By Jim Thompson
Working in the investment side of the industry, we are familiar with Project Risks (markets, raw materials, assets) and, where necessary, Country Risks (government stability, infrastructure, foreign exchange). In first world countries, we seldom give Country Risks much thought.
However, in recent times, events in California seem to be changing this standard. With rolling blackouts, curtailed natural gas distribution and general lack of access due to forest fires, it seems as though California is out of control. Hence, Country Risks will now have to be considered in industrial projects there.
Not that long ago, regulatory issues in California seemed to be the stumbling block when I talked to investors about that state. Adding these new uncertainties nearly takes California out of consideration for projects.
If California is interested in industrial growth, they need to rapidly demonstrate they have these new risks under control and a long term plan to permanently mitigate them.