Globalstar leaves (CA) for Louisiana without a fight

By Chris O'Brien
Mercury News Columnist

When Globalstar announced this summer that it intended to move its headquarters from Milpitas to Louisiana, the news barely made a ripple in our state capital.

Attracted by almost $8 million worth of incentives, the satellite telephone company is shuffling off to the bayou without so much as a phone call from state officials asking what should be a no-brainer of a question:

"Is there anything we can do to change your mind?"

Given the lucrative package dangled by Louisiana, the answer may well be "No." But no one from California is asking.

Here's a quick tally of what's being lost. Globalstar plans to move 100 of its 200 Milpitas-based employees to Louisiana. There the company has pledged to hire 150 more employees by 2011, and an additional 350 by 2018. Those 600 jobs may sound puny compared with the more than 4,500 jobs lost when the NUMMI plant closed, or the thousands of unemployed workers in this region.

But when the state's unemployment rate is 12.3 percent, every job matters.

It's particularly painful because in recent weeks, we've seen some notable valley-based companies, lured by cushy incentive packages, announce big expansions elsewhere. Soladigm of Milpitas is building a new plant in Mississippi with the help of a $40 million loan and $4 million in other incentives. Solexant of San Jose unveiled plans to locate its new plant in Oregon, backed by a $25 million loan and $18.75 million in tax credits.

Even worse, Globalstar represents just the kind of ambitious technology company the state should be begging to stay. I first wrote about it more than a decade ago. It was planning an incredibly expensive, highly risky venture to launch dozens of satellites for global phone coverage. It proved ill-fated; the development of incredibly cheap cell phones made Globalstar's expensive satellite phones a niche product.

But now that niche -- selling phones to military agencies, merchant ships and emergency departments -- is doing pretty well. And after reorganizing in bankruptcy court, the company raised $738 million in one of the worst credit markets in history to start a new satellite network later this year.

Investors clearly think there is something to this satellite business.

The company began to weigh a move earlier this year when it acquired a Louisiana-based company called Axonn with 35 employees. That state's economic development department caught wind of the company's interest in relocating from California and offered a package of $4.4 million tied to the number of jobs created, and $3.7 million to offset other costs.

In fairness to California officials, Globalstar never announced publicly it was considering a move. And it never called to ask about what incentives the state might offer.

What really worries me, however, is the reason Globalstar CEO Peter Dalton told me they didn't bother:

"I know the state is financially strapped," Dalton said. "It didn't appear it would be in a position to do anything."

In other words, California's chronic budget disarray means the state is fighting an even steeper battle than we realized to revive our economy.

Still, Dalton said he was surprised that he never received a call from the state after the move was revealed on July 13.

Worse, back in April, Gov. Arnold Schwarzenegger announced the creation of the Governor's Office of Economic Development, saying it would help the state focus on its No. 1 economic priority.

"It is the most important thing for our administration to create jobs and to help rebuild the economy and that means to help companies to come back and expand," he said.

So why was there no response to Globalstar's announcement?

Luis Farias, a department spokesman, defended the office's work, saying officials have been working hard in the months since it opened to reach out to businesses across the state.

"If we know about it, and we get involved, we can create action," he said.

Now, I'm not advocating that the state shower every company with crazy incentive packages. Perhaps Louisiana made an offer that wasn't worth matching.

If our public officials aren't willing to battle for every job, it's hard to put any faith in their ability to pull California out of its steep, downward spiral.