Wrong Chip on Our Shoulder : Or, How to Shed an Image and Become a High-Tech Draw

Learn from your competition, a business axiom, applies equally to Southern California and the rest of the state. Both could learn a trick or two from neighboring Phoenix and Arizona.

Phoenix is glowing these days because four semiconductor plants are now a-building there--including the $1.3-billion plant, the world’s largest, being erected for Intel’s P6 microprocessor.

The four facilities will add 4,600 jobs paying from $23,000 to $50,000 a year--solid manufacturing jobs, too, not rocket science. To work with the sophisticated equipment and “clean rooms” of semiconductor plants requires community college training in applied sciences, but not advanced degrees.

“We have very good community colleges in the Phoenix area,” says Lee McPheters, head of the MBA program at Arizona State University. Maricopa County, in which Phoenix is located, boasts a dozen community colleges, which assist in training employees for local companies.

But hey, Los Angeles, Riverside, San Bernardino, Orange and Ventura counties have more than three dozen community colleges, and a total of 65 institutions of higher learning. They also train workers in everything from computer-aided design to real estate.

So why didn’t Intel, Motorola, Microchip Technology and SGS Thomson take a good look at Southern California for the plants they’re building in Phoenix? The Irvine Spectrum, the nation’s largest high-tech business park, didn’t receive an inquiry from any of the companies.

The region surely could use the good jobs, as it struggles out of recession and fights the sickening fear that only minimum wage employment will replace aerospace. So what’s the story?

Southern California’s bad reputation, deserved and undeserved, for bureaucracy, ignorance and high house prices.

“It would have taken 175 permits to build a semiconductor plant in Los Angeles; in Phoenix it takes only five,” says McPheters.

Whether that’s accurate or not, a lot of business people believe it. “Time is valuable in our business,” says a company official in Silicon Valley. “If it takes longer than two to three years to get permits and build a plant, that’s a whole microprocessor cycle gone.”

Local observers echo the complaints. “California courts have elevated government arrogance to an art form,” says Gideon Kanner, professor emeritus at Loyola Law School.

But the impression of high home prices, which discourage employees from relocating to Southern California, are less deserved than they used to be. In fact, Riverside County now has lower median home prices than Phoenix.

And the widespread impression that Southern California is a vast desert of bad schools and poorly prepared employees is incorrect. Yes, the region has a higher percentage of high school dropouts than Phoenix, 24% compared to 18.5%.

But the percentage of college graduates (23%) is significantly higher in Southern California than in Phoenix (15%).

Why, then, do companies cite lack of “access to trained employees” to explain why they didn’t consider Southern California for their plants? Reputation. Namely, the notoriety of the Los Angeles Unified School District, the poor test scores of California pupils generally and the state’s long-declining support for its schools. Other states and regions cite all those shortcomings to take business from California.

What can be done? Beyond the Herculean task of fixing L.A. Unified, the region should advertise the capabilities of its community colleges--the way Phoenix and other places blow their own horns.

And cut the anti-business red tape the way California’s state government did recently in persuading Intel to make a $500-million plant expansion at its Santa Clara home base.

Southern California certainly has the capability for this key industry. In Newport Beach, Rockwell’s telecommunications division is making a second $200-million investment to expand a plant that makes semiconductors for the company’s fax modems.

“The area meets all our criteria for infrastructure--clean air and facilities to process chemicals and employees who can operate this very expensive equipment seven days a week, 24 hours a day,” says Dwight Decker, president of Rockwell Telecommunications.

In Irvine, Motorola acquired a semiconductor plant from Western Digital and is making a $200-million investment to expand it. “We are very happy with the facility,” says a Motorola official.

Why the fuss about semiconductors? Southern California is hardly bereft of high-tech industry: The Irvine Spectrum, still being built, already has 2,000 companies in computers, peripherals, software, telecommunications and the bio-medical industry. Computer and electronics employment throughout the five-county region is rising again.

But semiconductor manufacturing represents a fresh opportunity. As chips become part of every kind of product, fabrication plants are being built in many locations. Companies want multiple sites to prevent total shutdown in case of a disaster. But they want them in the West so engineers can travel to any site in a single day. Intel now manufactures in Oregon and New Mexico as well as Arizona and California. Rockwell’s next semiconductor plant will be in Colorado.

Southern California, which hasn’t had much chip business since Silicon Valley was founded in the early space-program days 40 years ago, now has a chance for a share of this good manufacturing business if it makes an intelligent effort to be considered for plant sites, and to repair its bad reputation.

Phoenix’ success should be a good example and a wake-up call.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Dueling Desert Regions

With the exception of state income tax rates and education levels, Southern California and the Phoenix metropolitan area show similarity in a range of indicators. A look at the two areas:

Southern California * Business income tax:* 9.3% * Highest state income tax: 11% * Median home prices: $122,630 to $208,330 * Sales tax rates: 7% to 8.25% * Per-capita income:** $21,123 * Average education level: High school diploma: 22% Some college: 23 College degree: 23 Graduate degree: 8

(The remaining 24% accounts for those who did not graduate from high school.)

Phoenix Metropolitan Area * Business income tax:* 9% * Highest state income tax rate: 5.6% * Median home price: $124,475 * Sales tax rate: 7.05% * Per-capita income:** $19,853 * Average education level: High school diploma: 25.5% Some college: 33.9 College degree: 15.0 Graduate degree: 7.1

(The remaining 18.5% accounts for those who did not graduate from high school.)

Note: Southern California figures indicate the range in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties.

* Statewide rate

** 1993 figures

Sources: State of Arizona, State of California; Census Bureau; California Assn. of Realtors;Jack Kyser, Los Angeles County Economic Development Corp. Researched by JENNIFER OLDHAM / Los Angeles Times