While most of the debate over the expansion of Los Angeles International Airport has focused on its potential impact to local residents, a new group of opponents has emerged: businesses located adjacent to the airport.
Two businesses that employ more than 1,300 people at facilities near the airport say they are concerned about their properties eventually being seized under eminent domain laws something that may not happen for a decade or more, if ever. Still, uncertainty over the future of LAX may force them to move before then.
“We’re very frustrated because we don’t know what’s going to happen,” said Don Schort, executive vice president of operations for Neutrogena Corp., the giant skin-care products manufacturer that has been located near the airport for nearly 30 years. “We’re growing phenomenally, (but) it’s very difficult to make multimillion-dollar investments if you don’t know over what time horizon you’re going to be allowed to stay.”
Schort added that if Neutrogena were forced to move, it probably wouldn’t be to another facility in Los Angeles or even in California. “It’s very expensive for businesses here,” he said.
Concerns about LAX expansion were echoed last week by Michael Ziering, president of Diagnostic Products Corp., a maker of medical testing equipment that has more than 620 employees at its factory just west of the airport.
“It’s clear to us that in the next three to five years, we’re going to have to relocate,” Ziering said. The planned expansion already has scuttled plans for a new six-story facility on his company’s 6.5-acre property, he added.
An environmental impact report on the $8 billion to $12 billion airport expansion is slated to be completed later this year, after which the Los Angeles City Council will consider five versions of a master plan.
In the meantime, though, a coalition of leaders from Southern California counties and cities that surround Los Angeles as well as state Sen. Theresa Hughes, D-Inglewood, and L.A. Councilwoman Ruth Galanter, whose districts include the airport have banded together to fight the master plan. They are instead arguing for a regional plan that calls for the expansion of airports in El Toro, Ontario and elsewhere.
The future of the master plan was thrown into more turmoil earlier this month when Jack Driscoll, executive director of Los Angeles World Airports who has been overseeing development of the master plan, announced he would resign in mid-August.
The concerns of Neutrogena and Diagnostic Products have not escaped the notice of master plan opponents. Hughes and Galanter have warned in recent statements that the expansion could drive businesses out of the area noting in particular Neutrogena’s threat to move out of state.
“It’s not a threat, it’s a serious matter,” said Sam Obregon, a member of Hughes’ Select Committee on Urban Economic Development. “Sen. Hughes doesn’t want to lose a company that has (nearly) a thousand employees.” Hughes did not return calls for comment last week.
“The biggest problem is the uncertainty,” added Galanter. “I think it will put a damper on investment in existing businesses.”
Also, Galanter said, the L.A. City Clerk’s Office this month completed a study on the impact of LAX expansion on local businesses. Under the version of the master plan involving the most land, Los Angeles would lose $11.8 million in tax revenue each year from local businesses displaced by the airport including $6 million in transient occupancy taxes, $1.4 million in business license taxes and $2.4 million in sales taxes. A total of nearly 400 businesses would be affected, she said.
“Some of these businesses would just go out of business,” she said. “Others, like Neutrogena, we don’t know what they’ll do, and we don’t know when they’ll do it.”
Officials from Neutrogena and Diagnostic Products have met with LAX officials and elected representatives about their concerns. And in trying to preserve their factories near the airport, they have encouraged such expansion opponents as Galanter and Hughes to air their concerns publicly.
“We don’t want to move that’s very clear,” said Schort of Neutrogena. “We went out and reached out to the political community and to other parties because we felt there were other people in similar situations.”
No other businesses have yet emerged with vows to move, but business leaders, LAX officials and others have been keeping tabs on firms in the area.
Driscoll said he has met with a number of local businesses Neutrogena and Diagnostic Products among them and tried to assuage their fears by telling them that any expansion likely would not affect them for 10 to 15 years.
“My commitment in dealing with those businesses is, we don’t want to chase any of them out of the city. We want to hold on to them,” Driscoll said.
Nevertheless, Ezunial “Eze” Burts, president and chief executive of the Los Angeles Area Chamber of Commerce, said, “There is a high level of anxiety with Neutrogena and with some of the other airport-adjacent businesses. The anxiety is over what the final plan will be.”
Indeed, that is the primary concern for Neutrogena, Schort said. His company is expanding by adding new staff and new equipment including a $9 million equipment expansion slated for completion next month. But, he said, it has been increasingly difficult to get funding for expansion from New Brunswick, N.J.-based Johnson & Johnson, which bought Neutrogena in 1994, because of uncertainty over LAX.
“Going back and asking them to make major investments here without being able to say how long we can stay is very difficult,” he said. “They’re very practical business people, as we are.”
Ziering of Diagnostic Products said the uncertainty is also his company’s primary concern. After canceling the construction of its new building because of the possible LAX expansion, Diagnostic Products has had to lease additional office and warehouse space as well as a nearby parking lot, he said.
“We’re going through renovations now to increase the utilization of the space we’re in now, and I think it will carry us over for three years,” he said. “But if we grow as we project, with the limitations we’re working with in this area, we’ll be left with no choice but to relocate.”
