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March 3, 2024

An economic pitch to media

– In just weeks, local business leaders will host a first-ever
Gilroy media day created to gain a buzz with business journalists
that organizers hope carries over to companies seeking a friendly
place to do business.
GILROY – In just weeks, local business leaders will host a first-ever Gilroy media day created to gain a buzz with business journalists that organizers hope carries over to companies seeking a friendly place to do business.

It is part of a joint strategy by the Chamber of Commerce, the Gilroy Economic Development Corporation and the city to lure clean industry, more jobs and more tax revenue into town.

Yet just one week ago, Indian Motorcycle, a top-five employer in Gilroy and a feather in the hats of local economic development leaders, left town and sent 380 workers to the unemployment line.

Nonetheless, the chamber, the GEDC and the Gilroy Visitor’s Bureau are working hard to lure seven television networks, five radio stations and a host of national and statewide newspapers and magazines to spend the day in Gilroy.

The Oct. 22 event, planners hope, will convince the media Gilroy’s economic potential won’t remain overshadowed by Indian’s demise for long.

“Nothing to do with Gilroy caused Indian to close,” said Bill Lindsteadt, executive director of the GEDC. “The high cost of business in California may have played a role in that.”

California costs

Lindsteadt’s message rings true for big-time gubernatorial candidates like Arnold Schwarzenegger to executives of small businesses like Joe Flynn.

Flynn is the president of Versafab Corp., a metal fabricator and an Indian supplier. He says his firm, like the now defunct motorcycle company, is thinking about leaving its Southern California location for a cheaper place to operate. And he doesn’t have his eyes on Gilroy.

“We are seriously considering moving out-of-state,” Flynn said. “Anywhere you do business in California, frankly, it will be difficult because the costs are just too expensive.”

During Wednesday’s gubernatorial debate, Schwarzenegger said businesses are over-burdened in this state and workers’ compensation costs was a root cause of California’s economic decline.

Flynn says his business is a prime example. A 50-employee outfit, Versafab has seen its workers’ compensation rates rise from $60,000 in 2002-03 to an estimated $143,000 for 2003-04.

“I’ve been doing nothing this week but looking for competitive (workers’ compensation insurance) carriers,” Flynn said.

But his search has been to no avail, due in large part to state-mandated changes to workers’ compensation, Flynn said. Last year, the state determined that State Fund – California’s largest workers’ compensation carrier – was not competitive enough and mandated rate hikes.

Versafab’s rates increased by 77 percent, so Flynn found a carrier that charged only 67 percent more. When that carrier raised its rates this year, Flynn sought a quote from State Fund.

But he couldn’t get one because that, too, was regulated by the state.

“No matter how ridiculous your quote is from a company, State Fund can’t give you their own quote once you’ve looked elsewhere,” Flynn said. “Put that together with an electricity bill that has increased 100 percent over the last 18 months and that spells trouble.

“A lot of businesses are going to get hit with these new (workers’ compensation) rates come January, well after the election, and it could be a mess. It’d be interesting to see if Indian anticipated similar problems,” Flynn said.

Indian officials could not be reached for comment before deadline.

A fragile near-perfect record

Through tours and presentations during the Oct. 22 media blitz, journalists will get a firsthand look at the economic development taken place in Gilroy this past decade. They also will hear why economic development leaders here say Gilroy is still one of the best deals for new and relocating companies in this troubled state.

After all, since Lindsteadt took over the economic development arm of the city in April 1996, Indian is the first major player to shut down.

From big box retail and factory outlet stores to high tech manufacturing and wood, paper and metal fabrication, Lindsteadt has quarterbacked the recruitment of scores of companies.

The GEDC brochure boasts 10 example companies employing nearly 1,000 workers and occupying roughly 725,000 square feet of industrial space.

“From my perspective, the Bay Area is much better off focusing on the truer picture of what Gilroy is about,” said Susan Valenta, executive director of the Chamber of Commerce. “The Bay Area has a lot of empty lease space, but in Gilroy we have the opposite of that.”

Potential for more

The empty lease space in the Bay Area isn’t necessarily good news for Gilroy. It’s a sign of a roughened up economy, which means there is less investment capital for startup and relocating businesses. But moreover, it means companies still in business have more leasing options than just Gilroy.

Already Gilroy is feeling the impact. Just months ago, biotech, or genetic engineering, was hailed as the wave of the future for Gilroy industry.

But the push to bring more biotech companies to town has stalled.

Earlier this year, the GEDC and the Gilroy Small Business Development Corporation nearly landed a Canadian biotech company that wanted to start producing a breakthrough flame retardant product. The company could not generate the funding to make the move here.

“A move like that is an expensive thing to do,” Lindsteadt said. “Nothing happens without money and without money nothing happens.”

Lindsteadt said Bay Area biotechs are not hard-pressed to move to Gilroy right now either.

“There is so much square footage available in Silicon Valley for research and development, it would be a stretch to get them to come to Gilroy now,” Lindsteadt said. “But we’re not giving up hope at all.”

The Oct. 22 event will be held at the Hilton Garden Inn in Gilroy. It begins at 10 a.m. and features a keynote presentation by Wayne Schell of the California Association for Local Economic Development.

Lindsteadt called Schell the “godfather” of economic redevelopment in California.

“He’s the source I go to whenever I have a question about economic development,” Lindsteadt said.

After the talk by Schell, journalists will be taken on a one-and-a-half-hour chartered bus tour of Gilroy. Valenta said participants will be taken to Bonfante Gardens, the Outlets and the new retail developments off Highway 152.

“The whole purpose of this event is to showcase the full gamut of economic development in Gilroy,” Valenta said. “What better way to do that then taking them there to see it up close?”

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