California: Driving Change

Stephen Gordon was mad as hell at California government, and he wasn’t going to take it anymore. So the chairman, CEO and president of Opus Bank launched a $1 billion challenge fund to provide capital to businesses that dare to expand their operations in California.

So far, Irvine, California-based Opus has disbursed more than $200 million in loans to small-business owners with revenues between $1 million and $10 million and to commercial companies with revenues of up to $100 million. “When we get through the $1 billion, we’re going to commit to another $1 billion,” says Gordon, whose commercial bank has $4.7 billion in assets.

So far, no other bank has dared to match Opus’s offer. Of course, in attempting to make California more attractive to businesses against the prevailing grain, Gordon has embarked on a quixotic quest indeed.

“I don’t want to keep waiting for Sacramento to address this from the top down; we’ve been waiting a long time for intelligent concepts to come from there. I’d rather do it from the bottom up.”

“Every day, economic developers from other states get up and thank God for California,” says Dennis Cuneo, Nevada-based founder of DC Strategic Advisors and an experienced manufacturing-site consultants.

Gordon was sick and tired of seeing California state government not only choke the ambitions of home-grown businesses with high taxes and a thicket of regulations, but also lose hundreds of thousands of jobs to other states, in an unparalleled erosion of the state’s job base. Gordon claims California has lost 77,000 businesses over the last several years, perhaps the most painful of 2014 being Toyota’s decision to uproot its U.S. headquarters in Southern California and move its 4,000 jobs to Texas.

Thus, California ranked ninth among the states in out-migration of population for the years 2003 through 2012, according to the American Legislative Exchange Council. “You’re talking about five to six times more business leaving California than any other state because of decisions made in Sacramento, with the result that the largest economy in the United States clearly isn’t living up to its potential,” Gordon says. “I don’t want to keep waiting for Sacramento to address this from the top down; we’ve been waiting a long time for intelligent concepts to come from there. I’d rather do it from the bottom up.” Last year, after seeing California land in 50th place in the annual Chief Executive “Best States/Worst States” rankings, he was beside himself. So Gordon decided to take  matters into his own hands last fall.

Opus is making loans out of the $1-billion fund only to businesses that vow to use the capital to expand employment in California only. Opus’ focus is on manufacturers, distributors, technology companies, and healthcare concerns, but its client base also includes restaurants and retailers. And the program is primarily aimed at business leaders and successful entrepreneurs who already have proven their ability to expand their companies and add jobs.

Some observers gave the state credit for the California Competes tax-credit initiative, launched last year to replace a poorly performing enterprise-zones program and aimed at “high-value”
businesses growing in the state. And California officials noted that the state added 320,000 jobs in 2014; added more private-sector jobs since the recession ended than any other state, at 1.5 million; and remains home to more venture capital, patents, tourism, Fortune 500 companies, agriculture, biotech and manufacturing output than any other state.

But Cushman & Wakefield clients “have no awareness that things are getting better in California for business,” said Andy Mace, a managing director in the supply-chain business of the real-estate consulting firm. “It’s not uncommon for companies to simply cross California off their lists without taking a look at it.”

And Gordon has tired of California relying on its crown jewels: high-tech companies. “Real America isn’t Silicon Valley,” he said. “The bulk of America is driven by businesses that aren’t sexy. You cannot bet all of California on that [sector] and then shut out the rest of America.”


MORE LIKE THIS

  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events

    Roundtable

    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)

     

    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.