Tech Industry

Schwarzenegger presses recovery plan

California's governor paints a gloomy economic picture for Silicon Valley executives, saying that if his recovery plan is not implemented, the situation would be "disastrous."

SAN JOSE, Calif.--California Gov. Arnold Schwarzenegger painted a gloomy economic picture for Silicon Valley executives on Thursday, saying that if his recovery plan is not implemented, the situation would be "disastrous."

The movie-star-turned-politician met with the chief executives of several dozen leading technology companies to hear their ideas for improving the California business climate and pitch his economic proposals.

Schwarzenegger stayed on message in his public comments, mentioning nothing specific to Silicon Valley or high-tech other than to warn that every California business will suffer if his economic recovery measures--bond measure Proposition 57 and spending limit bill Proposition 58--aren't approved by voters.

"If this does not pass, the consequences are severe," he said. "It would mean a disastrous situation."

Schwarzenegger was preceded by state Controller Steve Westly, formerly a top executive at online auctioneer eBay, who warned that the state is heading toward the same type of fate as many now-defunct dot-coms. "I'm the chief financial officer for the world's sixth largest economy, which is a pretty amazing job," he said. "The rub is that we're going to run out of money on June 16."

Schwarzenegger's visit was tacked on to a presentation at the San Jose headquarters of software maker Adobe Systems by the Silicon Valley Manufacturing Group, a local trade group that includes Intel, Hewlett-Packard and other technology giants. The group was presenting the results of a survey commissioned by the group on attitudes among area tech executives.

The results were not encouraging, with a majority of the 100 chief executives surveyed saying they see stagnant or negative job growth for their companies this year, and four out of five saying state regulations were becoming increasingly hostile to business.

Top issues identified in the report were the high cost of housing in the area and the spiraling cost for employer-provided health insurance and workers compensation coverage, a key issue for Schwarzenegger in his successful recall bid.

"The expense associated with workers compensation puts an additional burden on every company in Silicon Valley," said Michael Cannon, chief executive of electronics manufacturer Solectron. "California pays the highest price for workers compensation in the country, and our workers receive some of the lowest benefits."

Executives were more defensive when questioned on exporting of technology jobs. Adobe Chief Executive Officer Bruce Chizen said his company was creating jobs both in California and overseas. "We have to participate in the global economy," he said, adding that pending legislation to protect American jobs takes the wrong approach.

"I think that's the wrong focus," Chizen said. "Where the government should be focusing its energy on improving the quality of life and education...not focusing on trying to restrict what we do."

Technology executives appeared genuinely hopeful about Schwarzenegger's leadership.

"I was pleasantly surprised with how nonpolitical his approach seemed to be," Chizen said after the talk. "I got the sense that for the issues he sees are really important for the state, he's going to do whatever he needs to."

While it's rare for top executives, especially in the technology industry, to get involved in political issues, Chizen said he has a responsibility to lobby on behalf of Adobe employees for quality-of-life issues such as housing and schools. "It's really dealing with a public policy issue that's important to our employees--there's nothing political about it," he said.

HP Chief Executive Officer Carly Fiorina--part of Schwarzenegger's transition team--participated in a closed-door session with Schwarzenegger and other technology leaders, including Google co-founder Larry Page, but did not participate in the public session afterward.