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HomeMy WebLinkAboutWorkshop ~ ~~~~- ~ J 1~ - ,0 o tD ~ o .. 'D o n D l." o =0 [ l [ [ [ [- [ The Greater Los Angeles World Trllde Center Association THE CITY OF SAN BERNARDINO INTERNATIONAL BUSINESS RECRUITMENT AND RETENTION NEEDS ASSESSMENT PHASE I PREPARED BY: THE GREATER LOS ANGELES WORLD TRADE CENTER ASSOCIATION NOVEMBER 25, 1991 - .- - ( , THE CITY OF SAN BERNARDINO INTERNATIONAL BUSINESS RECRUITMENT/RETENTlON NEEDS ASSESSMENT PHASE I ,,,.', "'" ,,- ,... ".. ... .. .. .. . .- - - .. . I .. .. .. .. , ..' - - - '. - .. - , .. .. .. - .. .. .. I .. -' .. .. .~ TABLE OF CONTENTS PAGE TABLE OF CONTENTS 1 EXECUTIVE SUMMARY 2 GENERAL OBSERVATIONS & RECOMMENDATIONS 7 THE NEXT STEP - PRELIMINARY ACTION PLAN 9 ATIACHMENTS Working papers: Successful cities Attachment I Working papers: Foreign investors Attachment 2 Working papers: Private sector survey Attachment 3 Working papers: Support services Attachment 4 Contacu and interviews Project team biographies Attachment 5 -1- - - .. i. f ". , .- -. - - .. . ... . '... .. .. . II ... III ... ... ... ... .. III l'- j:.' . "" .. ~"" III ... .. "" .. ... - I .. .... .. "" ~ THE CITY OF SAN BERNARDINO INTERNATIONAL BUSINESS RECRUITMENTIRETENTION NEEDS ASSFSSMENT PHASE I EXECUTIVE SUMMARY In order for San Bernardino to fully develop its economic potential it must now look beyond local and domestic investment. San Bernardino must look to the growing global economy for its expansion. The purpose of this needs assessment is to establish a solid foundation from which the City of San Bernardino can attract and retain international business, which will result in the creation of jobs and an expanded tax base for the people of San Bernardino. Phase I of this needs assessment evaluates the current private sector environment in San Bernardino, identifies the resources available to support the expansion of international business, describes trends in investment, and develops criteria and a preliminary outline for "internationalizing" the San Bernardino economy. Future phases of this project will focus on implementing a strategic program to support the expansion of international business in San Bernardino. The following is a summary of the findings and recommendations of Phase I of the needs assessment. WHAT MAKES CITIES SUCCESSFUL IN RECRUITING AND RETAINING INTERNATIONAL COMPANIES Before initiating an international business development program it is important to review what other cities have achieved. Some cities have designed and implemented very successful strategies to recruit and retain international business. These same cities have succeeded in capturing foreign investment. While each city is different, they all share the same fundamental philosophy. Perhaps most important, these cities have made a clear and strong commitment to developing their community, and have adopted a realistic strategic plan. All successful cities have a clear plan and stick to it. They are also honest about their strengths and .weaknesses. They have strategically invested in the infrastructure they need to implement tlieir strategic plan such as sewers, water, streets, highway access, rail spurs, airports, business parks, or museums and stadiums. -2- - .. i_ - ( - ifl!t; .Jt., .. .. .. .. 110 .. . " .. III . R1 .. 110 .. - ~ , .,.' .. .. rill .. .. 110 !P 110 .. 110 '" 110 III 110 , III .' 110 ,.. . 110 By consolidating their operations, successful cities have made it easy for international companies to conduct business in their city They have created "one stop shops" for economic development. In implementing their goals, these cities have taken a very targeted approach to recruitment -- they identified what they wanted and went after it using strong information networks and a customized approach to meet the needs of each potential international company. When it comes to offering financial incentive programs nearly all successful cities downplay its importance, focusing instead on an overall good business environment, such as the tax climate, cost of living, land costs, lease rates, and utility rates. While all cities need a certain amount of promotional material, the successful ones do not over-emphasize or depend on fancy print materials to attract companies. They focus instead on the strategic information a company needs most to make its decision. Again, a customized approach based on business and economics, not merely public relations. Their economic development advocates and negotiators know their city and are serious about business recruitment. Finally, and most important to international business recruitment, successful cities committed for the long haul. They laid foundations with the targeted business community and nurtured relationships over a period of many years. They did not expect instant results. Criteria used by successful cities to attract international business are described in Attachment 1. CURRENT TRENDS IN INTERNATIONAL BUSINESS LOCATION International companies may locate in San Bernardino from virtually every part of the world. Some regions of the world, such as Asia and' North America are, however, more likely targets for San Bernardino in the near term. Therefore, we have focused on the trends in these regions. It is dangerous to paint a broad brush picture of an entire culture. However, in response to the City of San Bernardino's request that we contact foreign companies and review general business trends, we provide the following summary recognizing that these comments are very broad and general in nature. Japanese investment is entering a more mature second generation stage that is based on a deeper understanding of the U.S. market. There is a high level of dissatisfaction about Los Angeles as a venue for manufacturing among Japanese companies, and Japanese companies looking to expand outside Los Angeles may be better -3- - c'" ;- ( . 'e " -- !OW - '. ~ IIlo !II .. ... .. '" . fJ '" .. .. -. , .. .. .. t!"' .. .. .. !'. .. .. IIlo .. .. .. .. I ... .' .. P lot targets for San Bernardino than first time investors from Japan. The Japanese highly value their educational system and want above all a Japanese school for their children. Japanese expatriates wish to keep their children "in the Japanese system" during 3-5 year postings in the States. While Korean investors are verv different people from Japanese investors, they have tended to follow the Japanese model for business. Therefore, they may be persuaded by many similar strategies as those used for the Japanese. However, it is critical that Korean investment targets never be grouped with Japanese marketing efforts. The education of Korean children is also an important part of business decision-making. Taiwanese speculative real estate investment has slowed slightly and few Taiwanese companies have the clout or interest to establish manufacturing facilities in Southern California. Canadian firms may be important investment candidates for San Bernardino because of their desire to reduce transportation costs from trucking products from Canada's east coast and Great Lakes manufacturing hub to California. Warehousing and distribution capability may be an important "card to play" in the case of Canada, especially as it relates to Canada's emerging trade relationship with Mexico. Reform of the Mexican economy and the impending North American Free Trade Agreement creates a special opportunity for San Bernardino to develop international trade related business with Mexico. Changes are occurring rapidly and the situation should be monitored continuously. Likewise, the growth of certain South American economies as a result of debt re-structuring and new trade alliances will hold promise for cities with experience in conducting business in Latin America. Many large European companies are consumed by the new European trade arrangements for 1992. German companies are preoccupied by the East German situation. Eastern Europe and the Soviet Union pose special problems and opportunities. There is a certain amount of dissatisfaction with Los Angeles among large European companies as a place for manufacturing. The lifestyle problems of San Bernardino, principally air pollution and lack of executive housing, may deter much interest in San Bernardino by large numbers of European companies. A general description of trends in location decision-making by international companies, and comments by the companies surveyed, are contained in Attachment 2. -4- ~ f , , .~, . .- .... m lOt .. .. ... .. ... . ... . . ... .. ... " .. , .. ... .. r iIa ... .. J"" .. .. ... .. .. "" .... ( . .. . "" ., THE CURRENT INTERNATIONAL BUSINESS SITUATION IN SAN BERNARDINO There are fewer than 20 companies in San Bernardino that appear to be doing business, or are well positioned to do business, internationally. While this is not a large number, there is some track record for success. San Bernardino has two Japanese-owned manufacturing facilities, C&M Finepack and J&V Foam Products. These two companies employ a total of 213 people. While generally considered to be "international companies" neither of these operations produces any products for export. Also, the new Lockheed Commercial Aircraft Center (LCAC) has a Japanese minority equity partner, Japan Airlines. While no specific products are produced for export by the LCAC, the services performed and replacement parts installed are, technically, exports. And, the Maruko Hotel represents Japanese ownership. There has also been a substantial amount of speculative land investment made in the San Bernardino area by Chinese (Taiwanese and Hong Kong) investors. However, these investments do not appear to be specifically targeted for future international business in the area. And, while there are a large number of Koreans living in San Bernardino, none of these residents appears to own any manufacturing or exporting business of significant size. Four conclusions can be drawn from our existing business survey. First, San Bernardino has already proven that it can be attractive to Japanese businesses wishing to locate in the area. This past success points to the possibility for future success in attracting Japanese businesses who are in similar industries or who require similar attributes to those of San Bernardino. Second, one of San Bernardino's key strengths, the Norton Air Base, can successfully attract business which has an international aspect to it. Third, a small number of companies have demonstrated an ability to conduct business internationally from San Bernardino. And fourth, San Bernardino has significant excess capacity to increase the number of international businesses in the community. Results of our survey of private companies are contained in Attachment 3. WHAT RESOURCES EXIST TO SUPPORT THE NEW INTERNATIONAL BUSINESS COMMUNITY To recruit and retain international companies it is important that an "international trade infrastructure" be in place. There are a wide range of public and private agencies and organizations in Southern California which can assist the development of international business for San Bernardino companies. However, many of these organizations are not located in the Inland Empire, most -5- ,-"" - f . ..l~' , , -"" ... - - .. !II .. &. . "" . :1 . .. !II . ... Ii fill' . .. "" c-' ~, .. "" .. ,... .. ... .. ... .. "" .. ( .. -- .. ... . . often they are in Los Angeles or Orange County. These agencies and organizations range from the U. S. Department of Commerce to organizations at the state, county and local level. Many private sector organizations exist, but such organizations have yet to truly take hold in the Inland Empire. The service structure for international business, international banks, accounting firms, law firms, customs brokers, and freight forwarders, which normally grow in line with an international trade community do not as yet exist in San Bernardino. San Bernardino importers and exporters must still go to Los Angeles for these important business relationships. In the current recessionary economy, San Bernardino cannot realistically expect to attract these services until local demand has grown. In the meantime, the City of San Bernardino may be required to play an interim liaison role between local companies and the existing international trade structure in Los Angeles. While there are organizations set up at the county and local levels to help promote international business acti vi ty, these programs are generally not comparable to the State and Federal programs. This vacuum may present a special opportunity for San Bernardino to meet the needs of the community. For example, San Bernardino may wish to establish itself as the clearinghouse for international activities, or coordinate efforts underway in the region. A description of support services for international businesses is contained in Attachment 4. A list of companies and individuals interviewed for Phase I of this project, and a description of the project team staff is Attachment 5. -6- GENERAL OBSERVATIONS AND RECOMMENDATIONS 1. San Bernardino should clarify that it is seeking international compani.s, not just foreiqn investment. Foreign investment outside the United states. business. is simply capital that originates I.t ,does not mean international International business means companies that are doing business around the world, whether importing or exporting. Companies that are not solely dependent on their success in selling to or buying from the United states. Foreign investment can be a sub-set of international business. - We believe it is critical for San Bernardino to recruit and retain international businesses, whether capitalized with foreign or domestic funds. Why? Because San Bernardino needs to attract companies that are going to be successful in the long run. We believe companies that operate only in the United states run the risk of failure. Companies that are participating in the global economy hold the best prospects for long term growth. Make sure you pick winning companies to partner with in the future. 2. Watch transportation trends carefully, Your international future depends on it, The future of San Bernardino's ability to attract and retain international companies will be greatly affected by changing transportation patterns. Changes are occurring rapidly, both within the industry (ie. "Just In Time" deliveries") and physically (ie. commuter rail). San Bernardino is in an excellent position to attract and retain transportation dependent industries but must become more active in monitoring, and directing, how transportation impacts the City. We recommend that you become an active participant in discussions about the "Inland Port" concept, which is considered a way of handling increased waterfront port activity without expanding on adjacent land and sea. Rather than having cargo rest at the ports of Long Beach or Los Angeles, where it occupies valuable land, cargo would be transferred directly from vessels to trucks/rails and moved to a location in the Inland Empire where it would rest before further handling. -7- "'" .liIt , . ,,", " "I'" ... .. .. .. ... .. J. .. - .. ~I . . - .. .. , ,.. . .. ... !l '. .. .. 'II" . - - - .. ... ... , . ~ .. ... .. - We believe it would be worthwhile to evaluate the expansion of ontario International Airport's international cargo handling capabilities relative to the re-use of Norton AFB and the "Inland Port" concept. Ontario's primary function as a passenger airport may preclude it from capturing all, or a majority of, air cargo handling and distribution opportunities. While the future of Foreign Trade Zones (FTZs) in the Inland Empire is uncertain, it is worth monitoring the situation in Ontario. Also, it is worth tracking discussions surrounding Centralized Examination stations (CESs), as mechanisms for moving cargo away from ports and bringing cargo to customs inspectors in the Inland Empire. We encourage you to ensure that efficient commuter rail reaches San Bernardino. When industry moves to San Bernardino, not all employees will wish to live in or around the city. Efficient commuter rail service from Los Angeles and Orange County is critical. The city must make sure that the SANBAG/LKATC plan for commuter rail is implemented. 3. pay close attention to global business trends Offshore manufacturing will continue during the 1990s for many industries. Accept that San Bernardino may not be able to compete for low cost manufacturing plants with Mexico and Southeast Asian nations, and determine which higher value-added functions can be handled in San Bernardino. San Bernardino is perfectly positioned, geographically, to benefit from increased trade between Canada, Mexico, and the United States. There are many opportunities to tap into business expansion in Latin America, the re-integration of the European Community, the growing southern Pacific Rim (ie. Australia), and throughout the world. Watch the trends so that you are "in the right place at the right time" as a result of strategic positioning and a long term perspective, resulting in a competitive advantage. Money generally follows the family and immigration trends play an important role in the development of international business. Build strong networks within the various culture and ethnic organizations in San Bernardino. These may be your most important strategic alliances. The days of waiting for international investment to arrive on the doorstep -- simply because Los Angeles is growing --are over. Competition for capital is fierce. San Bernardino is well located, has a good infrastructure, and a pro-business government. By working smarter and harder than other cities, San Bernardino can create its own international future. -8- - I , ,';" , ,; illolio ,or .. .. .. .. .. ~ .. .. .. J~ - .. .. .. , .. .. ... .. tJ ... .. .. "'" .. .. ... .. .. .. .. I " - - .. .. .. TIlE NEXT STEPS - A PRELIMINARY ACTION PLAN 1. Make sure ~ you want to attract international !lusineas, make the commitment, and then don't let up until you aucceed. There is a difference between general development and foreign investment, attraction/retention of international Understand the difference. economic and the business. Commit to the long haul. There have been previous efforts to promote and attract international business. Programs have come and gone. International business-people have long memories. Be sure you make a commitment that transcends political terms. Don't begin a program if you are not able or willing to provide long term continuity and commitment. Carefully define what "success" really means to the City of San Bernardino. Build and assess the recruitment and retention program against this definition. 2. Make a good plan. Set realistic goals and a clear implementation plan with time-lines and budgets. Don't put all your eggs in one basket -- Norton AFB. While Norton is an exciting opportunity, it will require years to consummate. Norton AFB should be a component of the plan, but the plan must stand alone and be functional outside of this major re-use project. Take an honest look at San Bernardino. Emphasize the positive but don't ignore the problems. Tackle the problems head-on, explain the steps you are taking to solve the problems, and project realistic time-lines for resolution of the problems. Be clear about who is in charge. Have one individual responsible for implementing the plan who has the authority to negotiate with companies. Be sure not to continually "change horses mid-stream." A, Plan to "grow" existing companies to international. You don't have many, but you do !lecome -9- I .~.. ,.., ... ""' - ""' - ),. B. .. - ... .. .' ""' ... - ,.. , . - - - , ... - ... ~""' - ""' - - ... ""' .. ( .. . ... ... ... have a few companies that are well positioned to expand internationally. Make it a priority to help them "grow their business" abroad, and remain and expand their operations in San Bernardino. For example, identify 10 companies that you will target. Meet with them individually to understand their business and what benefits San Bernardino might derive if these companies expanded, ie. more jobs, more taxes. Identify actions the City could appropriately take to support these companies. Use these companies as examples and "case histories" when recruiting new companies. Plan to recruit new companies and be very targeted, Set criteria for the kinds of businesses you want in San Bernardino and go after them. Thoroughly research the companies before you begin so that you don't waste valuable time. Areas to consider are companies that: are being targeted by other cities -- get into the competition; are considering leaving Los Angeles and have not yet made a site relocation decision; are based in Los Angeles and need additional site locations; are based offshore and need a presence in the Western United states; can benefit from a good distribution system; are based in Canada and are searching for a better geographic location to serve Mexico, Southern California and the growing markets in adjacent states; have lost their low cost labor advantage and are seeking ways to maintain or increase their market share in Southern California, such as Korea; are tourism and recreation oriented, taking advantage of San Bernardino's site location; are transportation-oriented dependent freight handling operations; and or transportation- and consolidation -10- are value-added industries that support all aspects of the commercial aerospace/aviation sector taking advantage of Norton and skilled labor in the region c. Don't reinvent the wheel. Use the resources, both locally and internationally, that are at your disposal. There is no need to plan many overseas junkets and spend a lot of money advertising; there are more cost effective ways to tap into international businesses. Carefully review the resources you can tap into before adopting and implementing the plan. 3. Get everyone to agree to the plan and "!:Iuy into it," Get the private sector involved. Build a team based on strategic alliances. For example, bring together existing companies doing international business, companies that have a vested interest in the future ie. Lockeeed, leaders in the Hispanic and Korean business community, leading real estate brokers, the media and utilities etc. Present the plan. Accept their input. Make sure they have a sense of ownership in the plan and commit to doing their part to make it happen. Make sure the general public understands and supports the goal and the plan by waging a communication program directed at local residents. Address and resolve any sensitive issues, such as "foreigners" moving into San Bernardino before moving ahead. '"- Build civic pride and a sense of enthusiasm within the public and private sector. This is a very powerful tool in recruiting international companies -- the impression that the community is organized and the "welcome mat" is out. Be sure you don't "air your dirty laundry" to the outside world -- resolve your differences before venturing to the international marketplace. 4. Make sure everyone sings from the same sheet of music. Develop a clear message about the Inland EmDire. Consider participating in regional "umbrella" marketing programs. Review the plans proposed by the Inland Empire -11- il'"" - f "., , ... .. .. .. ... ... - ~ - ... - - El' ... ... - ... , ... - ... - t .. - - !I- - .. - .. ... ... ... , - ... - III Economic Council (IEEC) and other groups to determine how best San Bernardino might take advantage of economies of scale to raise awareness of the region around the world. Develop a clear message about San Bernardino and its unique advantages relative to other cities in the Inland Empire. Consider emphasizing recreation, the prospects for cleaner air in the basin and quality of life; a central location for selling into the growing Inland Empire and adjacent southwestern states and Mexico; reasonably priced and available land and utilities; pro-business public and government. Make sure you can deliver what you promise. Consider establishing a "unique selling proposition" (USP) for San Bernardino, such as the "center for aviation support in the West", or the "city that really knows how to expedite permitting" or "negotiate the complex California regulatory environment". Emphasize this USP in the message. Make sure the local media supports the plan and will emphasize positive economic advantages in its coverage of San Bernardino. Nothing is worse than having the local media at cross purposes with a city in its efforts to attract and retain international business. Consider bringing in a communications firm that can "re- position" San Bernardino's image from an international perspective. 5. Make the plan simple to implement Establish a "one stop clearinghouse" for information dissemination. Nothing infuriates international companies more than having to contact more than one entity/individual. Be sure the clearinghouse integrates the Office of the Mayor and its sister city programs, the City Council and its international committee, and the economic development office. Build and maintain networks of intelligence and information locally and internationally. Keep in continual communication with the private sector leaders who are actively supporting the plan. For example, use realtor/broker intelligence to learn which companies are exploring San Bernardino as a location for their , business. Tap into existing international resource networks. -12- <If - I ~ HI " -... Hlll - - - - ... . ... - - ... [I ... - - ... '... ... ... ... c b ... - ... .... ... - ... - ... ... ... I ... , ... ... '. Have a well coordinated and efficient method of introducinq people to San Bernardino. Involve the team in promotinq San Bernardino to visitinq decision-makers. Consider usinq videos and other cost effective communication tools. 6. Be persistent and follow up. Success depends on excellent follow up. Make sure that each company receives individualized attention and repetitive contact. continuously follow up to better understand the company's unique and special needs, so that the city can decide if it can meet these needs. Remember, it takes five "No's" to qet a qet those Nos so you can qet a Yes. Persevere. And stick to the plan. "Yes" -- so qo Be persistent. -13- - - '",,! ... I '.. ., ... ,"'" ... - .. .. ~ .. .. .. ill .. .. .. . .. " .. ... .. - .. .. .. .. ill .. .. .. .. ... .. I ... '" .. .. .. - - - , , w ~~* .. '... ... - .- - - - )., ... - ... iI ... ... ... .... \ .' ... ... ... I' .. ... ... .,. .. ... ... ... .. ... ... "" ~. ... ... ... ATTACHMENT 1 WORKING PAPERS CRITERIA USED BY SUCCESSFUL uTlliS TO RECRUIT INTERNATIONAL BUSINESS What makes a city successful in attracting international business varies as widely as the attractions of the cities themselves. In some cases cities attract new business as a result of past successes. San Jose is a good example. Due to the large number of high tech firms which have already located in the San Jose area, it continues to be one of the top locations sought by high tech firms wishing to relocate or expand. Other cities have been successful due to their geographic location. Reno, NV has been successful in attracting international companies' distribution centers and warehouses due to its geographic proximity to Los Angeles and San Francisco, the markets these companies want to reach. Other cities, like Santa Monica, have received significant notoriety overseas due to factors beyond their control. Santa Monica has experienced a significant amount of Japanese interest in recent years, in part, due to a song written about it by a popular Japanese pop song writer. The song is titled "The Winds of Santa Monica." still others have seen their cities grow simply by working smarter and harder than the other communities with which they are competing. For this section of the report we contacted 20 cities, and then conducted in-depth interviews with 10 cities that are experiencing success. If they had an international section we spoke to the individual specifically responsible for international business recruitment. In addition to interviews with economic development managers, we also made an extensive review of the literature currently available on communities which have been successful in business recruitment both in the international and domestic arenas. The cities were chosen based on their comparability to San Bernardino. As an example, Reno, Nevada, Sioux Falls, South Dakota, and Lincoln, Nebraska were comparable in population and in the challenges they faced in successfully promoting their communities. San Francisco, New York, and Chicago share little in common with San Bernardino. 1-1 - - .' ,~ ( ., .. ,.. '. .... ,. .. .. L .. .. - >> ... - ". .. -' ... - .. .. .. .. ll- .. ... .. ... .. ... ... - .,. .. ... , '. SUCCESSFUL ATTRIBUTES Numerous consistencies were identified among the communities we interviewed which separate them from the cities that have been less successful in attracting new businesses. The following is a summarized list of the attributes shared by the successful cities with whom we spoke: 1) One-StoD-ShoD Por Economic D.ve1oDment Municipal government, economic development authorities and the Chamber of Commerce have integrated their efforts toward business recruitment. This is either accomplished by putting all economic development and business recruitment under one roof or by designating a single organization to be responsible for economic development. 2) Commitment The City, the Chamber of Commerce and the Economic Development Authority have a clear, strong and long term commitment to developing their community. They are committed to being successful. 3) Realistic Btrateaic Plan The successful cities have all taken an honest assessment of their strengths and weaknesses. Based on this assessment, they have developed a realistic strategic plan with phased implementation and realistic milestones. 4) Strateaical1v Invested In Infrastructure The entrepreneurial cities have invested in the infrastructure they need to successfully implement their strategic plan. Infrastructure such as sewers, water, streets, highway access, rail spurs, airports, business parks, or museums and stadiums can all be important to the right business wishing to relocate or expand. Of course, the trick is to know where your infrastructure dollars should be spent for the best return on your investment. 5) Tara.ted ADDroach These cities all effectively target industries and companies which are in line with their strategic plan and fit in well with the community. They don't waste time using a shotgun approach to business recruitment. 6) Strona Information Networks The cities we spoke to have worked hard to develop excellent information networks which help them identify target companies more quickly and accurately than other cities competing for the same business. These networks often involve the use of overseas offices or representatives. Or they can be as 1-2 simple as maintaining good relationships with real estate developers and brokers in the region, taking advantage of their information networks. 7) custombed ADDroach Since it is very difficult to predict what any particular relocating business requires to make the decision in favor of your city, the successful communities have all adopted a customized approach. If a new business is concerned about low cost access to water and sewer or a location of the apron of the airport, financial incentive programs are probably not going to matter. The successful communities try to focus on each individual business' needs and to offer a package that meets those needs as closely as possible. 8) Good Business Climate Every community we spoke to, even some not very successful cities, offer financial incentive programs. However, among the successful cities a good business climate was listed as a much more important reason for companies to locate there than were loan programs or revenue bonding. Generally, overall tax climate, cost of living, land costs, lease rates, and utility rates were among the reasons most often cited by companies that relocated to these entrepreneurial cities. 9) Liaht On The Color-Glossv Almost any city you visit has a brochure showing all of the wonderful things you can do there, interesting sights, and good looking, friendly people. But, the successful cities down-played these types of tools. Most were quick to say that they felt they needed this type of material since all their competitors have them. But when they target a business, they go light on the color-glossy and heavy on the type of information the target business will need for inclusion in their business plan. , '10) Get Down To Business Without exception, every successful city we contacted took business recruiting very seriously. While their economic development staff were very friendly, when we asked a tough question, or any question for that matter, about their city we received a clear and substantive answer. When we asked why a business should locate in their city, their answers were strong, honest and realistic. They knew their product. EXAMPLES OF SUCCESSFUL ATTRIBUTES It is one thing to list out a prescribed number of "secrets to success" but, it is quite another matter to envision how they have been put into actual practice. The following section offers some specific examples about each of these successful attributes. 1-3 -, ... .. .. ( 'IId " ... ... - ... .. ~ .. \.. .. ~ .. , .. .. ... ,.. , ,..- ... .. ... -.. ~ ... "'" ... .. ... .. .. ,,",' .. I .. -' it. ... .. One-stoD ShOD por Bconomic DavaloDment San Bernardino has already recognized the necessity for this change. Today the San Bernardino Economic Development Agency brings together the City of San Bernardino Development Department; the San Bernardino Downtown Main Street, Inc.; the San Bernardino Economic Development Council; and the San Bernardino Convention and Visitors Bureau. Chattanooga, TN also recognized this need forming the Partners For Economic Progress (PEP). PEP receives funding from the County, City, Tennessee Valley Authority (TVA), the Power Distributors and from private members. The PEP organization has been given much of the credit for Chattanooga's success. For instance, they recently completed the construction of a $45 million aquarium built entirely through private funds adding significantly to the quality of life in Chattanooga. Commitment Sioux Falls, SD is a good example of a community which has a clear focus on commitment. Sioux Falls Development Foundation Director credits the unity of business leadership and the long term perspective of the Sioux Falls business community with much of their success. He notes that the sioux Falls Development Foundation is better funded than many competing cities. As a result, he can target a good prospect for his community and pursue them for the "long haul" . He feels that being able to take this approach has' allowed him to close deals that other cities had to abandon. Realistic Strateaic Plan without exception all of the successful cities we talked to had a solid strategic plan and they were following it. This was clearly the most important "secret to success". stockton, CA was a good example of a community that had taken an accurate and honest assessment of its strengths and weaknesses and was now applying these to their marketing effort. Any time spent talking to the man responsible for economic development for the Stockton Chamber of Commerce, tells you this man knows his stuff. Just the day before we spoke to him he had made a presentation to over 300 business people who responded to a targeted mailing. Stockton has targeted transportation and distribution and has had some big winners as a result of that focus in their plan. safeway, X-Mart and Walmart all have important distribution centers there. Other companies are now following the distribution sector. strateaicallv Invested In Infrastructure Reno, NV has 32,000,000 sq. ft. of industrial space already constructed. This space was built entirely with private funds. Reno has a pro business attitude and a favorable tax structure, but most of all, Reno has location. Reno has put its money where its mouth is. They have targeted the overland transportation 1-4 - ... ,~ ... f ~ business due to their strategic location in the center of the "Great crescent" which is within one night's haul of San Francisco and Los Angeles. But in order to suc,Q-,.ssfully target this industry, they recognized the need to bUild the space this industry requires. In fact Reno has been a little. too successful. They are now targeting industries which have a higher employment ratio to the amount of space required, like high tech industries which could benefit from an excellent distribution system. Internationally, they have focussed on foreign firms that need to distribute their products to the California market, but do not want to pay the higher cost and taxes of being located in California. Taraatad ADDroach Tucson, AZ is an excellent example of a targeted approach to developing international business. Due to Tucson's strategic linkages to the Mexican State of Sonora, they have been exceptionally successful at targeting companies participating in the Maquiladora program. They have also successfully targeted a linkage to a deep sea port through a direct highway connection with the Sonoran sea port of Guyamas. This route is significantly cheaper and faster than using the Port of Long Beach. Another interesting example of using a targeted approach to. recruiting business comes from Anchorage, AX. While Anchorage was not included in our list of comparable successful cities, they have had some exceptional success in wooing international cargo carriers to their international airport. Federal Express has its international cargo hub there and UPS stages its Asian operations from there. This success was due to a very targeted marketing effort to encourage U.S. air cargo companies to take advantage of Anchorage's strategic geographic location equidistant between Europe, Asia and North America. Only three companies were approached Federal Express, Flying Tigers (later acquired by Federal Express) and .UPS and pursued until success was achieved. Today, in terms of landed cargo weight, Anchorage is the busiest cargo airport in the world. ;1liJc ~ .,,' i_ ... ... .. iii - .. -.. .. - iii 3 ... .. III' ... ".' ... .. III' . l.. - .. .. .. strona Information Networks Anaheim, CA uses its relationships with real estate developers and brokers extensively to learn about businesses which may be considering a relocation or an expansion into the area. They receive "advance notice" and meet incoming business- persons. Chattanooga, TN has offices in Japan, Paris and Toronto, and uses these networks to secure information faster than their competitors. For example, in Toronto they discovered that Canadian businesses who export to the U.S. are finding it cheaper, due to the tax situation in Canada, to take advantage of the U. S./ Canada Free Trade Agreement by moving their entire operation to the U.S. .. .. .. ... .. .. . -,. .. 1-5 "" .... customi..d Aooroach Chattanooga is also a good example of a city that has been successful in using a customized marketing approach. One of Chattanooga's biggest successes was luring the U.S. headquarters of. Komatsu to their city. Initially, this Japanese firm was looking for just the right site and building combination. Chattanooga was able to present them the perfect site and building, and Komatsu agreed. Shortly after the deal was signed, Komatsu began to change virtually everything in the building. Today, only the load bearing walls remain the same. But the important thing was that Komatsu believed the site, and the other mix of benefits which Chattanooga brought to the table, was a perfect match to their needs. Good Busin.ss Climat. There were several good examples where the business climate was the key to recruiting new business. Burlington, VT; Lincoln, NB; Sioux Falls, SO; and even Chattanooga, TN are all beginning to have excellent success in attracting Canadian businesses to their respective cities due to their reasonable tax structure relative to the very high taxes in Canada. Many Canadian companies are finding it cheaper to simply move their operations into the U.S. rather than take advantage of the U.S./Canada Free Trade Agreement in Canada and continue to pay Canada's very high GST (Goods and Services Tax). Liaht On The Color-Glossy Anaheim, CA is a good example of a city that markets with their target company's business plan in mind. They are very focused on the target company's bottom line. While it may be difficult for some types of businesses to successfully locate in Anaheim, when the city'S Director finds a good target he sits down with that business to identify what the company needs from Anaheim to say yes to the deal. Anaheim does not offer a battery of financial ,.incentives, but they do own their electric utilities. This allows the city to strike a deal with a high energy consuming company that can have a long term impact on the target company's income statement for months and years ahead. Get Down To Business All of the cities interviewed know how to get down to business, but perhaps the most focussed was the Stockton, CA Chamber of Commerce, which has four industrial parks to fill with new business. Based on their strategic plan they mailed out 18,000 mailers with an invitation to attend a multi-media presentation on the relocation and expansion opportunities available in Stockton. They received well over a 2% response rate, which is good for this type of marketing, and were able to cost effectively reach hundreds of potential business partners. 1-6 CITIBS CONTACTBD San Jose, CA Newport News, VA Miami, Fl Portland, OR Minneapolis, MN Seattle, WA Anchorage, AK Atlanta, GA Irvine, CA Phoenix, AZ CITIBS INTERVIEWED Lincoln, NB Ventura, CA Sioux Falls,SD Reno, NV Tucson, AZ Anaheim, CA Chattanooga, TN Stockton, CA Huntsville, AL Burlington, VT One valuable piece of information obtained through the preliminary interviews and a review of the literature, is that cities that have tried to set up trading companies to "internationalize" their economy have failed. Newport News, VA., for example, attempted to set up a pUblic/private trade assistance program whereby the city took an active role in the actual business transaction. In reality, the city was perceived as competing with the private sector. We recommend that the City of San Bernardino not pursue the trading company approach to expanding international business. 1-7 ,- - r , .... .. .. .. .. .. .. .. .. .. .. .. .. .. ~ .. ',." .. .. '" . .. .. .. .. .. .. .. ill .. ... I flit .' ... .. .. - . I , - ... ... - III ... . ~ . ... - ~I ... . ... to , .... ... - .. i' , - ... ... !'- ... ... .. ... IIiI ... .iII I ... , ... ... '1IiI ATl'ACIIMENT 2 WORKING PAPERS TRENDS IN LOCATION DECISION-MAKING BY INTERNATIONAL COMPANIES We were asked to contact potential foreign investors/companies to identify what criteria they use in making relocation decisions. We focused on Asian and North American countries, assuming that during the near term (five to ten years), European and Latin American international business will be promising, but somewhat less relevant to San Bernardino in the near term. Please note that these our observations and comments reflect those of the comoanies contacted. and our own oersoectives. Thev cannot not substantiated bv factual data. JAPAN The first wave of Japanese investment targeted the two California "gateways" of Los Angeles and San Francisco. California was a natural choice due to its temperate climate, favorable time zone differential between California and Tokyo (Tokyo begins its workday around 4 p.m. Los Angeles time) and, most importantly, for its rich local market bursting with demand for Japanese consumer products. within Los Angeles, Japanese companies established a strong presence in coastal areas such as Torrance, Long Beach, Gardena, and Carson. With many of these companies present in Southern California for over 20 years, Japanese investment in the region is moving into a more mature, "second phase." Now, the rising cost of doing business in L.A., as well as a deeper understanding of the u.S. market is causing Japanese companies to move inland and seek more favorable conditions for their business operations in other States. 2-1 - ''I<" - f "i'~ .. .... .... ... ... - III .. "" - .. . , " - .. .. '10>, ,. \ .." - .. - t .. - .. ,... .. .. .. ... .. .. .. f ... ",- .. ... .. Relocations from L.A.: 10va1tv ... or the bottom line? The Japanese are monitoring very closely the departure of local American manufacturers from Los Angeles, which they view as very disturbing and a great failure of local government. The Japanese also view critically the short term, bottom-line oriented thinking which they believe drives American companies to make decisions. By contrast, in our interviews, some Japanese companies expressed a "moral commitment" to remain in Los Angeles; and cited this commitment as evidence of Japanese long term thinking and of the Japanese view of corporations as moral actors in the community. For example, the NEC Corporation told us of its intention to "fill the gap" created by American companies leaving Southern California, and expressed that it felt "obliged" to stay on here (implying that were it only for business reasons, NEC would leave Los Angeles). We believe that such moral obligations should be taken with many grains of salt; however, there is an emotional element here that San Bernardino may choose to exploit to its benefit; to suggest to potential Japanese re1ocators by moving to the Inland Empire, the Japanese will at the very least remain within the State of California, thereby assuaging Japanese corporate guilt. The other voice heard in interviews with Japanese companies especially from long timers such as automotive and electronics firms -- had decidedly more of a bottom line ring. These companies echoed the common complaints about the high cost and anti-business climate of southern California. In this context, San Bernardino should approach Japanese re10cators much the same as any American company, but with certain culturally specific differences, described below. We believe that Japanese re1ocators out of Los Angeles are strong potential investment candidates for San Bernardino. This niche group may even provide "riper" candidates than 2-2 ( # - IU .. "llIlll ,.. Ii"" "" l). IIlI .. .. ~ ,; .. .. .. ,. , .' .. .. - .... - .. ,.. ... - .. .,. .. - lio I - ... - ... first-time Japanese foreign investors, who are now staying close to home due to domestic economic stagnation, the fall of the Tokyo stock exchange and the relative weakness of the yen. We believe if San Bernardino has established as a goal the attraction of foreign-owned investment into San Bernardino, it may have a better rate of success tapping Los Angeles than Tokyo. Trends in investment Southern and Midwestern states such as Ohio, Kentucky, and Tennessee have been aggressively wooing Southern Californian Japanese companies with good results. Many Japanese companies interviewed reported their perception that Southern and Midwestern states offer very attractive investment venues. Japanese automakers, for example, have established manufacturing facilities in Kentucky and Tennessee, where land, labor costs and taxes are low. Moreover, in the case of automakers such as Nissan, relationships with component suppliers (already located in the Midwest) are easier to maintain from Midwestern venues. Nissan reports that customers are easily reachable due to the excellent transportation infrastructure in the States; what is of paramount importance for Nissan is to be close by its vendor network. Nissan also reports large investments underway in the area of research & design. Site selection for R & D has been driven by the staffing requirement for automotive engineers; in the States, that means locating in the Detroit area. For its forklift, industrial equipment, and textile machinery manufacturing operations, Nissan has selected locations in North Carolina. NEC Corporation expressed its growing interest in the Phoenix area which NEC perceives as a magnet for high quality high technology professionals. NEC reports that the Phoenix city government, through its economic development 2-3 ( , , '" ...- ,.. .. ... .. ... . 1.. iii '" iii l!t III iii ... ,. , .' ... .. ... J .. ... .. ... .. .. .. ... .. .. .. l .. .. ..,., .. agency, has done a good job of paving the way for attracting high tech companies into Phoenix. Other companies expressed doubt about states neighboring California, claiming that "L.A. syndrome" would soon reach these states. In that scenario, the more leapfrogging directly into the Midwest or the South is preferable. Toshiba, which has had 3 manufacturing facilities in Irvine for over 10 years, had its strategic planning department undergo a rigorous location analysis process before selecting Toshiba's current Orange County sites. Perimeters were established which included proximity to Japan, proximity to the L.A. market, "good security," good transportation network, good neighbor (no union) policy, etc. It would seem appropriate for San Bernardino's marketing staff to establish contacts with Toshiba's strategic planning department, as well as with other such decision makers in similar companies. Views of Los Anaeles and Inland EmDire The general complaints about doing business in Los Angeles expressed by Japanese companies include: high cost of living, high cost of labor, high insurance costs, high business taxes, heavy regulatory environment, general discouragement of manufacturing by authorities, loss of local business, and high crime rate. Perception of the Inland Empire among the Japanese business community included the following issues: poor quality of life due to heat, smog, and lack of Japanese amenities that can be found in Los Angeles and in the South Bay, too far from the Japanese service economy structure (banks, lawyers, accountants) in downtown Los Angeles. Important relocation criteria include: affordable housing, acceptable Japanese school for children, and good recreational facilities including good golf courses. The 2-4 Japanese among all immigrating ethnic groups are not the strongest of assimilators: the more Japanese facilities such as schools and clubs, the more comfortable the Japanese will feel about entering San Bernardino. Japanese investors often cite "safety" as a key criteria in site selection, which is not surprising considering that many first generation Japanese' facilities are located near high crime areas such as Compton. In its worst application, however, the "safety" requirement is a euphemism cloaking the Japanese desire to recreate in the States the mono- cultural environment left behind in Japan. It has been suggested that the Japanese predilection for regions of the country such as the Midwest is linked to the predominantly white labor force in those regions, as opposed to the multi-ethnic labor forces found in big American cities. Because its multi-ethnic population is a point of pride for San Bernardino, San Bernardino needs to address this issue very clearly from the start with potential Japanese investors. The experience the city underwent with the Maruko Hotel investment should not be a model for future Japanese investment into San Bernardino. There is a good deal of interest among the Japanese in recreational and hospitality investment opportunities in Palm Springs and the Coachella Valley. Some investors are seeking golf course and resort property investments in those areas. Many Japanese companies interviewed mentioned that Japanese culture is conformist and that if one important company led the pack, other companies would follow. For example, Japanese company C & M Finepak, located in San Bernardino's College Park industrial park mentioned the nearby presence of the Southland Corporation as a primary attraction of their current location. 2-5 !tOREA Korean business has, in many ways, patterned itself after the Japanese business model. While there are many substantial differences between Japanese and Korean businesses, it is useful to look at Korea's economic development in comparison to Japan. Many economic experts have described the current Korean economy as 10 years behind Japan's and closing fast. This lag may explain why Southern Califor~ia has experienced a much greater degree of Japanese companies locating here than Korean. The Korean economic miracle of the last 10 years was built largely through heavy industry and as a result of cheap Korean labor. The key to Korea's astounding success is a group of unique conglomerates called chaebol (e.g. Hyundai, Samsung, Daewoo, Lucky Goldstar, Ssangyong). However, the economics have changed significantly in recent years. Labor has begun to demand a grsater share of the economic benefits accruing to Korea and, as a result, labor prices have been increasing rapidly. This has forced Korean companies to look at developing higher-margin, less labor-dependent products, and to make other cost reduction moves which improve the price competitiveness of Korean consumer goods. Korean companies have made many in-roads into electronics and higher tech products. As a result, the American consumer market and the Southern California market have become increasingly important to Korean companies. Since many Japanese companies experienced similar economic dynamics several years ago, they were an early group of companies seeking to establish overseas manufacturing in Southern California. Our research indicates that many Korean companies may now be considering similar moves to the area. In the last two years over 45 Korean companies have opened new branch offices in the greater Los Angeles area. 2-6 , ... , .... .... .. ,. ... .. III .... III .. ... 11 . - .. ... . ... .. ... . >, '1IiI ... ... ."" ... - .. '. ... ... ... ... -. .. ... .. Borneo International Furniture (BIFl One illustrative example is the location of the new Borneo International Furniture (BIF) manufacturing plant in Moreno Valley. This plant is expected to employ 150 and comes at a time when many furniture companies are finding it impossible to operate profitably under current AQMD regulations. The plant is expected to be completed in the spring of 1992. This opportunity did not come to Moreno Valley through their direct marketing efforts. They were contacted by a development company which was contracted by BIF to perform site location and to oversee the construction of the new plant. Labor costs had risen to such a level in Korea that California labor costs, combined with expected transportation cost savings, had become attractive. BIF already knew they needed to locate to Southern California; they didn't need any convincing. But, they did need assistance with finding the exact location. And, if possible, BIF wanted to avoid working with unions. BIF was looking for a location close to the L. A. market, next to a transportation hub which allowed them to better distribute their product throughout the united States. A large labor force and inexpensive land were also important factors. By BIF's measure, these factors were best available in Moreno Valley or Palmdale. The factor which seemed to make the greatest difference was the speed with which Moreno Valley was able to respond in a tangible way to BIF's proposal to build there. Moreno Valley was originally contacted by BIF's developer in October, 1988 and the City Council of Moreno Valley voted to support the development in January, 1989. Moreno Valley built the necessary infrastructure to encourage the development including sewers, water, and a road into the site. The AQMD controls, which have been affecting local furniture manufacturers, were not a substantial problem for BIF. The 2-7 I ,. 'Mt , '.... ... ... ,... I ... "'" .. .. .. "" .. D "" ... "" ... , .. '"' .. '"' l. ... .. ... ... ... - ... .. ... -, ... .' - .' .. new BIF facility is designed to use new curing and finishing technologies which meet or exceed AQMD requirements. since BIF was building a new plant these design changes could be incorporated more cheaply than the cost of retrofitting an existing facility. Also BIF's size allowed them to spread these costs over a higher volume of product. Korean Cultural Differences Koreans are D2t similar to the Japanese as a culture. In fact there still remains a high degree of animosity between the two nations which stems from Japanese occupation beginning in the late 19th century. Japan annexed Korea in 1910 and enslaved hundreds of thousands of Koreans during World War II. It is highly advisable to not discuss Japan with Koreans and to not discuss Korean activity with the Japanese. Koreans as a group are much more emotionally driven than the. Japanese. They are inclined to reach an agreement more quickly than the Japanese, but also have a reputation for requesting changes to the deal after the contract is signed. They adhere to the "friends first, business second" rule of doing business. And, once they have made a commitment to a location, they will oftentimes feel a moral obligation to stick to their commitment even when the short term business outlook does not justify it. Korean companies often favor areas where there is a strong Korean population already in place. This helps in the language and dietary differences. However, since Koreans are very class-conscious, it is important that local Koreans, who represent a San Bernardino, be of similar background to visiting business representatives. Korea has a school system similar to that used in Japan, so a Korean style school is often very important to staff on overseas assignment. Without this level of education they are concerned that their children will fall behind their peers in Korea. 2-8 - l Ie ". '... fW ".. ,. "" . ... '" .. .. ... !l - .. - ,.. , .. - .. - '. - .. . .. - .. - .. ... ,... ... .. ... la, CUlADA Canadian companies should be seen as important investment candidates for San Bernardino. with the high cost of production in Canada and the attraction of the Los Angeles market, Canadian companies are aggressively pursuing local manufacturing in the region to access Los Angeles and the growing Mexico market. Los Angeles is a crucial market for Canada and there already exist strong synergies between Los Angeles and Canadian environmental firms, aerospace/military firms, and food companies. Southern california is also an important magnet for Canadian tourists seeking warmer climates. Canadian investment in southern California is driven in part by the high cost of production in Canada, where taxes, labor and raw materials are very costly; this situation now exacerbated by the overvalued Canadian dollar. Southern California's strong regulatory environment is not a hinderance to Canadian companies, per se, because the Canadian environment is also highly regulated. The most important spur to Canadian investment in Southern California are the high transportation costs from the Canadian east coast and/or the Great Lakes manufacturing regions. Because Canadian products enter the Southland by truck or rail, they are often priced very high in the U.S. market. Canadian owned Derlan Industries is a $400 million dollar publicly listed holding company based in Toronto. The company's U.S. headquarters is in Laguna Hills, overseeing 24 U.S. subsidiary companies, 8 of which are in the Southland. All of the companies are aerospace or military industry. Wholly-owned subsidiaries include Thiem Industries in Torrance, Radiant Illumination in North Hollywood both of which were originally American companies bought by the Canadians. Laguna Hills was chosen for proximity to the CEO's home, which is a not uncommon decision making factor in corporate location. 2-9 'i>, jf ii' ,~ 10" ... .. .. "" II ... II "" .. I' "" III "" .... . .. .. .. I' .. .. .. ~"" .. .. .. .. III .. .. ... ..' ... ... ... Canada Wire and Cable, which relocated to Long Beach from the city of Commerce also because its new president resided nearby. The Long Beach office is primarily a U.S. sales office and the location within southern California does not have any strategic bearing on the company's business. TAIWAN Taiwan is less a candidate for direct foreign investment than in the mid 1980's during the Taiwanese boom and the freeing up of foreign currency to leave Taiwan. The big wave of Taiwanese real estate speculation has peaked. Moreover, the Taiwanese overseas investment formula rarely includes manufacturing in the states; Taiwan itself,through its network of factories throughout Southeast Asia, and the P.R.C. is the master of low cost manufacturing. What Taiwan does in the states is distribute product through establishing small trading companies in the Southland (which, do not generate many local jobs); or to use these trading companies to source original equipment manufacturing contracts for production in Asia. In any case, there are only about 20 Taiwanese firms that could realize sizeable investments in Southern California. Among them, Tatung, the electronics giant which chose its current location in Long Beach primarily for reasons of proximity to the Port. Tatung imports all products including computer terminals and television monitors on a fully-finished basis from plants in Taiwan and in the P.R.C. They do some small assembly of electric fans in their warehouses in Long Beach and Atlanta. Long Beach was also selected because the Tatung CEO lived in nearby Palos Verdes and knew the Long Beach area well. Microtek, a Taiwan-owned software company manufactures out of a facility in Torrance which was selected because of freeway access, good price on a building, and because fellow high tech companies Mitsubishi, Ashton-Tate and NEC were on the same street. Several Taiwanese companies reported to 2-10 .. , - ... ... .,. .. .. .. '" ... .. .. Il .. .. ,. ,.. .. .. ... "" t .. "" .. .,. .. .. .. .. .. "" .. '"' -' ... ... ... GLAWTCA the importance of following competitors into a given area in order to wave the competitive flag. Microtek also chose Torrance because of proximity to the port. The company both imports components and exports product. wei Chuan, a major Taiwanese food processor selected its Bell Gardens location 15 years ago for its convenient location and for a special up-front deal for electricity and water supply offered by the city government. Wei Chuan, which produces frozen Chinese food for the U.S. market, employees a staff of 100. CUstom Craft Company, a custom window blind company which is growing rapidly, selected Cerritos as its location when it came to the California 4 years ago. Company management , considered the Inland Empire, but found it too far from the harbor. This was CUstom Craft's greatest concern, because its product is imported almost finished and is then cut to size before delivery to customers. China General Plastic Corporation, an Australian owned company sells PVC plastic rolls which are manufactured and imported from Taiwan. The company maintains warehouses in Cerritos and stated as its priority proximity to the port and airport. In our interviews with key Chinese business leaders on trends of investment in Southern California, a negative view on the situation for foreign investment surfaced. "What does California really have to offer?" said one very successful Chinese real estate broker who has brokered many deals for Hong Kong and Taiwanese investors. "There are too many uncertainties," she said. "Taxes are too high, the banks won't finance deals, housing is too expensive and there is no vision in the business community." We spoke with another leading Chinese real estate broker experienced in Inland Empire land development for commercial and industrial use. Direct investors from Asia are accessed 2-11 - through the Japan External Trade Organization (JETRO) and through the broker's business associates located in Asia. Other clients, however, are relocators from Los Angeles, such as Toshiba Consumer Products, which moved from Torrance to the Inland Empire due to its need for more space. Toshiba found cheaper real estate in the Inland Empire, was able to escape a costly business license tax which it had been paying to the City of Los Angeles; and over one-half of Toshiba's staff had already been commuting to Torrance from the Inland Empire. In this real estate broker's opinion the attractiveness of the Inland Empire is directly linked to a company's requirement for space. New ventures and smaller companies requiring under 50,000 sf of space tend not to be interested by the Inland Empire. In general, small, start-up companies need to establish themselves in Los Angeles first. As companies grow in size to the 85-100,000 sf space requirement, and begin to consider labor and real estate costs, they become interested in the Inland Empire. Another factor is that technically advanced companies which require state of the art warehousing cannot find such facilities in the older factory and warehouse sections of L.A. This broker suggested that San Bernardino market itself to niche targets and consider the following: o Japanese companies nervous about crime in Torrance. o Companies requiring over 400,000 sf of space. o Specific relocating industries: tire industry, paint and varnish industries, furniture industry. o Utilize California state international network. o Market through real estate brokerage network. o Recognize that other states such as Texas and cities such as Las Vegas are San Bernardino's competition, and not Ontario or Riverside. 2-12 - :t,~ '... f " !.,. .. - ... .. .. ... .. - -.. III .. - Ii, .. - .. .. , . .. III "" ! III .. IIIi tpo IIIi .. - .. IIIi .. III I ... # .. .. .. B,VROPBAN COXPANIBS The re-integration of Europe, and the resultant new market, is capturing a majority of European companys' attention at the present time. Conversations with European-owned companies revealed a high level of negativity about Los Angeles as a place to do business, with a low level of awareness of the Inland Empire as an alternative venue for production. Plumrose, a can!ed/packaged ham manufacturer owned by the East Asiatic Company of Denmark, has been located in City of Commerce for 25 years. The company is now encountering rises in the cost of business large enough to cause consideration of relocation out of Southern California. Plumrose experiences a huge differential between the cost of their Los Angeles plant and another Plumrose plant in Mississippi. The main areas of concern are employee costs (workman's compensation, health insurance) and electricity costs, all of which cost only a fraction in the Mississippi plant. The spokesman said that the price of proximity to the Los Angeles market had become too high and that a move was being studied. Oscar Meyer and Hormel, Plumrose's competition, have long since moved out the area and Plumrose may soon follow, he explained. Besnier, a French dairy product manufacturer with $12 million in U.S. sales of Bon Lait, a yogurt-like product, has had few problems with its location in Huntington Park. The company based its location decision on an available inexpensive building, and on proximity to both its main supplier (milk) and its customers (large retail supermarket chains). The Inland Empire is of little interest to this French company. French machine tool manufacturer Brisnard Machine Inc., set up a small sales office (no local manufacturing) in Irvine three years ago. The results in the Los Angeles market have 2-13 -- ... - I ~ ,'t " '- ... - -- ... - ... '", ... '" .. n .. ... .. .... .\ ,.. '" ... '" ~v 0 .. !II ... t", ... - ... - ... .. .. f .. . .. .. ... been disappointing, as Brisnard's customers -- the aerospace industry and its sub-contractors -- have been in steady retrenchment since Brisnard arrived here. The company manager spoke bitterly of business prospects in Southern California which he believes is a very negative environment for manufacturers due to high land cost, high taxes, difficult transportation, etc. AKZO Specialty Coatings, a Dutch owned multinational specialty chemical manufacturer with $10 billion in global sales ($30 million locally) produces paint and varnish stains for the auto and aircraft aftermarket. The company has just undergone a relocation from Torrance to Orange County. The Torrance plant was at capacity and could not meet demand. A facility became available in the city of Orange when a competitor decided to vacate it. Despite the basic suitability of the facility, two years and $25 million of investment was required to get the plant in order to pass myriad permitting inspections. Needless to say, not every company would be willing to make such a heavy investment to stay in Los Angeles. According to an AKZO spokes-person, the clean up technologies required by the AQMD are not even completely tested, although they are already required. AKZO reported that the biggest negative to a relocation in the Inland Empire was AKZO's need for specialized staff which tend to gravitate around big cities. He believed that white collar jobs would be easy to fill in the Inland Empire, but blue collar specialists such as batch-makers, color specialists and other low tech specialists would be difficult to locate in the Inland Empire. AKZO suggested strongly that San Bernardino target the furniture industry which has been having well-publicized problems meeting AQMD regulations. 2-14 ,- ,~" . t ;IIIM , '. '... ... roo ... .. .. ". .. .. .. IJ . .. . .. , .. roo .. .. ~ .. . .. ,. ... . .. . .. IJl' ... f ... ~ .. .' .... IlBXICO It is safe to say that trade between the united states and Mexico will be increasing in the next several years and that San Bernardino has an opportunity to play an important role in that trade. However, at the present time it is almost impossible to predict when and how this increased trade will take place. Mexican trade is rapidly expanding, but it currently pales by comparison to trade with Asia and Canada. It is important to take a long term perspective when dealing with Mexico. There are several unknowns which must be considered before an accurate prediction of opportunities for trade with Mexico can be crafted; o when will the North American Free Trade Agreement (NAFTA) be signed; o what are the political implications of signing NAFTA during a time of high unemployment in the U. S.; o how will tariff reductions associated with NAFTA be phased in, ie. the U.S./Canada Free Trade Agreement is being phased in over a ten year period. Which types of goods will be affected first; o how will transportation be affected under NAFTA; ie. under the Canadian agreement transportation issues were not addressed and had to resolved at a later time, and o how will the maquiladora program be effected by NAFTA. We believe that increased trade with Mexico and the attraction of Mexican investment into San Bernardino should be a key tenet of San Bernardino's "launch" into international business. San Bernardino's strengths in recruiting Mexican-related business includes: o Geographical, historical, socio-economic synergies between San Bernardino and Mexico; and o San Bernardino's Hispanic population with language capabilities, cultural understanding, and familial ties to Mexico. 2-15 One possible scenario for San Bernardino/Mexican trade and investment would address Mexico's current greatest trade problem, distribution, In short, Mexico needs enhanced distribution in Southern California to service the largest Hispanic market outside of Latin America. As an example, certain perishable Mexican food products such as fruits and vegetables require air cargo. These products could be transported to a refrigerated warehouse at Norton airport for consolidation and onward shipping into the U.S. This could result in significantly increased business for Mexico, which is blocked by lack of transport and distribution according to Mexican trade officials. As trade develops with Mexico, Latin America should be considered a next logical step in trade development. Already through debt restructuring and political change, Latin American economies have begun to stabilize. And, the formation of a free trade zone between Argentina, Brazil, Paraguay and Uruguay (the Mercosur), certainly bears close monitoring for future trade opportunities for San Bernardino. It is highly recommended that San Bernardino position itself to take advantage of international business opportunities with the Spanish speaking countries, beginning with Mexico and extending to south America. 2-16 - - ( IH - .. .. .. .. .. - .. ... .. ill ... ill ... .. .. - ill ... .. .. ill .. .. .. .. .. .. ... .. f ~ .. .. .. ... .. ATfACHMENT 3 WORKING PAPERS PRIVATE SECTOR SURVEY The purpose of this section is to determine the scope of international business being done by San Bernardino companies and prospects for the future. We believe that the city must "grow" existing companies to become international as well as recruit new companies. We searched existing data bases to find companies identified as doing some international business. Of these, we personally contacted 30 companies to determine the scope of their international business. There are two parts to this section. PART X identifies the companies we believe hold promise for international business. There are not many, but there are some. These companies and the City of San Bernardino can mutually benefit from a closer working relationship. The text reflects our conversations with these companies and, when they expressed interest in knowing more about the City's plans to support international business, this interest is so noted. PART XI identifies companies that were also contacted but do not appear well suited for international business at this time, or we were unable to reach. PART I Itev comeanies Lockheed Air Terminal, 2550 Hollywood Way P.O. Box 7229 Burbank, CA 91510 818/ 972-1508 Contact: Mr. Paul Development Lockheed Commercial Aircraft Center Inc. has been given the right of "Interim Joint Use" to share the Norton base with the military until closure in 1994. Lockheed plans to use its current facilities for the refurbishing of wide body aircraft, initially Boeing 747, 757 and 767's. 1. Inc. (LCAC) Haney, Director Business 3-1 ~C has a minority equity partner, Japan Airlines (JAL). Beyond JAL, it is expected that maintenance at the LCAC facility will continue to focus on Pacific Rim operations, perhaps including such carriers as Singapore, Korean Air, and Quantas. Mr. Haney is currently analyzing the types of commercial operations appropriate for an expanded Lockheed facility at Norton, including international cargo. The potential for civilian applications includes diversion of pure freighter aircraft from Los Angeles Airport (LAX) to utilize the clearer access arteries of San Bernardino rather than interstate highways and railroads. Mr. Haney noted that Dick Crail, V.P., Asst. Gen. Mgr., Lockheed Commercial Aircraft Center, Inc., is meeting regularly with the Inland Valley Development Agency (IVDA). Mr. Haney expressed interest in working with the GLAWTCA, possibly conducting a joint analysis. He has been exploring various ways in which the Norton facility could be converted from a military to civilian operation since April, 1991. 2. Mannesmann D_aq Corp. Material Handling Division 5435 Industrial Parkway San Bernardino, CA 714/880-8800 714/880-4469 Contact: Mr. Ted Specchio, Regional Sales Manager Mannesmann Demag Corp. is a manufacturer, importer, exporter of overhead gantry cranes from one ton to 150 ton capacity. The parent company, Mannesmann, located in vetter, Germany, is large and operates globally with divisions in many countries. All machinery and hoists for the U.S. market are produced in Germany. California was serviced by Canadian facilities in Vancouver prior to the opening of the San Bernardino facility in 1989. In the United states, Mannesmann Demag is headquartered in Cleveland, Ohio. All shipments to the United States from Germany go to Cleveland where initial assembly takes place. Cleveland then ships sub-assemblies to Material Handling Division facilities in Atlanta, Houston and San Bernardino. 3-2 { - - ... .- - - _ ,.., _ "" .. >> - - ... ,.. , .. ... - .. 1_ .. ... ... ... .. ... .. _ .. too. { .. .. ..' , ... These facilities fabricate girders (a bulky and heavy component of the final assembly), then marry the assembly to the girders and ship the entire product to its destination. All shipments are made by truck from Cleveland to San Bernardino and then to the final destination. The hoist and machinery sub-assembly from Cleveland may comprise 60% - 80% of the fully assembled product, depending on the model. Sales through the San Bernardino facility are targeted at $4 million this year. Mr. Specchio estimates that as much as 20% of their finished products from San Bernardino may be exported. He stated that no shipments may be exported in one year and up to 20% the next. Export volume is contingent on local engineering firms that specify type and manufacturer for such cranes, and availability of various Material Handling Division facilities in Singapore, Australia, China and other locations. Mr. Specchio would be interested in learning about any programs that might be available to support his international business. He is aware of the potential for new sales in Mexico and believes this to be one viable market for expanded sales. He is interested in following the progress of this study. 3. Concept Building systems (formerly National Prebuilt Manufacturing ) 1212 S. Mountain View San Bernardino CA 92412 714/796-6981 Mr. Jim Bates, General Manager Concept Building Systems is a manufacturer and exporter of mobile homes, with 90 employees, $8 million revenue, and was established in 1985. 100% of the product is produced on site; no sub-assemblies are imported. Less than 1% of their production is exported. Mr. Bates noted that in most years they have not exported any products. In the past they have sold several mobile homes to buyers in Mexico, their only foreign destination. He believes these are primarily for U.S. citizens setting up retirement homes. Sales to Mexico involve as much as a 50% duty, making their product prohibitively priced, except for a few buyers. 3-3 , - -. ;ttII'. ... ,- . - - .... t.. .... - .. ) - - - .... , .. - .. - ~ .. - ... ~... ... - .. - .. .. ~ al f .. ... ... ... He noted that sales to areas like Mexico are very difficult because the company would need to establish a sales outlet in which all of their custom interiors and accessories could be presented or displayed. He is reluctant to consider foreign markets for their mobile homes, noting that domestic retailers have ~lways come to them to purchase mobile homes and they do not promote sales to any great extent. Mobile home sales are currently down drastically, however, when we discussed the prospect of some form of international trade assistance program to help local manufacturers expand sales, he was not particularly interested. He did indicate, however, that if foreign distributors (buyers) became interested, approached them to buy mobile homes, and provided a sales-outlet in that country, he would be interested. 4. Scott specialty Ga.e., Inc. 2600 Cajon Blvd. San Bernardino CA 92411 714/887-2571 714/887-0549 Contact: Mr. Donald Tyssee, Vice President Scott is a manufacturer and exporter of specialty calibration gases, with 50 employees, $5 million revenue, and was established 1961. All of the products are developed locally with no imports. Mr. Tyssee estimates 20% of his products in San Bernardino are exported to the Pacific Rim - from Australia to Korea, roughly up to $1 million a year. Cylinders of gas are shipped by truck to the Ports of Long Beach and Los Angeles for these export shipments. He expressed interest in participating in any program that would promote new international business for established companies. 5. Ground Bog, Inc. 2501 E. 5th st. San Bernardino CA 92410 714/888-2818 Contact: Mr. Richard Carlson, President Ground Hog is a manufacturer and exporter of hand-held earth drills, with 15 employees, and $5 million revenues. Ground Hog produces hand held drills and parts. Sub- assemblies such as engines are sourced in the Midwest and trucked to San Bernardino. 3-4 - .- .. ... f Itlltl - '" .. '... .. - .. ~ .. .. .. I) .. - .. II- , ... .. - - t - .. - ~ ... .. .. .. _i ... ... i .. .. ... ... Mr. Carlson indicated that Ground Hog does little export business, but has exported to New Zealand, Spain and Israel in the past. He is anxious to know what assistance might be available for international businesses expansion. &. Pleetwo04 Travel Trailers 255 S. Pepper Ave., P.O. Box 6066 San Bernardino CA 92403 714/874-0242 714/874-2002 Contact: Mr. Carl Betcher, General Manager Mr. Jim Sheldon, Marketing Director - 714/351-3500 (Riverside) Fleetwood is a manufacturer, importer, and exporter of travel trailers, with 165 employees, $25 million revenues, and is 20 years old. In San Bernardino, Mr. Betcher expressed little interest in international business development, with less than 1% of their current business involved in exports. They shipped only a few vehicles to Japan in the last few years selling through local trading companies. In the Riverside headquarters office, Mr. Sheldon indicated that possibly 2% of their business has been international, specifically Canada. He is interested in Europe, but has done little to investigate the potential market. He expressed interest in knowing what assistance might be provided local manufacturers in expanding their business. 7. Delta Plo Manufacturing Co., Inc. 1875 W. Rialto Ave. San Bernardino CA 92410 714/888-3291 714/884-8475 Contact: Mr. Rick Ward, General Manager Delta Plo is a manufacturer and exporter of electric duct heating equipment, with 22 employees and $5 million revenues. The company is strictly ,involved in manufacturing. They do not produce for foreign markets, nor do they promote their products internationally. They estimate that approximately 3% of their products are sold overseas via sales to local contractors who in turn contract for overseas projects. One example is L&W Equipment. Mr. Ward did not express interest in international assistance programs and would, instead, rely on established contacts with wholesalers and contractors. 3-5 ,,., ( " .. ,... Ii" ... '... . ... - ... '" ... .. ... D ... ... ... ... , .. ... .. '"' . .. ... ... ''''' ... - ... '" .. - .. .. ..., .' ... 8. Koran Keat company 1411 E. Base Line San Bernardino CA 92411 714/381-7454 Contact: Mr. Jeff Tinsley, Controller Moran is a manufacturer and importer with a meat grinding and packing facility, with 85 employees, $65 million in revenues, and is 14 years old. This is the headquarters plant of a two plant operation. The other is in Colton and operates under the name Centennial. The company is currently working on a plan to export meat to Japan. Production of qround meat is for the local market, Southern California, New Mexico and Arizona. Less than 5% of the meat that they grind is imported and arrives from Australia. The balance of their sourcing is from the Midwest. Imports are trucked from the Los Angeles/Long Beach harbor. There is some interest in investigating what international business support might be available for local manufacturers. t. Baldwin Graphic Products 1351 E. Riverview Dr. San Bernardino CA 92408 714/824-7020 714/796-8297 Contact: Ms. Patty Armbruster, Secretary Baldwin is a manufacturer, importer, exporter of printing equipment accessories, with 52 employees, $10 million in revenues, and was established in 1965. Ms. Ambruster indicated that there are international shipments originating from this plant, but preferred not to provide any details. This is a global company with many divisions, headquartered in Stamford, Conn. Mr. st. John has been unreachable. We were also referred to Mr. Robert Doudican, Director of Sales, 401 Shippan Ave., P.O. Box 9314, Stamford, CT 06904, 203/359-8631, who was also unreachable. We also tried to reach Baldwin's Sales Manager, Mitch Quisgar, (714) 824-7020, to no avail. Should the City wish to pursue, we recommend this company be contacted. 3-6 j .... ( 'I..' 1 '... ... - .- - - - -- - - ... t - - - ... , ... ... ... - 1 ... - - 1- .. - .. - .. - .' ! .. .. ..' ... 10. Protection Devices, Inc. (formerly U.S. Alcohol Testing) 10410 Trademark st. Rancho CUcamonga CA91730 714/466-8378 Ms. Karen Laustsen, Vice President Protection Devices is a manufacturer and exporter of breath-testing equipment with 20 employees and $5 million revenues. Ms. Laustsen ind~cated that the company recently moved from San Bernardino when they needed larger facilities. Protection Devices exports globally, yet Karen indicated their exports were a very small part of their overall sales. She expressed great interest in any program that would expand international business. 11. Webber Engineering , Manufacturing 439 S. Stoddard Ave. San Bernardino CA 92401 714/889-0039 714/889-1434 Ms. Jackie Webber, General Manager Webber is a manufacturer, exporter of test equipment and amusement park rides, attractions and parts, with 25 employees, $5 million revenues, and was established 1975. After many attempts we were unable to meet with Ms. Webber directly. Our discussion with Webber staff provided limited information. They produce amusement park products and have had limited exports, but they are very busy domestically. 12. Contech Construction Products Inc. 1585 S. D st., Suite 203 San Bernardino CA 92408 714/885-8800 Mr. Frank Tolerico, Regional Manager Contech is a manufacturer, exporter of pipe, rails, walls, with 800 employees, $100 million revenues, and established in 1906. Mr. Tolerico indicated that 1% of their products are exported, stating that "their products do not lend themselves to international business." He did not express interest in programs or outside assistance in evaluating new markets either domestic or international. 3-7 , . f "1111 .. .... '"' ,... .... . ... ... ... ... .. ... .. I .. ... .. ... ." , " .. ... - ~I .. .. .. ,... ... ... .. .. .. .. .. ( ... .. .... ... 13. C' M ~iD.p.k, IDC. 4162 Georgia Blvd. College Park San Bernardino, CA 92405 714/880-1781 Contact: Hr. lCazya Mizuno, Assistant to the President C & M manufactures styrofoam packaging, has 140 employees, and $ 25 million revenues. The parent company is Chuo lCagaku. C & M Finepak is 40% Japanese owned and was acquired in 1986. The company conducts no international business -- it operates wholly within the United states -- selling to Wendy's, Long John Silvers, and airline food services. TWenty percent of sales are located in the greater Los Angeles area. The company located in San Bernardino in order to access Los Angeles and western states, and because of land availability, proximity to Southland Corporation, and the City's positive attitude and efforts. This is an excellent company to serve as advocate for other companies to locate in San Bernardino. 14. J & V ~oam Products 4062 Georgia Blvd. San Bernardino, CA 92405 417/880-1855 Contact: Hr. Carl Moyer, General Manager J & V Foam is a manufacturer. The parent firm Styrene Paper Corp., which is located in Tokyo. 100% Japanese owned, has 100 employees, and was in 1988. is Japan J & V is acquired The company is located near C & M Finepak and also functions entirely wi thin the U. S. No international business is conducted. J & V would also be a good "spokes-company" for the benefits of locating in San Bernardino. 15. Bkotek corporatioD 3932 N. Oxford Lane San Bernardino, CA 92404 714/882-3045 Contact: Hr. Larry Peterson, President Ekotek is a wholesaler and previous exporter of beef and meat. The company would be interested in programs that would support his company's exports. 3-8 - ... .- .~ .. ( ." # '. '. .. ... ... .. ... -. ... ... III >> ... ... ... ... , # ... III ... I. .. ... .. .. III .. .. ... III .. .. I .. ... ... '.. PART II Other com~anie. contacted Arrowhead continental, Inc. 1324 Rialto Ave., P.O. Box 2211 San Bernardino CA 92410 Mr. J. Giebeler, President Manufacturer, importer, exporter oil field equip, pumps. 10 employees, established 1947, $5 mil/rev, oriqinal phone disconnected, no listinq, no contact. Arrowhead Venetian Blind company 2698 Arrowhead Ave. San Bernardino CA 92405 714/886-1341 714/886-2412 Contact: Mr. Anqel Sole Manufacturer, importer, exporter of vertical blinds. 4 employees, established 1937, <$500k/rev. No contact. Boeinq Company 808 E. Mill st., Suite 201, MS RPOO San Bernardino CA 92409 714/888-9700 714/888-9729 Contact: Ms.J.J . Thorp, Office Manaqer, Defense/Space Grp. Manufacturer, aerospace missiles division. No local involvement in international - this office supports military missile operations. sierra Wholesale Hardware, Inc. P.O. Box 5158 San Bernardino CA 92412 714/884-8644 714/381-3033 Manufacturer, importer of doors, hardware, toilets Contact: Mr. Frank Lyman, President 50 employees, $10 mil/rev, established 1946, no answer, no contact. Kazarian Manufacturinq, Inc. 354 S. I st. San Bernardino CA 92410 714/885-6107 714/889-3926 Contact: Mr. Mike Kazarian, President Manufacturer of store fixtures, production for domestic clients only, no interest in international. 3-9 ,. { -.. ,.. ... ~.. .. .- .. ."", .. .. .. . .. .. .. .. , ... .. ... .. '.. .. .. t- .. .. ... .. ... .. \ ... I .. - .. . , -.. Karuko Botel , convention Center 295 N. ESt. San Bernardino CA 92401 714/381-6181 714/381-5288 Contact: Mr. James Deskus, General Manager Hotel, Restaurant Hotel. Also contacted Angela Latin, Director of Sales & Marketing, has experience with Maruko chain. May be useful in recruitment efforts pending further contact re: Japanese ownership. California Motoraporta 4532 N. Acacia Ave. San Bernardino CA 92405 714/881-1689 Manufacturer, disconnected, importer of sporting out of business. goods. Phone cargill J:nc. 19684 Cajon Blvd., P.O. Box 9010 San Bernardino CA 92407 714/880-1309 Contact: Mr. Paul Campbell, Operations Superintendent Manufacturer grain. John Olive moved to Ogden, Utah Regional HQ, no international shipments from San Bernardino, just small service staff. culligan USA, .estern Region 3633 University Parkway San Bernardino CA 92402 Contact: Mr. John McNeely, General Manager 714/887-2557 714/887-2563 708/205-6000 Chicago - Mr. Rose. Manufacturer, exporter water softeners. 6 employees, $6 mil/rev. No export operations from San Bernardino. Rockwell J:nternational 1911 S. Commercenter E., Suite 305 San Bernardino CA 92408 714/386-2200 Contact: Mr. Jeffrey Brady Manufacturer, no longer there, no forwarding address. Ekotek Corporation 3932 N. Oxford Land San Bernardino, CA 92404 714/882-3045 Contact: Mr. Larry Peterson, President. Wholesaler and previous exporter of beef and meat, Would be interested in programs that might support exports. 3-10 'fl1t ... I <0.1 ..... .... .... '"" .. .. ... \.. .. .. . y, .. .. .. .. , .,. .. .. .. ~ . .. .. tl!" .. .. .. .. .. Glan Strand San Bernardino 714/981-3697 Contact: Charles Cogan. Manufacturer and exporter of fiberglass manufacturing equipment. Unable to reach. XMEX Xnternational 1264 Waterman Suite 7 San Bernardino, CA 92401 714/381-2885 Importer, phones disconnected with no forwarding location. OBB Bnterpri.e., Xnc. 5730 Dogwood San Bernardino. Manufacturer, exporter of terra cotta cookware. 1990 California Manufacturers Register shows $ 1 million revenues, 15 employees, established 1986. No phone listing. P.B. O'Hair , Co. 1304 E. San Bernardino Ave. San Bernardino, CA 92408. Manufacturer, importer, exporter of waterworks supplies. California Manufacturers Register 1990 shows 23 employees, $ 25 million revenues, established 1906. Unable to locate accurate telephone and address for company. SOURCES OF INFORMATION TO COMPILE LISTS OF PRIVATE COMPANIES THAT MIGHT BE CONDUCTING INTERNATIONAL BUSINESS Southern California Trade Register U.S. Importers and Exporters Directory California Manufacturers Directory California State University San Bernardino, interviews Inland Empire Economic Council, interviews San Bernardino Chamber of Commerce directory, interviews City of San Bernardino Yellow Pages Teofilo & Associate Companies files Greater Los Angeles World Trade Center Assn. files WORLDPORT LA files .. .. I .. 3-11 .. .... .. - - .. .. r "'IIH ", ... ... .. - .. '" .. .. .. .. .. .. .. .. ... " .' .. .. .. .. .. ... .. ... .. ... .. ... "" ... ( ,. ....' .. ... loot ATIACHMENT 4 WORKING PAPERS SUPPORT SERVICES FOR INTERNATIONAL BUSINESS The following resource directory has been compiled specifically for the City of San Bernardino to ensure that, in its plans to build an international economic development program, efforts are not duplicated. The directory contains major resources available to the City, and to the companies within and around the city, that may need assistance in developing their international business. I'EDERAL GOVERNMENT 11. S. DEPARTMENT OF COMMERCE International Trade Administration/Foreign Commercial Service (ITA/US&FCS) District office: 11000 Wilshire Blvd., Suite 9200 Los Angeles, CA 90024 Tel: 213-575-7207 Contact: Sherwin Chen, Deputy Director Santa Ana branch office: 116-A West 4th Street, Suite 1 Santa Ana, CA 92701 Tel: (714) 836-2461 Contact: Jesse Campos, Manager The U.S. Department of Commerce offers a wide range of valuable information for exporters. San Bernardino firms interested in developing international business are well advised to utilize the ITA trade services which are relatively low cost, thorough and professional. Services tend to favor exporters for obvious reasons, but information on sourcing internationally can also be accessed through the ITA. Through its many overseas offices, the Department of Commerce ITA can provide in-depth information on international markets, research the export potential of a particular product, uncover trade leads, and develop overseas contacts. The Department of Commerce conducts 4-1 overseas trade missions, catalogue exhibitions, and assists firms participating in overseas trade shows. It also conducts export seminars and workshops, often in cooperation with the SBA. There are four ITA offices in California. The closest office of the Commerce Department ITA is located in Santa Ana. There are also ITA offices in Los Angeles (Federal Building, Westwood), San Diego, and San Francisco. U. S. DEPARTMENT 01' COMMERCE ' Bureau of Export Administration (BXA) 3300 Irvine Avenue, Suite 345 Newport Beach, CA 92660 Tel: 714-660-0144 Contact: Mike Liikila, Regional Director BXA aids exporters in determining the requirement for export licenses and administers the issuance of export licenses. This office also sponsors monthly seminars giving regulatory guidance to exporters who require licenses. Affected exporting industries include high- tech, military, electronic, advanced material, and computer industries. Low tech or consumer product exporters, such as companies currently in San Bernardino, generally do not require export licenses. UNITED STATES CUSTOMS SERVICE Los Angeles District 300 S. Ferry Street Terminal Island, CA 90731 Tel: 213-514-6001 Contact: Tom Winkowski, Assistant District Manager Regional office for western U.S. One World Trade Center Long Beach, CA Customs officers are present in the Los Angeles district ports of entry: Port of Los Angeles, Port of Long Beach, Los Angeles International Airport, with part-time presence at San Luis Obispo, Port Hueneme and Norton Air Force Base. Customs will be present at Ontario Airport once international service starts there. (Both AeroMexico and Mexican Airlines have expressed interest to operate primarily tourist flights out of Ontario Airport; such requests are being considered in the context of the new terminal planning for Ontario; the plan is to convert the 4-2 .. .- current terminal into an international terminal; start up of international flights at Ontario is slated for mid- 1995, according to LAX planners.) Approximately one year ago, the Customs Bureau reviewed bids by warehousing companies wishing to be designated as centralized examination stations (CES). A CES is an inland (i.e. physically removed from the port-of-entry) facility staffed by customs personnel and designated as an area to examine goods. The concept is to move cargo away from the ports and also to bring the cargo to customs inspectors, rather than vice versa. There were several Inland Empire applicants for CES status; their bids were denied because the area falls outside the Los Angeles port of entry geographic limitation which has been mandated by Congress. All of the current CES facilities are therefore located either in Long Beach, San Pedro, Carson, Compton, or downtown Los Angeles. This situation should be monitored by San Bernardino since designation as a CES can be extremely lucrative for a warehouse, inasmuch as there are very limited options available to importers whose goods are directed into a CES by Customs. In short, CES business is a locked- . in business. Customs is currently working with UPS to support their international business at Ontario, specifically a 500,000 sf warehouse. This should also be monitored. There is no customs service present in the Inland Empire, despite the presence of a foreign trade zone and a foreign trade sub-zone in Ontario. Goods imported into the Inland Empire cross customs at the port of entry and are then transported to the Inland Empire. The clearance of goods through customs and the arranging of transport to the Inland Empire is normally the job of a customs broker, who is a vital link in the international trade chain for the Inland Empire. U,S. SMALL BUSINESS ADMINISTRATION (SBA) Santa Ana District 901 West civic Center Drive, suite 160 Santa Ana, CA 92703 Tel: 714-836-2494 Contact: Steve Waddell, District Director 4-3 - ;- , - ... t !I:I' ~ "- - - - .. - ... , .- ... .. ... ml ... ... ... .. , ". - .. ... tr .. ... - ,.,. ... .. ... .. ... .. ... , ~. .. .. ... .. .. Los Angeles District 330 North Brand, suite 1200 Glendale, CA 91203-2304 Tel: 213-894-2956 Contact: M. Hawley Smith, District Director International services provided by the SBA include educational seminars and conferences on exporting, financial assistance, and initial market studies through the Export Information System. The Service Corps of Retired Executives (SCORE) provides one-on-one counseling by retired executives with years of business and international experience. Counseling and other export assistance is also available through SBA's cooperative effort with the Small Business Development Centers and Small Business Institute (SBI) networks, located at numerous colleges and universities. In cooperation with the Federal Bar Association, the SBA can also provide initial legal consulting on exporting. The closest SBA office to San Bernardino is located in Santa Ana. This office has as its territory Orange, Riverside and San Bernardino Counties. STATE GOVERNMENT STATE OF CALIFORNIA Department of Commerce Office of Foreign Investment 801 K Street Sacramento, CA Tel: 916-322-3518 Contact: Brenda Lopes, Associate Director Office of Business Development Sacramento, CA Tel: 916-445-8943 Contact: Robert Berry, Regional Marketing Association Coordinator Office of Business Development 200 East Del Mar, Suite 302 Pasadena, CA 91105 Tel: 818-568-9856 Contact: Laurel Shockley 4-4 ~- . - l ;"" ~ ".... - ... .- . ... .- .. . J_ .. .. .. ~ .. ... .. ... . .. ... .. I .. .. ... t.. ... - ... ... .. .. .. I ~. .. ,.- ... .. ... The California state Department of Commerce Offices of Foreign Investment and Business Development channel business investment into Southern California by working with city and county economic development agencies, as well as with non-profit economic development agencies such as the Inland Empire Economic Council and the Riverside Economic Partnership. The Office of Foreign Investment is the direct liaison point to California state's five overseas offices in Hong Kong, Tokyo, London, Mexico City, Frankfurt. Opportunities are then channeled into the field office, which in the case of Southern California, is an Office of Business Development branch office. For domestic relocation, a wide-ranging referral network is employed including local real estate brokers, developers, banks, and accounting firms. The OBD office in Pasadena is the contact for localities in Southern California en route to Sacramento. This office performs site analysis and accompanies investors and relocators (both domestic and foreign) on local site tours. The City of San Bernardino should have a relationship with this office as well as with the head offices in Sacramento. The OBD office in Sacramento administers a program called reaional marketina arOUDS which have recently emerged with the support of the California Department of Commerce, California legislature representatives, and the private sector. In the case of Northern California, PG & E provides funds to the program. The "regional marketing groups" pool resources to jointly market their region by attending trade shows, advertising in site selection magazines, calling on major corporations planning expansions or relocation. Regional marketing groups which now exist include: Northern California Industrial Development Executive's Association (NORCAL IDEA, representing 20 counties north of Sacramento); Bay Area Economic Forum (group of executives from major corporations in the Bay Area); California Central Valley Economic Development Council (CCVEDC, representing 8 counties in the central valley south of Sacramento); and Sacramento Area Marketing Group (SANG, also known as the Capital Committee, representing 6 counties around Sacramento). The OBD office also reports a "fledgling group" from the Inland Empire, the Inland Empire Economic Council. The City of San Bernardino should broach the subject of a 4-5 regional marketing group with the IEEC as part of its planned membership in the IEEC. . The regional marketing group concept appears to be very much in favor in Sacramento. OBD sources report that funding for the program is relatively stable. There also seems to exist in Sacramento a desire to attract foreign investment into areas outside of Los Angeles County. The City of San Bernardino may find a good advocate for San Bernardino's cause in some of these offices. The Pasadena OBD reports that the most effective way regional marketing groups and/or individual localities work with OBD is when a central coordinator/liaison is designated to liaise with OBD; this coordinator/liaison should be highly aware of site availability and should also have the power to ease potential investors through bureaucratic permitting processes. STATE OF CALIFORNIA California Stat. World Trade Commission 1121 L Street, Room 310 Sacramento, CA 95814 Tel: 916-324-5511 Contact: Greg Mignano, Director Export Development Office One World Trade Center, Suite 990 Long Beach, CA 90831-0990 Tel: (213) 590-5965 Contact: Bob DeMartini, Director California State Export Finance Office (CEFO) 107 South Broadway, Suite 8039 Los Angeles, CA 90012 Tel: (213) 620-2433 Contact: Irene Fisher, Director The California State World Trade Commission is the state's leading agency for export promotion, offering several services. Policy and Research area is considered the head office of the World Trade Commission, located in Sacramento. This office sets policy for the organization, lobbies on state and federal levels for better export legislation, and tracks bills moving through government. They also co- publish California Manufacturer's Registry and the California International Trade Directory. 4-6 The Export Finance Office, with offices in San Francisco and Los Angeles, guarantees working capital loans, provides loan guarantees to exporters, financial counseling, maintains an accounts receivables facility, and provides information on foreign country and foreign buyer credit-worthiness. The CEFO reports very limited usage of its services by San Bernardino firms despite several marketing trips and educational forums staged in the Inland Empire. The Export Development Office (EDO) organizes seminars and conferences on exporting, promotes the participation of California companies in overseas trade shows and trade missions, and maintains a computerized trade lead system. This office has an excellent track record in connecting companies with buyers through trade shows, and the office is highly recommended. According to EDO statistics, participation by San Bernardino county companies in the State Export Development programs has been very minimal, representing 2.2% of statewide industrial participation in the program in 1990. The closest office of the California State World Trade Commission to San Bernardino is in Long Beach. STATE OF CALIFORNIA Center for International Trade Development (CITD) CITD at Citrus College Territory: L.A. County and West San Bernardino County (Works in conjunction with East Los Angeles SBDC.) 363 South Park Avenue, suite 105 Pomona, CA 91766 Tel: 714-629-2223 Contact: Ralph Jagodka, Director CITD at Riverside Community College Territory: Riverside County, East San Bernardino County 1760 Chicago Ave., Bldg. K-1 Riverside, CA 92507 Contact: Kathleen Barros, Trade Specialist Tel: 714-276-3400 CITDs are non-profit, California State-funded agencies made available through the California state community college network with the purpose of assisting small to medium sized businesses become involved in the international markets. CITDs function primarily as a referral agency, supplying information on how 4-7 I ~ governmental, non-profit, and private sector agencies can be utilized throughout the international transaction process. They also offer staff development programs to work in-house with companies on solving international business problems, and some work in conjunction with Small Business Development Centers (SBDC, below). .,- ,- - .... .. STATE OF CALIFORNIA Small Business Development Center (SBDC) program c/o California State Departm~nt of Commerce Office of Small Business, SBDC Program 801 K Street, Suite 1600 Sacramento, CA 95814 Tel: 916-324-9234 Contact: Dr. Ed Kawahara, State Director .. ... t.. ... .. Inland Empire Economic Council Inc. SBDC (just began) Territory: San Bernardino, Riverside Counties c/o Inland Empire Economic Council 100 N. Haven Avenue, suite 100 Ontario, CA 91764 Tel: (714) 941-7877 Contact: Steve PonTell (temporary contact) .. o .. ... .. ,... ,.' Southern California Export Assistance SBDC 124 E. Olympic Blvd., suite 517 Los Angeles, CA 90015 Tel: 213-749-8698 Contact: Fargo Wells, Director Satellite office: Central Coast World Trade Center Association SBDC 300 Esplanade Drive, Suite 1020 Oxnard CA 93030 Tel: 805-988-1406 .. .. .. . 110 .. ... ... ... .. Northern Los Angeles SBDC (not yet begun) Territory: Los Angeles, Santa Barbara, Ventura counties Valley Economic Development Center 14540 Victory Blvd., Suite 200 Van Nuys, CA 91411 Tel: 818-989-4377 Contact: Roy Muto, Director ... .. ... .. ... I .. . 4-8 ... .. ... East Los Angeles County SBDC ,(at Mount San Antonio Community College) linkage with Pomona citrus College CITD and eventually with San Bernardino/Riverside SBDC) Territory: East Los Angeles, Pasadena, Glendale, West Covina, Pomona 363 S. Park Avenue, Suite 105 Pomona, CA 91766 Tel: 714-629-2247 Contact: Toni Valdez, Director Rancho Santiago SBDC Territory: Orange County 17th & Bristol Street Santa Ana, CA 92706 Tel: 714-564-6775 Contact: Hilda Roberts, Manager Southwestern College Small Business and International Trade Center Service southern San Diego county; international trade expertise 7101 Siempre Viva Road, Suite 200 Otay Mesa, CA 92173 Tel: 619-661-1135 Contact: Hugo Amores, Manager The goal of the SBDC program is to provide comprehensive services to small business owners and individuals interested in starting businesses resulting in the increase of job opportunities and local revenues. Funding is a patchwork of federal funds from the Small Business Administration and state funds through the California Department of Commerce and the California State Chancellor's office. Direct services are provided by local centers who receive state funding and certification from the California Small Business Development Center Program. SBDCs provide three basic services: 1) Information; distribution of basic business and economic information and referral services; 2) One-on-one counseling; providing technical assistance in the areas of business planning and management, financial analysis and finance and marketing; 3) Seminars; sponsoring training and educational activities with Chambers of Commerce, educational institutions, SCORE, job training and placement programs and other business organizations. 4-9 c Some SBDCs are designated as having special expertise in international trade issues. In Southern California, those SBDCs are the Southwestern College Small Business and International Trade Center in southern San Diego and the Export Assistance SBDC in Los Angeles (just begun). Other SBDCs are directed to refer clients to corresponding CITDs for international trade related issues. 8U BBRNAllDINO COUNTY A!JD CITY COUNTY OF SU BERNARDINO Economio and Community Development 474 West Fifth st. San Bernardino, CA 92415-0040 Tel: 714-387-4573 Contact: Tom Loren, Director of Development Terry Moore, Vice President, Pathfinders From 1985-1991, San Bernardino County maintained representation through the offices of Pathfinders in London and Tokyo with the goal of attracting international direct investment into the County. Following recent budget cuts, the County no longer has those offices. The County now relies on the State of California's five overseas representative offices for this function. CITY OF SU BERNARDINO Mayor's Office Office of International Council San Bernardino City Hall 300 North "D" Street San Bernardino, CA 92418 Tel: (714) 384-5133 Contact: Thelma Press, CUltural and International Affairs The office of international council oversees the organization and reception of visiting VIPs, international trade missions into the city, and the sister cities programs. The office also has a liaison function with many local bilateral chambers of commerce and ethnic business associations. CITY OF SU BERNARDINO Eoonomic Development Agency (ECA) 201 North E Street, 3/F San Bernardino, CA 92401-1507 Tel: (714) 384-5081 Contact: Timothy C. Steinhaus, Agency Administrator 4-10 '. ~ ( - ~I"l' .. - ... ... - .. .. .. t.. ... ... .. II .. .. ... ... ,.' ... ... ... C .. .. ... ". .. ... .. ... .. ... . ... ! ,.. ~ .. ... ... San Bernardino's Economic Development Agency was formed to develop an efficient, comprehensive economic development strategy utilizing the programs and incentives offered by four agencies, both public and private: the city of San Bernardino Development Department, (combining both redevelopment and community development activities), San Bernardino Downtown Main Street, Inc, the San Bernardino Economic Development council; and the San Bernardino Convention and Visitors Bureau. The City's Development Department aids firms wishing to locate in any of San Bernardino's ten redevelopment project areas. CITY OF SU BERNARDINO (Former) San Bernardino Eoonomic Development Council Contact: Tim Steinhaus The former Economic Development Council was involved in the international marketing of San Bernardino in the early 1980s; since the Council was disbanded, no formalized international marketing effort has been undertaken. The Economic Development Council promoted San Bernardino independently and also as part of Department of Commerce "Invest in American cities" program. Between 1983-85, a total of 58 corporate executives visited San Bernardino. Of those companies, one British metals company now has a plant in San Bernardino, employing 200. Three others were close to investing in San Bernardino at the time of the dissolution of the EDC. SU BERNARDINO CHAMBER OF COMMERCE 546 West 6th Street, P.O. Box 658 San Bernardino, CA 92402 Tel: (714) 885-7515 Contact: Executive Vice President (position being filled) The San Bernardino Chamber of Commerce currently has no committee focusing on international trade due to lack of member interest. 4-11 ! ..~ ... ... ,- ... ... ... t.. .. ... ... D .. ... ... ... .. - ... ... J ... .. ... >>"" ... .. ... ... ... ... .. ,. ... ... ... REGIONAL/INLUD EMPIRE INLUD EMPIRE ECONOMIC COUNCIL fIEEC) 800 N. Haven Ave., Suite 100 Ontario, CA 91764 Tel: (714) 941-7877 Contact: Steve PonTell, President IEEC formed in late 1980's by a group of Inland Empire "west end" real estate developers who felt that county programs were not marketing their projects effectively. IEEC is now generally perceived as a key vehicle for important decision makers to work on issues, lobby, and as a general brainstorming center for the economic planning and development of the Inland Empire. The IEEC publishes a "Quarterly Economic Report," written by local economist John Husing. This publication lends prestige and credibility to the IEEC. The IEEC stages an annual Inland Empire Conference and recently organized a visit by Japanese bankers into the region, which was considered to be successful. The IEEC was recently named as the SBDC for San Bernardino and Riverside Counties. San Bernardino should look to this SBDC for the education and nurturing of international business among small to medium sized local companies. Although still in the planning stages, it is thought that the international component off this SBDC will be fulfilled by partnering/referral to CITDs in Riverside and/or Pomona, or through the Global Trade Association. GLOBAL TRADE ASSOCIATION fGTA) c/o Inland Empire Economic Council, above Contact: Richard Poplett, President Tel: 714-391-9622 The GTA is a private, non-profit group of professionals involved in and concerned about international trade issues. It is a trade association focused on international business issues, much like the Foreign Trade Association, and other regional groups. The GTA is housed and supported by Inland Empire Economic Council, and aspires to be the "international arm" of IEEC. The GTA has links with both Cal Poly/Pomona and Riverside Community College and services mostly very small companies, but hopes to expand membership and services. At one point, the GTA had 35-40 members but is currently undergoing major reorganization and refocus. 4-12 CITY OF ONTARIO It should be noted that the City of Ontario recently joined the Greater Los Angeles World Trade Center Association (GLAWTCA). The City seems interested in establishing some kind of international trade presence in Ontario. The GLAWTCA has no contractual arrangement with the City of Ontario outside of membership. ONTARIO CHAMBER OF COMMERCE 123 West "D" street Ontario, CA 91761 Tel: (714) 984-2458 The Ontario Chamber of Commerce currently has no committee focusing on international business. FOREIGN TRADE ZONES (FTZ) FTZ 50-1 California Commerce Center 9580 Commerce Center Drive Rancho Cucamonga, CA 91730 Tel: 714-466-8268 Contact: David Ariss, Managing Director FTZs are warehouses designated by the Department of Commerce and the u.s. CUstoms Service to be outside the United states for duty and revenue purposes. Merchandise is subject to duty only when it leaves the FTZ for consumption in the U.s. market. If the FTZ merchandise is exported, there is no duty liability. While in the FTZ, merchandise may be stored, sold, exhibited, assembled, disassembled, repacked, distributed, sorted, tested, graded, cleaned, mixed with other merchandise, otherwise manipulated or destroyed. The merchandise may also undergo manufacturing operations. Merchandise subject to quota may be stored in an FTZ until a closed quota reopens. FTZ sub-zones are special purpose facilities set up by companies whose manufacturing operations cannot function effectively in general use, public FTZs. Sub-zones are located in the user's own facility. FTZs are an important part of the structure of international trade which can add real value in transactions. For example, FTZs can help by deferring payment of duties, or in some cases reducing duties. (If components of a product have a higher duty rate than the completed product into which they are manufactured or assembled, the duty rate for the completed product may 4-13 apply). However, in the Greater Los Angeles region the FTZ concept has not quite caught on as it has, for example, in certain Mexican border towns such as Nogales and San Antonio. FTZ 50 is one of six FTZs in the Los Angeles region: 1 in Ontario, 1 in San Diego, 1 in Long Beach, and 2 sub- zones at Toyota facilities, 1 sub-zone in Ontario. FTZ 50-1 is a part of the FTZ 50 in Long Beach. The Ontario sub-zone is located at National Recreational Vehicle. In addition, Leisure Oddysey, a San Bernardino company, has also applied for sub-zone status according to the Port of Long Beach. Through the use of an FTZ, Leisure Oddysey's major competitor Winnebago had been able to effectively undersell both Leisure Odyssey and National Recreational Vehicle (located in Perris). This motivated the competitive action by the two Inland Empire recreational vehicle manufacturers to gain access to FTZs as well. According to the California Commerce Center management which runs the FTZ 50-1 in ontario, FTZ status has not been a special drawing point to attract tenants into the business park. The general level of understanding of FTZs in the Inland Empire is deemed low. However, it should be noted that neither is the Port of Long Beach FTZ flourishing. The ability to obtain a new FTZ is becoming more complex. There is some reluctance among FTZ administrators in Washington D.C. to designate more FTZs unless a clear demand is demonstrated for such facilities, ie. demonstrable tenant demand specifically among clients currently paying substantial customs duties. Given the poor use history, tendency toward not granting new FTZs, and the possibility that the North American Free Trade Agreement (NAFTA) may counter the need for FTZs, the future of FTZs in the Inland Empire is not certain. RIVERSIDE DEVELOPMENT PARTNERSHIP. INC. (RDP) 3750 University Avenue, Suite 260 Riverside, CA 92501 Tel: (714) 781-9000 Contact: Steve Albright, President RDP is a private, non-profit, member-supported economic development agency formed in 1984 focused on business recruitment into the Inland Empire. 4-14 ~ ( "', ~ '... ... III .... .. III ... .. t.. .. ... .. ,. " .. .. .. ... ,.. ... ... .. I!!IIII iii '"' .. t- III '"' ... ... .. .. ... ... ... ... ... Business recruitment is both domestic and international. ,For international recruitment, the RDP works closely with the California state Department of Commerce Office of Business Development and through an informal network of referrals from real estate brokers and member companies. The RDP expressed its belief that it is more cost- effective to work through the state structure than go on costly overseas trade missions, the results of which are difficult to quantify. WORLD AFFAIRS COUNCIL 4800 Magnolia Avenue Riverside, CA 92506 Tel: 714-682-4505 Contact: Marilyn Jacobsen The World Affairs Council is a private, non-profit educational association with focus on international issues sponsoring 20-30 events per year; primarily sponsoring speaker forums with international politics and/or economics as topics. RIVERSIDE CHAMBER OF COMMERCE 4261 Main street Riverside, CA 92501 Tel: (714) 683-7100 The Riverside Chamber of Commerce currently has no committee focusing on international business, they refer telephone requests to RCC/CITD. MISCELLANEOUS/OTHER INTERNATIONAL BANltS Banks with international departments provide a variety of services. These include: credit information on foreign firms and overseas agents; international trade finance including letters of credit, foreign collections, international fund transferS, foreign currency exchange, export financing, as well as information and advice on international trade, support in international markets through representative networks. Classically, an importing company with a recurring need to finance trade will open a line of credit with a bank which is designated for usage in opening letters of credit or other international methods of payment through the banks. The minimum size for such a line of credit would range from one-quarter to one million dollars. 4-15 r f rill ~ i.... .. .. ,- .. ... .. ... .. .. .. t '"' .. '"' ... , .. ... .. .. ~, .. .. ... .... "" '"' ... .. ... .. .. I - ... - - None of the local banks in San Bernardino are involved in international banking business except for the occasional opening of a letter of credit on a cash collateral basis. Bank of San Bernardino reports that there are very few requests for international trade finance from customers and that, moreover Bank of San Bernardino is generally "not interested" in that kind of business. Life Savings Bank as an S & L does not become involved in international trade finance. Chino Bank, the largest local bank in the Inland Empire, reports very little demand for trade finance, with existing demand handled through a correspondent relationship with the Bank of America. In general, all of the local San Bernardino banks pointed to the majors, specifically Bank of America and Security Pacific Bank, as the key players in trade finance, and moreover, that the larger sized lines of credit are established through the Los Angeles offices of the majors. In conversations with Bank of America's international office in Los Angeles, it was confirmed that a certain level of business out of the Inland Empire through its own network and also through correspondent banking relationships. Union Bank in Los Angeles also reported correspondent relationships with Inland Empire banks producing a modest level of activity out of the region, primarily through its office in Riverside. INTERNATIONAL LAW A!JD ACCOUNTING FXRMS Large law firms and Big Six accounting firms may, through their international networks, provide information on international markets, conduct feasibility and marketing studies, help establish international contacts and assist in product promotion and provide strategic international expansion consulting. CUSTOMS BROKERS A!JD FREIGHT FORWARDERS It is a long reach from San Bernardino to the Los Angeles ports of entry and therefore San Bernardino importers need a relationship with a customs broker to clear goods through customs and to arrange transport to the ultimate destination of the goods. It is useful for an importer to have close access to its customs broker, however there are no customs brokers rep offices locally in San Bernardino. There is only one customs broker listed in the San Bernardino yellow pages and that brokerage has its offices 4-16 '...- * , , " -- ,.. ... "'" . .. - IiII , .. - ... - t . - ... .... , .. ... - ... ) ... ... ... "'" .. ... .. ... .. in Los Angeles. The broker reported a small amount of business flowing from the yellow page listing, mostly from small San Bernardino companies. ontario, with its vast direct importer warehousing community, is a better target for the brokers. If and when Ontario airport becomes an international port of entry, customs brokers will invariably open representative offices in the Inland Empire. INTERNATIONAL TRADE ORGUIZATIONS BASED IN LOS UGELES A!JD ORUGE COUNTIES Trade organizations and associations playa very vital role in the growth of an international trade community, primarily in networking and education. Below is a select listing of such organizations which are members of the Southern California Coordinating Council (SCCC). The function of the SCCC is to coordinate the programs offered by the various international trade organizations to avoid scheduling conflicts: Central Coast World Trade Center Association California Council for International Trade Export Managers Association of California Foreign Credit Insurance Association Foreign Trade Association of Southern California Greater Los Angeles World Trade Center Association International Business Association of Southern California International Marketing Association of Orange County Japan-America Society of Southern California Japan Business Association of Southern California Los Angeles CUstoms & Freight Brokers Assn. Propeller Club of the United States Southern California District Export Council World Trade Center Association of Orange County INTERNATIONAL BUSINESS EDUCATION PROGRAMS At many universities and colleges, faculty members have expertise in international business and may provide consulting services. Those universities and community colleges with SBDCs offer services to exporters. A pool of local International business school students and graduates is an important foundation upon which an international trade community is developed. ... . .. .. 4-17 ... .. ... ,- '- - ~ (' ". .. - .. .. .- - .. - .. ... .. ... .. Il .. .. .. Jill .. .. .. '"' ~. .. .. ... ~ ... .- ... - ... .. ... ( - ... .. , ... o California state San Bernardino 5500 University Parkway San Bernardino, CA 92407 Tel: (714) 880-5000 Offers an International Business Degree through the management department. The business dept. offers an MBA, and MPA plus undergraduate degrees in business administration with concentrations. Contact: Dean David Porter, Tel: 714-880-5700. o University of California at Riverside 900 University Ave Riverside, CA 92521 Tel: (714) 787-1010 Offers a Business Administration degree with an international relations minor as an option. o Riverside Community College 1760 Chicago Ave, Bldg. K-1 Riverside, CA 92507 Tel: (714) 276-3400 RCC Business Resource Center houses Center for International Trade Development. o California State Polytechnic at Pomona International Marketing and Management Department 3801 West Temple Pomona, CA 91768 Tel: (714) 869-7659 Offers an international business major and MBA. o Claremont McKenna Offers BA in economics, specializing in economics and government with international relations. o Claremont Graduate School 170 East 10th st. Claremont, CA 91711 Tel: (714) 621-8069 Offers MBA in management with a concentration in international business. o University of La Verne 1950 3rd Street La Verne, CA 91750 Tel: (714) 593-3511 Offers BS and MBA degrees in International Business and Language. 4-18 - CONSULAR CORPS There is a well developed consular corps in Los Angeles representing virtually every country with which the city of San Bernardino and its private sector might wish to conduct business. The role of the consulate is to represent its respective country in Los Angeles and the surrounding region, of which San Bernardino is included. While their objective is to promote business in their country, they are valuable resources for two-way trade. There is no active consulate in San Bernardino, except Mexico, which maintains a processing center. 4-19 + "' ,... I"" .. "" .. ... .. ... .. .. .. .. .. .. ... , ,.' .. .. - .. .. ... - .. - .. '"' ... - ... I ... ... ... ... "r' ~.'" ( ". - ... .. - ... - .. ~ ... - .. II) ... .. .. ..... , ". - ... .. Ie . ... .. tp .. - ... - .. - ... - .. - , ... ATIACHMENT 5 ThlTEKVlEWS AND CONI'ACI'S The following individuals were interviewed during Phase I to obtain information about global business trends, cities' economic development programs, perceptions of San Bernardino as a location for business, private sector activity, and international trade patterns in southern california. In addition to these interviews, forty-five other companies and organizations were contacted for background materials and information during Phase I. A list will be provided upon request. INTERVIEWS Steve Albright, Economic Development Partnership Dave Ariss, CA Commerce Centers, Rancho Cucamonga Kevin Artaserse, China General Plastics Corporation Captain Manny Aschmeyer, Stevedoring Services of America Henri Baglione, Brisnard Machine Inc. Kathleen Barros, CITD Riverside Community College Robert Berry, CA Office of Business Development Cecil Bird, Community Development Corporation Lou Borego, Moran Meats Daryl Brown, Economic Development, Nevada Mr. Burmeiser, Atlas Display Co. Cindy Butner, The Sun Paul Campbell, Cargill Inc. Richard Carlson, Ground Hog, Inc. Cathy, Economic Development Office, Nevada Mr. Cavalucci, Chino Valley Bank Clifton Chang, Altea Investment Co. Grace Yung Chiu Consulates of Mexico, Canada, China, Germany, Japan Frank Cottle, Office Technology Group-Ontario/Long Beach David Crampton, Southern Pacific Transportation Co. Mary Beth Crow, Economic Development, Souix Falls, SD Fermin Cuza, MatteI Inc. John DeCeseare, West Coast Logistics Services Bob DeMartini, California World Trade Commission Monica Durrand, PRESSA, Sonora/Tuscon Esther Estrada, Councilwoman, San Bernardino Al Fierstein, WORLDPORT LA (Port of Los Angeles) Irene Fisher, CA State Export Finance Office Dale Gilfillan, Economic Development, Lincoln Nebraska Don Haller, TABC (Toyota) Marty Hamilton, The Pathfinders 5-1 1- ( , ,. ... - ... ... ... .. .", ... ... .*' ... ... ... .11Io '. ...' ... .. .. .. . .. -.. *' .. ... ... .. ... .. ( ,. ... ... ... Bob Hammock, Inland Valley Development Authority David Hanes, AKZO Specialty coatings Paul Haney, Lockeed Air Terminal, Inc. Jerry Haugen, Port of Long Beach Bill Hoble Heinrich, First Interstate Bank Alan Heslop, Claremont McKenna College Ken Henderson, Econ.Development Agency, San Bernardino Kenneth Henderson, Stockton Chamber of Commerce Sam Henley, San Bernardino Area Chamber of Commerce Tom Hodge, World Trade Finance Mayor Holcolm, San Bernardino Fred Ho~g, Hill Farrar & Burrill Robert Huang, Wei Chuan Henry Hsu, Solidex John Husing, Inland Empire Economic Council Marilyn Jacobson, World Affairs Council, Riverside Ralph Jagodka, CITD Pomona/citrus College Ezell James, Economic Development Agency, San Bernardino Henry Jurgens, Union Bank, Los Angeles Kathleen Karahalios, Metropolitan Investing Inc. Mike Kazarian, Kazarian Manufacturing, Inc. Jack Kelly, Schneider Commercial Real Estate Ron Kennedy, WORLDPORT IA (Port of Los Angeles) Phil Kidd, Mitsui Fudosan Robert Krieger, Norman Krieger CUstoms Brokers Shirou Kunihira, Loma Linda University Jack Kyser, Economic Development Corporation LA County Michael Lai, Tatung John Lanslick, Economic Development, Tuscon Karen Laustsen, U.S. Alcohol Testing Co. Lilly Lee, Lilly Enterprises Tom Link, Los Angeles Business Journal Brenda Lopes, CA Office of Foreign Investment Sam Maejima, NEC Corporation Wilfred Marshall, Office of the Mayor, Los Angeles Michael Maudsley, Councilman, San Bernardino Tatsuo Matsoka, Mitsubishi Cement Corporation Al McCord, Economic Development, Anaheim John McNeely, CUlligan USA, Western Region Christophe Megavant, Besnier USA Bruce Mills, Life Savings Bank, San Bernardino Robert Mitchell, Inland Valley Development Authority Kazuya Mizuno, C & M Finepack Terry Moore, The Pathfinders Hiro Mutoh, Crown Electronics Mr. Nakamoto, Daimaru Patrick Norville, Bank of San Bernardino Norio Ohsawa, Nissan North America Consultancy Larry Peterson, Ekotek Corporation 5-2 - "- ~ steve PonTell, Inland Empire Economic council Richard Poplett, Maeco America & Global Trade Association David Porter, CA state University, San Bernardino Thelma Press, Office of the Mayor, San Bernardino Bill Puri, Bechtel San Francisco Jack Reilly, Councilman, San Bernardino Jerry Rogers, CA Poly, Pomona Ron Rosko, Derlan Industries Kevin Rupp, U.S. CUstoms Service Laura Schockley, CA Office of Business Development Bill Schoenfeld, Los Angeles Department of Airports Mark Scott, Mag Instruments Jim Shih, CUstom Craft Co. John st. John, Baldwin Graphic Products Tony Stapleton, Atkinson , Topeka Daniel Stark, San Bernardino Convention Visitors Bureau Tim Steinhaus, Economic Development Agency, San Bernardino Al Stewart, Schneider Real Estate Ted Suzuki, Toshiba USA Masanori Takeda, Japan Business Association Terry, Mercury Aerospace Fasteners J. Thorpe, Boeing Missile Systems Rick Uyeno, C & M Finepack Vagn, Plumrose Inc. Toni Valdez, Small Business Development Center, Pomona David Valesku, Economic Development, Ventura Jackie Webber, Webber Engineering' Manufacturing Mr. Weinstein, Bank of America Baxter Williams, San Bernardino County Ron Winkler, 10M Corporation Don Wylie, Port of Long Beach Theresa Shea Yamazato Leon Yeh, Cosmos International John Yeskel, METRO International Trade Services Inc. 5-3 - '- . ,.., ( l'!l!l' , , "' ... - ... ":- . ... - .. . .. - ... 11'" - .. - t... \ , - ... 1- .. - - '- ... - - - .. - .. I - ,. - - .. PROJECT TEAM BIOGRAPH II'S Merry Tuten, president, Greater Los Angeles World Trade Center Assooiation (GLAWTCA). Ms. Tuten has more than fifteen years of international experience, having held positions as head of one of the US's largest and most successful commodity commissions, the Alaska Seafood Marketing Institute; Director of Pacific Rim Relations for a Governor; and Director of a public corporation where she managed a $ 300 million natural resource and real estate portfolio. She holds a M.S. degree from The University of Michigan, and B.A. degree from the University of California, in resource management. Bob Poe, Vice President, Trade Development, GLAWTCA. Mr. poe is best known for convincing Federal Express to locate its world air cargo hub, and UPS to build its Asian air cargo hub, in Anchorage. He held positions as Director of International Trade, and Deputy Commissioner of Transportation, with the State of Alaska, and has seven years "Big 6" management consulting experience with Coopers & Lybrand and Price Waterhouse. He holds a M.B.A., and a B.S. in Business, from the University of Missouri - st. Louis. MiChael Klesh, Vice President, Sales , Marketing, GLAWTCA. Mr. Klesh has fifteen years international experience, having held positions as Marketing Manager with companies selling products, management development projects, and consulting services in more than seventy countries. He holds a M.I.M. degree from Thunderbird, and a B.A. degree from the SUNY, and is fluent in Spanish, Arabic, and Swahili. Tom Teofilo, President, Teofilo , Associate Companies. Mr. Teofilo is a trade and transportation veteran with more than twenty years of international experience. He is best known for his marketing achievements on behalf of the Port of Long Beach, and his experience in the shipping industry with Sea-Land Service, orient Overseas Container Line, and Korea Shipping Corporation. Debra Levine, Independent Consultant. Ms. Levine has considerable international banking experience, having spent six years in Asia and been employed by Standard Chartered Bank, the First National Bank of Chicago, and Banque Paribas. She holds a B.A. from the City University of New York and is fluent in Chinese and French. 5-4