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Sun Valley Firm to Leave, Citing High Price of State

Sun Valley Firm to Leave, Citing High Price of State By CARLOS MARTINEZ Staff Reporter Fitness Products International, a 26-year-old Sun Valley firm is leaving the state citing high costs of workers’ compensation insurance and an overall difficult business environment. “I’m a native Californian and I love the state and I would rather stay, but it doesn’t make sense as a businessman to stay here,” said Rick Wallace, company president and chief executive. The privately held firm is scheduled to leave its 50,000-square-foot Branford Street building for larger quarters in Las Vegas when its current lease is up on July 30. Wallace said he has asked all 120 employees to move with the firm to Las Vegas, but added that he was unsure how many would eventually make the move. “I hope everybody goes with us, but I probably expect between 40 and 50 percent of our employees to go with us. It’s not an easy decision for them,” he said. Fitness Products makes weight benches, weight lifting gym sets, barbells, weights and related products for commercial gyms. About 70 percent of its sales come from the United States with the remaining coming from overseas markets. Wallace said the company’s growing contribution to workers’ compensation insurance was the key to his decision to move his company. “Our workmen’s comp premium was $170,000 two years ago and now it’s $450,000, so it just doesn’t make much sense to stay,” he said, noting that he would pay just $95,000 for workmen’s comp in Nevada. “We really started to focus on Nevada last year. They have the federal minimum wage and they have caps on what it pays for certain treatments on workers’ comp,” he added. Saul Gomez, executive director of the Economic Alliance of the San Fernando Valley, said he fears more Valley firms will leave the Valley before state legislators can pass effective measures to curb rising workers’ comp premiums. “I know there are 21 measures proposed by legislators, but I don’t know if any one of those has the magic bullet that will cut these workers’ comp rates,” Gomez said. Although Fitness Products is operating in an Enterprise Zone, which gives businesses state credits to offset tax levies, Wallace said that was not enough to keep his firm in the Valley. “Costs there are lower, wages are competitive and the rents are 40 percent to 50 percent lower than we’re paying here in the West Valley,” said Wallace, who estimates the move will ultimately save him $750,000 over a one-year period. Founded in 1977 by Howard Briles and Karl Johnson, Fitness Products was acquired by sporting goods equipment manufacturer Voit which in turn sold the firm to an investment team made up of Wallace, Gene Lesnak, Russ Squier and Michael Ledesma. Wallace, who has three children and strong ties to the Sun Valley area, plans to move his family to Las Vegas.

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