Fed up with paying a high price to be a Californian, custom blow molder Bomatic Inc. is moving some of its operations to southern Utah.
The company, founded in California in 1969, has purchased acreage in a new industrial park in St. George, Utah, said President Kjeld Hestehave. The company will spend $6 million to $8 million to build a plant and move some equipment to the facility, in a rural area about an hour northeast of Las Vegas.
Bomatic plans to start moving production and distribution to the 100,000-square-foot building by late next year.
The Ontario, Calif., company, a maker of plastic containers, had no choice but to make a serious monetary commitment out of state, Hestehave said. The family-owned molder was backed into a corner by what he considers the anti-business California Legislature.
Utility and insurance costs have risen to alarming levels, he said. Bomatic's electric bill alone will drop from about $100,000 a month to about $15,000, Hestehave said.
``The state of California in its infinite wisdom has decided it does not want manufacturing in the state,'' Hestahave said. ``When we move out, we'll be able to ship back into California at a price significantly less than companies that stay here. They're kicking me out of the state.''
California is the largest state for plastics processing, according to figures from the Washington-based Society of the Plastics Industry Inc. Plastics processing accounted for $24.2 billion of the state's produced goods in 2000. But that perch is in jeopardy. Several other processors have moved operations out of California and more are considering it, said Paul Strong, president of blow and injection molder Poly-Tainer Inc. of Simi Valley, Calif.
Poly-Tainer considered moving to St. George six years ago but was talked into staying after gaining local incentives and a rate reduction from California Edison, Strong said.
Now, he has second thoughts, he said.
``I don't believe that decision was right, in light of what's been going on in that state since then,'' said Strong, who serves on a manufacturing committee that lobbies state legislators. ``Worker's compensation is a big debacle, and I know that taxes will keep increasing. It's difficult to compete in California with other states.''
Poly-Tainer would like to acquire a blow molding company in Arizona or Nevada and open another facility there, Strong said. That would balance some of the high costs of working in the Golden State and the frustration of trying to enact change in Sacramento, where the state faces severe deficits, he said.
``The outlook overall here is not that good,'' he said.
Bomatic plans to shift five to eight blow molding machines and some of its 120 workers to St. George in 2003, out of 25 machines in Ontario. Gradually the company will bring its other machines to the facility and expand its space to 300,000 square feet, Hestehave said in a Dec. 2 telephone interview.
The company gradually will downsize its two facilities in Ontario, maintaining a small presence there, he said.
Costs made the difference. In addition to the high electric bill, Hestehave cited California's worker's compensation rates and health insurance costs as issues.
Bomatic expects to post 2002 sales of about $15 million, a 20 percent increase over last year. The company makes containers for food, beverage, household and chemical uses.
The company will receive a $250,000 incentive from Utah to create at least 155 jobs in St. George, said Tracie Cayford, spokeswoman for the Utah Department of Community and Economic Development in Salt Lake City.
The company also will receive a 10-year utility contract that puts a lid on electric rates, Hestehave said.
He said he has no regrets about leaving Southern California. He termed working in California a no-win situation.
``I really like to live here, but something has got to happen,'' he said. ``Others are thinking that some sanity will be restored in the California Legislature. But we've come to the conclusion that it will take a long time, and we can't wait any longer.''