Last February the softwaremaker Electronic Arts went looking for
a new site to consolidate three company operations into a state-of-
the-art digital gaming studio. The California firm, worth an
estimated $13 billion, came to a decision three weeks ago. The
winner: Playa Vista, an enclave of Los Angeles.
The maker of electronic video games decided to stay in the Golden
State largely because of the labor force. "L.A. has a phenomenal
talent base," says John Batter, a vice president and general manager
of the firm's Los Angeles operation.
To hear the gubernatorial candidates talk about it, you'd think
California has become a Third World nation, a Bangladesh where
people wear a lot of spandex. As the would-be governors pitch their
wares for the Oct. 7 recall, they tell the same bedtime story: How
the California dream has turned into a nightmare.
Yet their gloomy scenarios may be a bit melodramatic, even by
California standards. True, the state is facing a serious budget
problem and, like the rest of the nation, is struggling to pull
itself out of an economic hole.
But the economy here is doing better than many states, and
California still has some built-in strengths that others don't.
Successes like Electronic Arts or Lockheed Corp. - busy building 100
C-17 military cargo planes in Long Beach - were created by a
hothouse of growth ingredients that only California can serve up: a
pool of educated workers, prestigious universities, great weather,
entrepreneurial vigor, and a walletfull of venture capital.
It's the formula generating a $1.36 trillion economy - the fifth
largest in the world. It draws 40 percent of the nation's venture
capital to the state and has helped create an explosive housing
market as well as awaken the slumbering high-tech industry.
It's gathering momentum despite the continued effects from the
Sept. 11 terror attacks, a national economic downturn, the impact of
the SARS epidemic on state travel and business, and the effects of
the Iraq war.
Still, there are concerns in the corporate community - notably,
the "hostile business environment" in Sacramento. "It's the inherent
strength of the California economy trying to overcome [a drag on
it]," says Jack Kyser, chief economist at the nonprofit Los Angeles
County Economic Development Corporation. "It's like a high-powered
vehicle stuck in a ditch. It's trying to get traction."
Political one-liners aside, the state is showing some verve:
* Job creation in California beat the rest of the nation for the
last three years, according to the Center for Continuing Study of
the California Economy in Palo Alto. Since May 2000, the state has
lost 20.7 percent of its computer and electronic manufacturing jobs,
while the US has lost 21. …
