Andrew “Andy” Favor – CPA
Libertarian for California State Controller
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http://bizleavingcalifornia.blogspot.com/2009/10/californias-hostility-to-business-56.html
Saturday, October 10, 2009
California’s Hostility to Business:
69 Instances of Biz Closings & Losses
(Updated as of 10/24/09)
Hence, without a central repository, it’s difficult to determine how many jobs are lost because of California’s hostile business environment. Commentary on the subject generally is deficient for the following reasons:
- News reports may note the loss of HQ operations while ignoring the loss of individual facilities, which results in under-reporting on the issue.
- An incalculable number of California-based companies have a policy to stay lean in the state while locating new facilities elsewhere, which means job creation is never tallied as “jobs that would have been located here had such an anti-business attitude not existed.”
- The media and politicians tend to ignore California business losses when smaller companies move away. (I’m now working with a company that will move about a dozen jobs to another state, an event that will go virtually unnoticed. No one knows how many times events of this size occur.)
In this blog, I’ve attempted to note facility moves and job losses on a catch-as-catch can basis based on incomplete media reports. With all that in mind, below is a roundup of such activity that I’ve been able to find since I started this blog in July of this year. The fact that the list is imperfect and incomplete means it is the “tip of the iceberg” about the loss of jobs in California.
- Alza Corp. in 2007 eliminated about 600 jobs in drug R&D while also exiting its Mountain View, Calif., HQ. At the time the company said that its 1,200-person Vacaville facility will continue to operate. But the Vacaville Reporter on Oct. 23, 2009 revealed that the plant is being offered for sale by J&J, its parent company. It’s unclear if more layoffs are in the facility’s future.
- American AVK, a producer of fire hydrants and other water-related products, moved from Fresno to Minden, Nevada.
- American Racing moved its auto-wheel production to Mexico, ending most of its 47-year operation in California.
- Apple Computer has expanded in other states, most recently with a $1 billion facility planned for North Carolina.
- Audix Corporation relocated from Redwood City, Calif., and to accommodate growth moved to a 78,000-square-foot facility in Wilson, Oregon.
- Apria Healthcare Group of Lake Forest is shifting jobs from California to Overland Park, Kansas, a K.C. suburb.
- Assurant Inc. cut 325 jobs in Orange County and consolidated positions in Georgia, Ohio and South Carolina.
- Automobile Club of Southern California placed 1,100 jobs in Texas.
- Barefoot Motors, a small “green” manufacturer, moved from Sonoma and will grow in Ashland, Oregon.
- Bild Industries Inc., which specializes in business news, directories and market reports, moved to Post Falls, Idaho, from Van Nuys, a part of the San Fernando Valley in Los Angeles.
- Bill Miller Engineering, Ltd., suffering under the “hostile business climate” in California and Los Angeles County, moved from Harbor City to Carson City, Nevada.
- BPI Labs, which formulates, manufactures, and fills personal care products for the health and beauty industry, relocated from Sacramento to Evanston, Wyoming, a move the company’s owner called “very successful . . . . It felt good and I’ve never looked back.”
- Buck Knives after 62 years in San Diego moved to Post Falls, Idaho.
- California Casualty Group left San Mateo for Colorado, cutting operating costs to remain competitive.
- Checks To-Go moved to Utah where workers’ comp rates helped make the troubled company healthier.
- Chivaroli & Associates, a healthcare-related insurance service based in Westlake Village, Calif., moved a regional office to Spokane, Washington.
- CoreSite, A Carlyle Company, is delaying a Santa Clara project while it expands its data center in Reston, Virginia.
- Creators Syndicate may flee L.A. because it operates like a “banana republic.”
- Creel Printing Left Costa Mesa for Las Vegas and SoCal loses 60 more jobs.
- Dassault Falcon looked at building an aircraft services facility in Riverside County but instead located in Reno.
- DaVita Inc. moved its HQ from Los Angeles to Denver; expects to see millions of dollars in savings over time.
- Denny’s Corp. – the large restaurant chain – once had its headquarters in La Mirada, later in Irvine, Calif, and then moved to Spartanburg, South Carolina. In fairness, I note the move occurred in the early 1990s. However it’s noteworthy because the company was founded in California and its growth over time created HQ jobs in another state.
- DuPont Fabros Technology suspended a $270 million Santa Clara data center project in favor of one in Ashburn, Virginia.
- EDMO Distributors, Inc., a world-wide wholesaler of aircraft avionics, test equipment, and pilot supplies, moved its HQ from Valencia, Calif., to Spokane Valley, Wash. Since, it has built a larger headquarters in the city’s Mirabeau Point community complex.
- Edwards Lifesciences based in Irvine will expand with 1,000 employees – not in California but in Draper, Utah.
- EMRISE Corp. completed its HQ move from Rancho Cucamonga to Eatontown, NJ, in May 2009. The company said the move “will result in additional annualized cost savings of approximately $1 million and facilitate improvements in operating efficiency. . . . The cost savings associated with relocating our corporate headquarters will start immediately. . . The aggregate total of these expense reductions will increase our profitability and cash flow in this and succeeding years and, over time, substantially improve our ability to further reduce our long term debt.”
- FallLine Corporation Left Huntington Beach, where they were being “hammered” with multiple governmental regulatory fees, for Reno, Nevada.
- Fidelity National Financial left Santa Barbara for Florida, spurred by California’s “oppressive” business environment.
- Fluor Corp. moved its global headquarters from Aliso Viejo to Irving, Texas, with about 100 employees asked to relocate while the company planned to hire the same number there. In 2006, when Fluor moved into its new headquarters building, a company statement said: “The official dedication had a decidedly Texas theme” as a horseshoe was raised on the building, a time-honored Texas tradition.
- Foxconn Electronics, a large contract electronics maker, moved some of its Fullerton operations to Dallas.
- Fuel System Solutions moved its headquarters from Santa Ana to New York.
- Helix Wind Inc. may move its research and development, engineering, and testing departments from San Diego to “more supportive” Oregon.
- Hewlett-Packard, HQ’d in Palo Alto, at various times has moved jobs to Tennessee and Texas.
- Hino Motor Manufacturing USA moved from California to Williamstown, West Virginia, in 2007, where it now employs about 100 workers. The company has growth plans to “Raise Hino’s presence from medium-/heavy /heavy-duty trucks to all ranges of trucks” and an aggressive program to improve fuel economy and emissions. The company builds trucks under its own brand and also manufactures Toyota-branded vehicles.
- Intel Corporation, HQ’d in Santa Clara, has chosen to expand operations in neighboring states.
- Intuit of Mountain View created a customer support office (110 people) not in California but in Colorado because of lower operating costs.
- Intuit also located Innovative Merchant Solutions LLC in Las Vegas as part of a $1.8 million investment in Nevada.
- J.C. Penney closed it Sacramento call center and moved the work to five out-of-state centers.
- Klaussner Home Furnishings in closing its La Mirada manufacturing plant will maintain its NC and Iowa operations.
- Knight Protective Industries moved to Oregon “where 4-day work weeks were permitted by the state” and wanted by the employees.
- LCF Enterprises, which makes specialized high-end amplifiers used by researchers, medical professionals and others, moved from Camarillo, Calif., to Post Falls, Idaho.
- Lyn-Tron, Inc., a supplier of electronic hardware, moved from Los Angeles to Spokane, Wash. Their website has a rather California(ish) statement: “Our commitment is to maintain a manufacturing environment that is progressive and safe, where our employees are able to achieve their personal objectives, thereby adding to their quality of life and to the community in which they live.”
- Nissan North America moved its Los Angeles headquarters to Nashville, Tenn.
- One2Believe, a specialty religious-toy maker, left California for East Aurora, New York.
- Patmont Motor Werks, Inc. (GoPed manufacturer), after being hit by California regulators for hundreds of thousands of dollars in small fines even though his company has a stellar safety record, moved to Nevada.
- Paragon Relocation Resources moved from Rancho Santa Margarita to Irving, Texas.
- Plastic Model Engineering, Inc., a custom plastic injection molder and mold manufacturer, moved from Sylmar, Calif. to the “Inland Northwest,” notably Post Falls, Idaho.
- Precor will stop manufacturing fitness machines in California and re-open in North Carolina.
- Premier Inc., the largest healthcare alliance in the nation, will move its HQ from San Diego to Charlotte, involving an investment of $17.7 million and adding 300 jobs in North Carolina. The announcement was made Oct. 14, 2009.
- Pro Cal of South Gate, in Los Angeles County, a unit of Myers Industries, expanded its Sparks, Nev., operations to become the company’s primary West Coast production and distribution facility. Pro Cal is a plastics manufacturer of nursery containers and a big recycler.
- SAIC will move its headquarters east, from San Diego to McLean, Virgina, which the Washington Post called “Another Coup for Area.” The announcement was made Sept. 24, 2009; it is unclear how many employees will move east in 2009 and 2010.
- Scale Computing, a data-storage developer and manufacturer, is leaving Silicon Valley for Indiana.
- Schott Solar Inc. will close its sales and customer service office in Roseville and will relocate the office to Albuquerque, NM.
- SimpleTech transferred its manufacturing work from Santa Ana to Asia more than a year ago.
- Smiley Industries, an aerospace manufacturer, moved to Phoenix, where productivity improved.
- Special Devices Inc. brought 250 jobs to Mesa, Arizona, from Moorpark, Calif.
- StarKist headquarters is leaving San Francisco for Pittsburgh, Pa.
- Stasis Engineering moved from Sonoma County to West Virginia, a “friendlier business climate.”
- Stata Corp., which specializes in data analysis and statistical software, moved from Santa Monica, California to College Station, Texas.
- Tapmatic, a metalworking firm whose owners were “fed up with the onerous business environment,” moved from Orange County, California to Post Falls in northern Idaho.
- Teledesic moved to Washington state in anticipation of better capital gains.
- Telmar Network Technology Inc. moved from Irvine to Plano, Texas, consolidating some 150 workers there.
- Terremark postponed a Santa Clara project earlier this year to invest $50 million in a Culpeper, Va. project.
- Terumo Cardiovascular Systems is moving R&D from OC to Ann Arbor, Michigan, involving 65 jobs and $3.5 million in investments.
- Toyota will stop making cars in Fremont, will idle 4,700 workers, and move work to Canada and San Antonio, Texas.
- TTM Technologies will leave L.A. & Hayward and move to other states and China to achieve big cost savings.
- Twentieth Century Props of L.A. has gone out of business as film-making has moved to lower-cost states.
- US Press shifted work from Los Angeles and San Diego to Portland, “where union rules were almost rational.”
- USAA Insurance closed its 625-person Sacramento campus in favor of other states.
The list will grow as Sacramento considers more measures that will increase corporate taxes, increase workers’ comp costs, increase regulatory reporting requirements (along with higher fines for minor infractions), increase gasoline and diesel-fuel taxes, increase water rates, increase electric-power rates, and increase assorted fees that will cause services to become more expensive.
California officials will go to great lengths to avoid admitting companies are leaving for locations elsewhere, although one state economic development official admitted that in 2007 (before the economic meltdown) the state lost “only” 1,000 businesses. The official did not comment on the California Manufacturers and Technology Association study that showed the state lost 25 percent of its total manufacturing employment between 1990 and 2007. For additional perspective, see: “California factory jobs have disappeared.”
One excellent summary of the reasons companies depart California can be found in this Orange County Register story by Brian Joseph, “Why do businesses leave California?” See story here.
Ecconomic Competition to Increase
Clearly California has seen competition from lower cost states such as Nevada, Texas, Idaho, etc. But that competition is nothing compared to the competition we face from other nations. As we go into the election season, voters need to realize that we cannot continue to keep going down the same path. We need radical reform of our schools, health care systems, prisons and entitlements. For a glimpse of the competition we face, I encourage all voters to watch “The World is Flat” author Thomas Friedman discuss the rapidly changing world in which we live.
From the Wall Street Journal
As Taxes Rise, Wealth Flees
Based on Wall Street Journal editorial, Escape from Taxation: A New Study Shows that Wealth Flees After Taxes Rise:
New Jersey’s Governor Chris Christie must be following the economic news from Greece. Its tattered reputation for fiscal control has turned Greece into an international financial nightmare and laughingstock. Perhaps tiring of New Jersey jokes, Governor Christie this week handed down a stiff freeze on spending.
Announcing the freeze on $1.6 billion of unspent money, Mr. Christie was blunt: “Today, we come to terms with the fact that we cannot spend money on everything we want. Today, the days of Alice in Wonderland budgeting in Trenton end.”
Not a day too soon, judging from the striking data that a just-released study reveals about the number of residents of the Garden State fleeing to greener pastures.
The study by Boston College’s Center on Wealth and Philanthropy—Migration of Wealth in New Jersey and the Impact on Wealth and Philanthropy—looked at 1999 to 2008. It found that in the decade’s first half New Jersey experienced a “substantial increase in both household wealth and charitable capacity,” otherwise known as “expected giving.” During those five years the Garden State had a $98 billion net influx of capital due to wealthy households moving into the state, and it enjoyed a corresponding $881 million increase in “charitable capacity.”
The Garden State was blooming. Then the trend reversed. From 2004-2008, author John Havens found “a large decline in the number of wealthy households entering New Jersey” as well as “a moderate increase in the outflow of wealthy households leaving.” The result: a net decline of $70 billion in household wealth while the “expected giving” became a net outflow of $1.132 billion.
So what happened in 2004? The study doesn’t purport to explain what caused the wealth movements. But the state’s most notable economic policy event that year was an increase in its top income tax rate to 8.97% from 6.37%, on incomes starting at $500,000. That’s a 40% increase. …
The nearby table shows the upward march in taxation in New Jersey, which was once a fast-growing state but has now joined California and New York as high-tax, high-debt states with budget crises. As Jim Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers, told NJ.com recently, until the tax picture is improved, “we’ll probably see a continuation of the trend, until there are no more high-wealth individuals left.”
Last year, Democrats raised the top rate for one year to 10.75%. This year New Jersyans elected Chris Christie.
