One of the more high-profile “red team” efforts in the Valley has been last year’s effort by City Councilman Dennis Zine to prevent the Boeing Co.’s Rocketdyne Propulsion & Power from leaving Canoga Park for Huntsville, Ala. It turned out to be a false alarm Rocketdyne stayed put but officials from the Economic Alliance and the United Chambers of Commerce were involved and the efforts made headlines. Ackerman was involved with the Rocketdyne “red team,” as well as another effort that was able to prevent a fitness equipment manufacturer from leaving Sun Valley. The owners of that company eventually sold their business, but it still remains in the Valley. “We’ve got a 98 percent success rate,” Ackerman said about his experience on red teams. Speaking on a cell phone, he was on the way to Santa Clarita, where he was scheduled to meet with a company that is considering expanding out-of-state. Citing confidentiality, Ackerman did not identify the company. “If we can get involved and they call us in earlier, our odds are really, really good,” Ackerman said. “A lot of times (company executives) haven’t thought of the things that we know well. We can’t do anything about unemployment insurance rates, but if they can save some money here and there, the bottom line is that it makes a difference.” Ackerman said his participation in “red teams” for business retention increases in a weaker economy. “When it’s going fast, we do more recruiting. When it’s slowing down, we do more retention,” Ackerman said. Long list Currently, “the number is twice as much,” Ackerman said, adding from the LAEDC survey, he had about 300 companies to contact. “We’re not just waiting for the calls to come in,” he said. Sitting beside Ackerman in the car on the way to Santa Clarita was Alex Rosas, the LAEDC’s Valley regional manager. Rosas said he was currently involved with three “red teams,” including Poly-Tainer Inc. in Simi Valley and another Simi Valley manufacturer in addition to the Santa Clarita company. The Simi Valley companies are looking to relocate. “Have you had a need for more ‘red teams’ lately I would say ‘yes,” Rosas said. “All these companies are planning to move out of state.” Roberto Barragan, president of the Valley Economic Development Center, has also been involved in a number of “red teams,” including one that helped retain Oh Boy Foods in Pacoima, which was under pressure to close down, he said. Over the past several years, Barragan was involved in about six “red team” efforts altogether and he is not exactly a believer that they work. “When a red team is brought in, it’s too late,” Barragan said. “The red teams are more of a reactive approach than a proactive approach. Most decisions to relocate a company are months or years in the making. “Red teams are useful tools, but government and business has to be more proactive as opposed to running and saying ‘the sky is falling,” Barragan said. “It makes for good press, but it has limited effectiveness.” Code Red “Red teams” dispatched 2003: 250 Success ratio: 50 percent Average length of time: Several weeks to several months Members: Varies; typical members include an LAEDC regional manager, local economic development officials, and utility company representatives Source: LAEDC

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