city built around a 2.5-mile (4-km.) circular racetrack is speeding its way toward an economic development record that would make the City of Industry proud.
   Not as well known as the more industrial-sounding city to its northwest, Corona, Calif., is making a name for itself by attracting advanced manufacturing and other high-tech firms looking to flee the rising costs of Los Angeles and Orange County.
   Located in Riverside County where the 91 Freeway and Interstate 15 intersect, Corona is undergoing an "extreme makeover" that is rapidly transforming "The Circle City" from bedroom community into industrial hotbed. Since 2005, business expansions citywide are up 20 percent.
   "We are going through a huge expansion of industrial and manufacturing space," says Darrell Talbert, director of redevelopment and economic development for the city of 153,000 people. "If a company wants to reach the West Coast market and be close to the Alameda Corridor and have two-airport access and freeway access, Corona is the epicenter of that."
   A good example is Thompson Enterprises, which in the last six years relocated three of its major business units to Corona from Orange and Los Angeles counties.
   Late last year, Corona welcomed Thompson Door and Frame, a division of Thompson Enterprises, to a 65,000-sq.-ft. (6,039-sq.-m.) building. Including Omega Products International and Western Manufacturing, Thompson Enterprises' operations now occupy 300,000 sq. ft. (27,870 sq. m.) and employ more than 300 workers in Corona.
   "Corona's business climate, combined with its location at the confluence of the 91 and 15 freeways, has made the city a major business hub in Southern California," said Ken Thompson, president of Thompson Enterprises. "The city is attentive to the needs of businesses, recognizes that our growth is beneficial to the community, and is easy to work with."
   Thompson tells Site Selection that work force is a major draw. "Corona offers a diverse labor pool," he says. "From our line positions to management, we are able to recruit a quality work force that does not have to drive hours to get to work."
 
     Incentives, he adds, were not even part of the deal. "The city of Corona does not have to offer incentives to get businesses like ours to locate here," Thompson says. "Corona attracts business because it's geographically located at the center of Southern California, which provides great exposure. The city also has the quality of life and the labor pool we need."
   Christopher Celtruda, vice president and general manager of CIRCOR Aerospace in Corona, agrees. "We already have a 95,000-sq.-ft. (8,826-sq.-m.) plant here, and we are leasing a second plant of 35,000 sq. ft. (3,252 sq. m.)," he says. "We are moving some work from the city of Ontario into the new plant, which will come online by the second quarter of this year."
   When asked why CIRCOR is expanding in Corona, Celtruda notes: "For one, the cost per square foot of the space we are leasing is less than our current lease in Ontario. Two, we were able to find a property that is only a quarter-mile away from our current facility here in Corona. We will no longer have to shuttle parts back and forth. A lot of our employees already live in the Corona area."
   The $100-million company employs 280 people in Corona, and will add another 100 jobs as part of the expansion.
   Access to highly skilled labor was a driving factor, says Celtruda. "We manufacture precision products for the aerospace industry," he says. "Even the folks doing factory-level assembly work are paid fairly high on the wage scale. We also have engineers that do design work."
   He says it's not hard to convince people to move to Corona. "People who are passionate want to be part of this," says Celtruda. "We have hired people from Fortune 500 companies who are frustrated with bureaucracy and the slow pace of change. People here can dig in and really create something. With the growth trajectory we are on, a career here can be fairly lucrative."
   Talbert says the stories of Thompson and CIRCOR are not unusual. "Corona has a large labor pool and offers quality, quantity and cost attributes that are favorable to employers," he notes. "Plus, the residential market here has grown tremendously. People can play and work near the community where they reside."
   The 39-square-mile (101-sq.-km.) city has grown in population by 53 percent since 1996, while its crime rate has fallen by 52 percent. Today, more than 82,000 people work in Corona, where the median house price is $584,000.
   Corona is also home to some more well-known companies, including Hansen's Beverage, Monster Energy Drink, Fender Guitar and West Coast Customs.
   With all the growth, Corona still hasn't strayed too far from its heritage. As the circular track suggests, Corona remains a playground for all kinds of racing enthusiasts.
   "The automotive and motorcycle cluster really took off here because of our proximity to the Fontana Raceway," says Talbert. "As a result, we are now home to many after-market car parts manufacturers and race teams, and we are one of the centers for motocross. Most of the factory teams for motocross have practice tracks around our edges. They just keep coming, and that creates jobs. We are pretty happy with it."    Like the City of Corona, the State of California is undergoing an extreme makeover of its own, spearheaded by a governor who says it's time to get tough with the competition.
   Arnold Schwarzenegger became famous by playing an action hero called to save the world. As governor of California, he has taken on a new mission: terminating the efforts of neighboring states bent on feeding the wanderlust of Golden State businesses.
   While the governor's climate-control initiative and tax-relief efforts received plenty of media attention in 2007, a bill approved late last year in Sacramento may end up making the biggest impact on economic development efforts throughout the state.
   AB 1721 designates the California Business, Transportation and Housing Agency (BTH) as the lead economic development organization for the state and unites local and regional groups from around the state in a focused effort aimed at business development, retention, expansion and attraction.
   Just as importantly, the law gives California something it hasn't had for several years – a statewide economic development chief with authority and the backing of Sacramento.
   Brian McGowan, appointed by Gov. Schwarzenegger on Nov. 30, 2007, as the first deputy secretary of economic development and commerce in the BTH, says, "The governor wanted to reinvigorate the economic development efforts in California. It is a priority of the governor now."
   Working under BTH Secretary Dale Bonner, McGowan says his job "is to lead economic development efforts at the state level."
   Don't expect passive efforts either, McGowan tells Site Selection.
   "It's hard to compare California to other states. We're more like a nation," he says. "We are a lot bigger than other states. Everybody wants to pick a fight with us. Everyone loves to attack California. A big part of our push is to defend California and get the right perception out there about why it is such a great place to do business. It is also our goal to help existing businesses."
   The state may have fired its first shot across the bow last October, one month before the bill became law, when it persuaded a manufacturer to relocate to San Bernardino County from Henderson, Nev.
   Q.E.P. Co. Inc., which makes and distributes flooring tools and accessories for the home improvement industry, moved into a 30,000-sq.-ft. (2,787-sq.-m.) building on 5.8 acres (2.3 hectares) in Adelanto in the High Desert region of Southern California, bringing about 30 jobs across the state line.
   While it has been normal in recent years for California companies to leave the state for Nevada to lower their operating costs, Q.E.P. did exactly the opposite: It moved from Nevada to California to reduce its bill.
   "Being in Adelanto is going to be a lot more cost-effective for us," a spokesman for the firm told The Business Press in San Bernardino.
   The county offered no incentives to entice the move. It didn't have to, says McGowan.
   "Their CEO said they moved to San Bernardino County because the costs in Henderson were rising. They do a lot of exporting. By locating in Southern California, they have access to the Pacific Rim through the deepwater ports of Los Angeles and Long Beach."    McGowan promises that Q.E.P. won't be the last such relocation. Even as the Nevada Development Authority ramps up a new marketing campaign targeting California businesses, McGowan says that BTH is ready to fight back.
   "There are so many assets here," he notes. "There are more R&D dollars here than in any other state in the U.S. More Nobel Laureates live in California than in any other place in the world. Some of those companies that chose to leave California made a bad decision. They don't realize that California has changed."
   One big change, McGowan says, is workers' compensation.
   "Three years ago, we were addressing the workers' comp issue because everyone was complaining about it," he notes. "The governor implemented workers' comp reform, which decreased costs by 68 percent for all California employers. I don't hear any complaints about workers' comp anymore."
   The next step, he adds, is to address California's infrastructure – a step made easier by the passage of two landmark propositions: 1B and 1C.
   California voters approved both measures in November 2006, giving the state the authority to fund infrastructure projects needed to meet the demands of a population expected to grow by 9 to 12 million over the next 20 years.
   Most of that growth will occur in Southern California, a region that has 21.64 million people already, according to the California Department of Finance. The $37-billion Strategic Growth Plan bonds introduced by the governor will go toward transportation projects, public education and affordable housing.
   "Infrastructure is the governor's number one priority," McGowan says. "If we are to be competitive in the 21st century, we have to provide people with access to quality transportation, good schools and affordable housing."
   McGowan notes that California, the seventh largest economy in the world, exports more goods than any other state in the nation.
   "The only way to maintain that pace is with infrastructure, including grade crossings for roads and rail, to ensure efficient goods movement across California. Linking our airports is key – San Diego, LAX, Ontario International, San Bernardino International, Moreno Valley Airport and Southern California Logistics Airport in Victorville. Runways, roadways and railways connect all of Southern California to the rest of the world."
   The importance of that connectivity was highlighted in a recent report showing that the Ports of Los Angeles and Long Beach are responsible for one out of every eight jobs created in the five-county Southern California region.
   In 1996, the ports accounted for 259,100 jobs in the region. Today, the ports make possible more than 918,000 jobs region-wide, according to the study by Martin Associates in January.    Another study, conducted last fall, showed that international flights at Los Angeles International Airport (LAX) add $82.1 billion in total annual economic output.
   The study by the Los Angeles Economic Development Corp. (LAEDC) revealed that LAX flights created 363,700 direct and indirect jobs with annual wages of $19.3 billion in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties in 2006.
   An average 2006 transoceanic flight traveling round-trip from LAX every day added $623 million in economic output and sustained 3,120 direct and indirect jobs in Southern California with $156 million in wages.
   "The study shows that LAX is not only the region's front door for tourists visiting the region, but it's also the loading dock where local businesses ship their goods to the rest of the world," said Greg Freeman, vice president of economic and policy consulting for LAEDC. "More than 80 percent of the economic impact of overseas flights at LAX is generated by firms that take advantage of the international flights to export their goods."
   LAEDC President and CEO Bill Allen added, "This report is a real eye-opener for those concerned with job creation and retention throughout Southern California. With manufacturing, international trade and tourism being the largest employment sectors in Los Angeles County, it is clear that LAX plays a powerful role in the overall economy of the entire region."
   While media reports give some the impression that the Southern California economy is tanking, economists who monitor the region closely say the opposite is true.
   "If you look at our economic base – which relies heavily on foreign trade, the entertainment sector and venture capital – amidst the short-term downturn, the economic fundamentals of Southern California are not being affected," says Steve Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto. "There is no key industry getting slaughtered in the long term in Southern California. We have a pretty strong economic base going forward."
   Levy predicts continued growth for the region in both 2008 and 2009. "We look at the economic base. That is how we judge the future of this state," says Levy. "And the economic base of California is concentrated in high-wage sectors like foreign trade and logistics in places like Los Angeles and the Inland Empire. We serve as the financial center for Korea and the Pacific Rim."    Jack Kyser, chief economist for LAEDC, forecasts that the Los Angeles region's economy will grow by 1.8 percent in 2008.
   "We predict that Los Angeles County will have employment growth of 0.7 percent and an unemployment rate of 5.6 percent this year," he says. "The Riverside-San Bernardino area will have job growth of 1.4 percent and a jobless rate of 6.1 percent, which is very high. But that number could be revised downward. We are waiting on federal employment number revisions."
   Kyser notes that the industrial real estate sector in Southern California remains "very strong," especially in Los Angeles County, which has an industrial vacancy rate of 1.6 percent.
   "Major growth sectors in 2008 are travel and tourism. A lot of investment is being made in that sector right now," says Kyser. "Disney is spending $1.1 billion to upgrade its California Adventure theme park. Legoland is doing a $20-million expansion near San Diego. Universal is adding The Simpsons ride in Southern California. And international tourism benefits from the devaluation of the U.S. dollar."
   Kyser also points to a new "China syndrome" – a federal memorandum of understanding that makes it easier for casual travelers to come from China to the U.S. "They had to come in the form of study groups in the past. Now, you don't have to go through that charade," he says. "Los Angeles is already the number one entry point for Chinese citizens entering the U.S."
   Kyser predicts sold growth in business services, health-care services and technology. He also predicts, like McGowan at BTH, that more California companies will decide to come back.
   Since 2003, nearly 1 million new jobs have been created statewide, according to the California Employment Development Department. The American Electronics Association reports that, with more than 1 million high-tech jobs, California is the "No. 1 cyberstate in America."
   "You see firms moving back here. You especially see that trend increasing in creative activities like lifestyle and fashion design," says Kyser. "Southern California is the place those companies want to be. We have the attitudes and the international makeup of a diverse population. Plus, there are so many institutions for training people for global industries."
   The big gains should come in the technology sector, notes McGowan. "NASA spends $3 billion a year in Southern California – more than any other state including Texas and Florida," he says. "The NASA crew exploration vehicle, Orion, is being built in Palmdale in Southern California. Lockheed Martin is building the new vehicle for NASA as the prime contractor."
   Boeing expects to add 6,500 jobs in Long Beach to work on the C-17 Globemaster for the U.S. Department of Defense. "The C-17 is the workhorse aircraft of the military," says McGowan. "Those 6,500 jobs are direct jobs that will create lots of employment in other sectors. Many Boeing contractors are based in the Inland Empire."
   California leads the nation in spending on research and development. More than $3.2 billion, or 46 percent of all venture capital funding in the U.S. last year, was spent on R&D in the Golden State.
   "Stats like that separate California from all other states," says McGowan, who worked as an economic developer at the local level in Southern California for 14 years before joining BTH. "You can eat at a five-star restaurant or you can eat fast food. It costs more to eat at the five-star restaurant, but you get better food. Our message is that we are California and there is a reason why more patents are created here than in any other location in the U.S. This is where talented people want to live."