Newspaper article The Christian Science Monitor

California's New Economic Magnet ; Sacramento Becomes a High-Tech Hub as Firms Flee Silicon Valley, Creating an 'Incubator Economy.'

Newspaper article The Christian Science Monitor

California's New Economic Magnet ; Sacramento Becomes a High-Tech Hub as Firms Flee Silicon Valley, Creating an 'Incubator Economy.'

Article excerpt

. - There is a part of Rick LaPado that still seems surprised to be sitting here. Even a decade ago, the thought of moving operations for a primary US defense contractor to this overlooked outpost of Bartlett pears and state bureaucrats would have brought a chuckle.

Today, however, Mr. LaPado sits in his air-conditioned office with a sense of satisfaction. The old Silicon Valley operation was too expensive, and moving across the country to be closer to the Pentagon seemed too traumatic. So here he is, in the remodeled hangar of an abandoned Air Force base, bolstering his company's bottom line in Sacramento.

LaPado, the general manager of Northrop Grumman's mission systems has caught on to something. A year after a recall campaign in which Arnold Schwarzenegger lamented the flight of California companies to better business climates, Sacramento is becoming a safety net for a state concerned about losing businesses across state lines - or the Pacific.

Lower home prices and acres of open land have lured all kinds of companies - from large distributors to small-time manufacturers. But in particular, this emerging empire of strip malls and red-tile roofs is casting itself as the Bay Area's new back lot, filling an intermediate niche for companies that have moved past Silicon Valley's spark of invention but aren't yet to the point of outsourcing operations abroad.

"It's emerging as a different economy than anywhere else in California, and that is the economy of the future," says Robert Fountain of the Sacramento Regional Research Institute. "It is the incubator between the lab and the market."

The characterization fits LaPado's division of Northrop Grumman perfectly. When company changes forced him to look for a new property for his Silicon Valley division, prices there were as much as 10 times what he was paying. "I couldn't afford anything," he scoffs.

The answer: Run a leaner operation in the Bay Area, keeping only the talent he "couldn't afford to lose," and expanding elsewhere. He found that in Sacramento - cheap, convenient, close. While engineers in the Bay Area are wedged into tight spaces, those in Sacramento sprawl throughout the old hangar to test the antennas and communications equipment Northrop Grumman sells to the military.

"Lab tests use up a lot of floor space without a lot of people," LaPado says.

The lab has brought more than 300 jobs to Sacramento, and it is a taste of the economic revolution here. …

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