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November 30th 2004 >> Source: Press
Democrat The organic frozen foods processor will keep its Santa Rosa operation and some 700 jobs here. But local and state officials invested considerable political capital in urging the company to expand in Santa Rosa, and Amy's Kitchen came to symbolize California's high business costs. "You never like to leave with any part. We have the room to expand here," Berliner said. "You're comparing overhead costs. If over the years things go in the direction we hope, if the costs get more competitive, we would love to expand in Santa Rosa." Keeping Amy's Kitchen in Santa Rosa is important to Sonoma County, community leaders said, but they had hoped the additional jobs from the company's expansion would have bolstered the region's sluggish economic recovery. "I'm disappointed, but probably not very surprised. I knew it would be hard," said Santa Rosa Mayor Sharon Wright, who talked with company officials about ways to cut costs and fees. "It's an issue of economics. It makes it a real challenge to be competitive." Local and state officials emphasized that Amy's Kitchen could have left Santa Rosa entirely given potential cost savings elsewhere, particularly for electricity and workers' compensation insurance. Berliner, however, said the company never intended to pull up stakes here. Gov. Arnold Schwarzenegger made a personal pitch to Berliner, singling out Amy's Kitchen as an example of the need to reduce costs for doing business in the state. "The governor's thrilled that Amy's Kitchen has decided to stay in California, keep the headquarters here and the manufacturing here," said Vince Sollitto, a spokesman for the governor. "At the same time, the company's decision to expand outside our state shows the problem with the business climate. We've made tremendous progress. But there's no doubt that much more needs to be done." Given the company's growth, Santa Rosa still could gain jobs in the future, and that is why it is important to keep Amy's Kitchen based here, said Ben Stone, executive director for the Sonoma County Economic Development Board. "It's a setback. They had enough reasons to go elsewhere," he said. "If you can't have the whole loaf, having most of the loaf, that's really important." Berliner said the timing of the company's announcement was linked to a hearing Thursday where California utility regulators were to discuss giving Amy's Kitchen an electricity rate cut if they expanded in Santa Rosa. Berliner said the company is withdrawing the request, which was controversial because Amy's Kitchen would have received a special discount not yet available to other companies. "We didn't feel it was proper to ask for it, because our intention was to do it (expand) up there," Berliner said. Amy's Kitchen expects to purchase a Medford site in about two weeks and then plan its project there. The production, distribution and warehouse facility could cover as much as 200,000 square feet and employ up to 200 workers. Amy's Kitchen aims to open it by January 2006. The company also will eventually need further expansion on the East Coast to keep pace with strong demand in that region. Founded in 1987, Amy's Kitchen has grown from five workers to 700 at its complex in a Santa Rosa industrial park and could outgrow the site in a little more than a year. Annual growth is about 25 percent, but operating costs have limited profits to about 3 percent, according to the company. Amy's Kitchen could double or triple that number in Oregon. The company has $100 million in annual sales. The Medford operation should save about $1 million in annual operating costs compared with expanding in Santa Rosa, led by much lower workers' compensation insurance premiums and electricity rates, in addition to lower land costs and corporate taxes. Moving the entire company to Medford would have saved $4 million a year, Berliner said. Expanding in Santa Rosa also would have cost the company nearly $700,000 in city permit fees for a 70,000-square-foot facility. "Overall, we're looking for the best deal," Berliner said, adding the company never planned to leave Santa Rosa altogether. "We already have a tremendous investment here in equipment and people. We still believe it would be helpful to stay in California long term." Citing confidentiality agreements, local and state officials familiar with the Medford bid for Amy's Kitchen said they couldn't discuss specific enticements used to lure the company. But lower costs to do business have helped attract businesses from other states, including a handful from California in recent years. "If all the economic indicators stack up nicely, then you make the short list for a company," said Brad Hicks, president and CEO for the Medford/Jackson County Chamber of Commerce. "Some of those things we don't need to sell very hard." Lighthouse Worldwide Solutions expanded in Medford rather than in the South Bay because of cost savings. "If you had a checklist, you would go down and say positive, positive, positive. It's all about profits," said Demi DeSoto, marketing director for the San Jose-based manufacturer of quality control instruments. In addition to cost savings, Medford also offers distribution advantages. The city sits on Interstate 5 for trucking, has a busy regional airport with air cargo services and a railroad connection. Like Sonoma County, the economy for Medford, with about 70,000 residents, and its surrounding area has become more diverse. While lumber remains an important sector, Medford has become a regional retail and medical care hub for southern Oregon. + Read Full Article | << Back to 2004
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