Doing business in California isn’t easy

by Steve Feldman

The front page article in this issue about the recycling and landfill diversion thresholds California is looking to impose on carpet manufacturers, officially known as AB2398, reminded me of a speech given by Anthony Minite, president of Bentley Prince Street, at the CARE conference a few months ago in Santa Fe. This legislation is just the latest example of the challenges of doing business in California. In fact, Minite cited a chamber of commerce business climate study where 62% of respondents said it is harder to do business in California than in other states.

Case in point: There were once more than 80 California carpet mills. Now there are four: Atlas, Bentley, Tuftex and Royalty. “It’s a tough industry to maintain itself,” he said.

Among the challenges:

1. Too many government regulations in running a manufacturing facility.
2. Hiring and retaining a qualified workforce. An aging workforce makes it a challenge in trying to find the next generation of people wanting to work in a mill. A diverse workforce adds operational complexity.
3. Infrastructure. A dense population and lack of public transit make Los Angeles a non-attainment zone for ground level ozone.
4. Although cars are the major cause of pollution in Los Angeles, regulators have focused on manufacturers because it’s easier. VOCs have been a focal point.
5. High cost of energy. California’s cost for electricity is 32% higher than the national average and 11% higher for natural gas. “We compete against companies that don’t have these costs built in,” Minite said.
6. High cost of landfill. “This is the single biggest issue for us from a recycling standpoint.” He noted that waste to landfill cost is 10% higher than the national average.
7. High cost of living despite average wages being 14.8% higher than the national average and the fourth highest in the country.
8. No state has more strict air quality regulations. “We don’t even have white out because it emits VOCs.”

But despite the obstacles, companies like Bentley Prince Street not only survive but thrive. That’s because it views these challenges as opportunities. In illustration, Bentley has proactively addressed environmental issues:

• 94% reduction in VOC emissions since 1994, which did not cost the company a dime.
• 66% reduction in Greenhouse Gas Emissions since 1996.
• 97% reduction in pounds sent to landfills since 1996.
• Avoided $800,000 in land- fill costs and earned more than $3 million in recycling revenue, money that Bentley reinvested in the company.
• Implemented energy efficiency and renewable energy projects since 1994.
• Streamlined dye and chemical purchases.

At the same time, Bentley tackled other issues head on. Despite the age and ethnicity of its workforce, the manufacturer has focused on fostering and maximizing the talents and strengths of its people while embracing the strengths of cultural diversity.

The end result is better quality control and the realization of certain cost savings. And should AB2398 eventually pass, I’m sure Bentley Prince Street will turn that into a positive, too.