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Enterprise Zone Played a Role in Saving Manufacturing Jobs

According to this article in the Desert Sun, the recent turnaround in CareFusion’s decision to cancel plans to move its California manufacturing jobs to Minnesota, was due partly to the company gaining a better understanding of tax incentives available – including the Enterprise Zone:

- For months, CareFusion’s departure appeared to be a done deal.

The manufacturing company’s executives had announced in July they were moving production to a sister plant in Plymouth, Minn.

The plans were firm, a point they stressed in meetings with representatives from Palm Springs and the Coachella Valley Economic Partnership. They weren’t interested in hearing about any incentives.

Their position left local officials resigned to the fact that the Coachella Valley would lose one of its largest employers, where 270 skilled workers make sophisticated ventilators and diagnostic devices for acute respiratory care.

But by October, there were signs the company might be softening its position. On Nov. 7, an email sent by a rank-and-file CareFusion employee to Palm Springs City Hall suggested the company’s management was rethinking the consolidation.

“We found out there might be an opening and we took it,” Palm Springs Mayor Steve Pougnet said.

“We just went into overdrive.”

The sales pitch that followed resulted in a rare corporate change of heart, and it provides officials with a rare success story to tout in a state frequently criticized for not doing enough to retain manufacturing businesses.

On Wednesday, San Diego-based CareFusion announced it would keep the Palm Springs plant, which was first established under a different company in 1965.

“We’ve made the commitment that we are going to make every effort to improve our business environment so they can thrive here,” said Tom Flavin, CVEP president and CEO.

“Now we’ve got to deliver that competitive business environment so we can have them here for the long haul.”

CareFusion executives didn’t divulge exactly what made them change their plan to shut down the local operation by the end of 2012.

But it is clear there were internal considerations. A spokeswoman said there were growing concerns about how the move to Minnesota would affect business at a time when demand for their products is increasing.

“When we took another look at the plan, there had been several changes through the year to the industry that it just made sense to remain in Palm Springs,” CareFusion spokeswoman Suzanne Hatcher said Wednesday.

“You don’t want to shift manufacturing lines during that time to ensure there are no disruptions to customers.”

Externally, the company was getting the hard-sell from Coachella Valley officials in an all-out push that included a representative from the governor’s office.

For the last six weeks, city and valley economic development experts had been in regular communications with CareFusion, including meetings, teleconferences and email chains that involved the governor’s office and Southern California Edison.

They soon discovered CareFusion wasn’t taking advantage of all the tax benefits that California could offer them.

No one has provided a price tag for the incentives that CareFusion would get by staying.

But local officials confirmed the company would likely see lower utility costs after Edison does an energy efficiency evaluation of the plant, something that hadn’t previously been done.

Numbers are also being crunched at the savings CareFusion would see from the city’s foreign trade zone, or by swapping credits it gets by having its San Diego headquarters in an enterprise zone.

“We’re going to provide whatever we can provide to any company,” said Wesley Ahlgren, CVEP’s chief operating officer.

“There’s no sort of magic bag of tricks that the governor’s office, or an assemblyman or CVEP can reach into. We can throw stuff out there. But without knowing the specifics of their business model, it is hard.”

There were plenty of reasons valley officials pulled out all the stops.

Experts say the health care industry is key to boosting and diversifying the valley’s economy, and CareFusion has long been involved in CVEP efforts.

There were also a lot of well-paying jobs on the line:

According to the California Manufacturers & Technology Association, an average manufacturing job in California pays $69,000.

Specialty workers – like those at CareFusion – typically get paid more, though the company has not said what its workers make.

Since CareFusion announced its plans in July, those same workers had made it clear to the city that they were trying to avoid the unemployment line.

“There was a bunch of employees who came to the city to take another run to save them,” said John Raymond, Palm Springs’ community and economic development director.

Valley leaders didn’t learn until Wednesday that their sales pitch had worked.

Pougnet said he got a phone call with the good news in the morning.

But others didn’t know until they gathered for what was supposed to be another negotiating meeting with CareFusion executives at the Rabobank Regional Business Center in Palm Springs.

Officials had just launched into their presentation when CareFusion representatives interrupted: We’re staying.

Ahlgren said his first thought was that “300 workers are going to go home and tell their families they’re staying here.”

“They should thank themselves,” he said in touting the employee’s efforts.

“They engaged their management. They stayed on the job and they stayed positive. If I get told I’m getting laid off – that it may be six months, it may be 18 months – I may be looking for another job. They stuck with it.”

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