EXECUTIVES SAY ARNOLD WILL AID BUSINESS

ELLIOT ZWIEBACH / Additional reporting: Mark Hamstra

SACRAMENTO, Calif. -- Arnold Schwarzenegger will be good for business and good for the food industry, executives from two trade associations told SN last week.

"He will restore balance in state government," Peter Larkin, president of the California Grocers Association here, said.

"Over the last five years, liberal Democrats have held the governor's office and dominated the legislature, and over those five years, we've seen a slew of anti-business bills -- dealing with overtime work rules, paid family leave and increased workers' compensation benefits -- that have been passed by the legislature and enacted by the governor without any long-term thought for the business climate.

"With a moderate Republican as governor, we should begin to see a change in the kind of legislation that have disregarded the effort it takes to be competitive in a world economy. "I believe the legislature will cooperate with the new governor to a certain extent, though there may be a lot of fights. Initially, legislators will want to appear to be open to discussion and compromise, but when it comes down to a final decision, there will probably be a lot of rancor.

"One thing Arnold brings to the governor's office that others don't is a little bit of what Ronald Reagan brought as governor and later as president. On any very important issues, he has the ability to go over the heads of the legislature and communicate directly with the people, who can then put pressure on the legislature. That's something we haven't had here in a very long time."

Thomas K. Zaucha, president and chief executive officer of the National Grocers Association, Arlington, Va., said he expects supermarket operators to benefit from the efforts of Governor-elect Schwarzenegger.

"He will probably be a good listener to the grocery industry in California, which still faces some very, very formidable challenges," Zaucha explained.

"In the final days of his administration, Gray Davis signed a stream of pro-union legislation, and the grocery industry there is going to look for support from the new governor to help moderate some of the runaway health and welfare costs that are killing businesses.

"For example, there's a new law that companies with 20 or more employees have to provide health care benefits for employees, and if they have more than 200 employees, then they have to provide insurance for dependents as well. That goes to the heart of some of the issues that all businesses face in California, but it smacks even harder in an industry that is as labor-dependent as the grocery industry."

Energy costs are another issue in California that the new governor will have to face, Zaucha said.