Business climate: Some rate the state high, some don't

To companies like Starbucks Corp., Washington is just fine. "For every business it's different, but for us this has been a very healthy community," said Orin Smith, the coffee retailer's chief executive. "We have never even considered for one moment that we would uproot ourselves."

To Weyerhaeuser Co. Chief Executive Steve Rogel, Washington is "a great place to operate a global leader."

But Susan Hahn, who operates a North Bend truck and recreational-vehicle repair shop, might disagree. "If someone were to say to me 'would you do it again,' I would say I would do it again, but not here, not in King County. ... It's not a friendly place ... to do business."

Boeing's announcement Wednesday that it is moving its headquarters to another state prompted a firestorm of debate about whether Washington discourages businesses from locating in the state and penalizes the ones already here.

Boeing and other business leaders were quick to say yesterday that the decision to relocate wasn't a commentary on Washington's business climate.

"The shift of (Boeing's) headquarters is probably less related to the business climate than to Boeing's realignment," said Richard Davis, president of the Washington Research Council.

But given Boeing's previous grumbling about the cost and hassle of operating here and its reference Wednesday to looking for a new headquarters state with a "strong pro-business environment," some in the business community contend that the impending move illustrates that a pro-business environment is precisely what Washington doesn't have.

But evaluating Washington's business climate can be tough, and not just because those things that appeal to businesses might be seen less favorably by worker or environmental groups.

You could wallpaper the Pentagon with studies and rankings of business climates, all using different criteria, all coming to different conclusions..

The Corporation for Enterprise Development, for example, gives Washington quite good grades for economic performance (B), business vitality (A) and development capacity (A). Yet it also noted the state fared poorly in business closings and sector competitiveness, making up for that in entrepreneurial activity.

Nor is there any agreement on how significant certain measures of business climate are.

On some elements of the business climate there isn't much disagreement that Washington has a problem. On transportation --the moving of goods and people into, around and out of the state -- Association of Washington Business President Don Brunell said the business community agrees with Gov. Gary Locke that more investment is needed in transportation.

"That's something business and labor have been working on," added state labor council spokesman David Groves. "They've been hampered by a series of conflicting initiatives"

On other issues, however, there's disagreement within business about what factors matter and whether Washington is good or bad on those factors. Sometimes the split is between different industries, such as on tax structure.

Sometimes it's between large and small business. "What usually happens is that larger businesses are able to withstand or comply with regulations easier," said Carolyn Logue, head of the Washington chapter of the National Federation of Independent Business. "Big businesses say 'this is OK,' small businesses say no."

Allie Mysliwy, vice president of human resources for Safeco Corp., said Washington has a business climate advantage over other states with the absence of a personal income tax. "It ends up being a really wonderful positive when we're trying to attract people here," he said.

Immunex Corp. did a national search before the Seattle-based biotechnology company decided to build a $750 million science and research center on Elliott Bay.

A significant feature of the business climate to Immunex, COO Peggy Phillips said, is the people here. "So much of our business is about intellectual property, the stuff that's between people's ears," she said. "Our employees are right here. This is where we live. We didn't want to uproot ourselves."

Yet a significantly different view comes from small business owners like Hahn of Cascade Diesel & RV Repair. She cites myriad impediments to doing business: High unemployment and worker's compensation insurance rates, regulations that have discouraged her from giving jobs to those under 18, rules on liability for job recommendations that have led to some poor hires, tax rates that make it less expensive for truck owners to have their vehicles hauled to another state to be repaired because it's cheaper and rules, rules, rules. "I belong to three different organizations simply to read up on what regulations apply to what," she said.

"When we started 23 years ago, I had one license," Hahn added. "Now I have 12, and they all contain a fee."

Just as hard to measure as a business climate is what effect a good or bad business climate has. While announcements like Boeing's draw attention, there's no way to track investments that aren't made. Brunell said the long-term impact on business owners of a bad business climate is "they tend not to invest in new factories; they ride out what they've got here and gradually shift work."

The labor council, however, contends the bigger problem is constantly telling the rest of the world there's a bad business climate here.

While workers are concerned that Boeing's announcement is a harbinger of further job erosion, those job losses have "more to do with our trade policies and globalization" than with the state's business climate, the labor council's Groves said. "We don't think it's a bad business climate."

P-I reporter Bill Virgin can be reached at 206-448-8319 or billvirgin@seattle-pi.com