Chuck DeVore: Hewlett Packard packs up — Will California ever get fed up with losing to Texas?

The grandfather of the tech industry in California, and the world, is moving from Silicon Valley to Houston.

“In its filing, HPE stated that it has was relocated its headquarters from San Jose to Houston because that Texas city was already, “HPE’s largest U.S. employment hub, (and) an attractive market to recruit and retain future diverse talent, and is where the company is currently constructing a state-of-the-art new campus.” For the immediate future, much of HPE’s research and product development will still take place in California.

HPE’s move to Texas comes months after Tesla founder and CEO Elon Musk threatened to move his company headquarters to Texas or Nevada, both states featuring no personal income tax and lower corporate taxes than in California.

Tesla is rapidly constructing a gigafactory outside of Austin, breaking ground only weeks after the announced effort. A similar factory would have taken around five years simply to work through government approvals and environmental lawsuits in California. “

Watch as San Fran and Silicon Valley crumble due to impossible mandates by Gov. Newsom and productive people wanting to leave California.  You will see more large firms going to Texas, Tennessee and other Free States.  This affects not only the employees of HP, but the vendors, suppliers, consultants and others that count on doing business with HP.  Those decisions will be made in Houston.

Chuck DeVore: Hewlett Packard packs up — Will California ever get fed up with losing to Texas?

Texas is well-positioned to continue to poach companies from states that prize tax revenue over jobs

By Chuck DeVore,, Fox News,  12/3/20 

Hewlett Packard Enterprise (HPE), the California firm that literally kickstarted Silicon Valley in a garage in 1939, is moving to Texas. The low-key announcement was made via an SEC filing on Dec. 1.

If California’s anti-jobs policies, its high taxes, capricious regulatory enforcement, and blackout-inducing energy policy can chase out the company that launched Silicon Valley, is any business, large or small, immune from pressure to move? Unless a company must directly serve the California market, such as a fast-food chain, the answer is a resounding “No!”

And there’s no sign that things are about to turnaround soon: after the 2020 election, Democrats retained their supermajorities in both legislative chambers while controlling every statewide office. In effect, California is a one-party, anti-free enterprise state.

Taking advantage of California’s penchant for crushing businesses, Texas Gov. Greg Abbott issued a statement noting, “We are excited that Hewlett Packard Enterprise has chosen to call Texas home… Hewlett Packard Enterprise joins more than 50 Fortune 500 companies headquartered in the Lone Star State, including 22 in the Houston area alone.”

Abbott frequently urges corporations to move to Texas, citing the Lone Star State’s lower taxes, more reasonable regulatory burden, more affordable housing, and better lawsuit environment.

In its filing, HPE stated that it has was relocated its headquarters from San Jose to Houston because that Texas city was already, “HPE’s largest U.S. employment hub, (and) an attractive market to recruit and retain future diverse talent, and is where the company is currently constructing a state-of-the-art new campus.” For the immediate future, much of HPE’s research and product development will still take place in California.

HPE’s move to Texas comes months after Tesla founder and CEO Elon Musk threatened to move his company headquarters to Texas or Nevada, both states featuring no personal income tax and lower corporate taxes than in California.

Tesla is rapidly constructing a gigafactory outside of Austin, breaking ground only weeks after the announced effort. A similar factory would have taken around five years simply to work through government approvals and environmental lawsuits in California. 

Business relocation expert Joe Vranich, a former Californian, produced a study in late 2018 showing 13,000 businesses left California over the past eight years.

Vranich’s findings are echoed in the Census Bureau’s state-to-state migration estimates which show California consistently losing residents to other states with lower taxes, a trend that has continued for some 20 years. Through mid-2018, California saw a net loss of 190,122 people who moved to other states.

John Ghiselli, a former commercial real estate developer in California, moved to Texas last year. He calculated that businesses reduce their operating costs by 32 percent by moving out of California to Texas. He now loans businesses money to move out of California through the firm he founded, Waterloo Capital Private Equity, confident he will get a strong return on his investment.

For the hundreds of employees who do move to Texas, they’ll want to get a head start on securing moving vans. The rush to leave California has led to a severe shortage of commercial movers, with California’s stringent regulations stopping firms from meeting demand and leading to the proliferation of shady operators. Even a U-Haul truck can be tough to get, with one-way rates from San Jose to Houston for a 26-foot truck clocking in at $5,569, more than three times the cost of a relocation to California at $1,688 heading west.

Texas is well-positioned to continue to poach companies from states that prize tax revenue over jobs. Every year, Canada’s Fraser Institute ranks the economic freedom of the states and provinces in the U.S., Canada, and Mexico in its Economic Freedom in North America index. California ranked the 4th-worst in America, Texas, 4th-best—New York had the lowest economic freedom ranking.

HPE’s employees will find a familiar face a few hours to the west in Austin where Joe Lonsdale moved a few weeks ago. The former Silicon Valley founder of tech firms Palantir and Addepar took his $3.6 billion venture-capital firm to Texas, writing in the Wall Street Journal two weeks ago that “I love California, but I had to leave.”

HPE may have been silent about its true reasons for moving its HQ as it still plans to have a footprint in California, but Lonsdale wasn’t so reticent, citing, among other issues, a non-responsive government caused by “California’s intolerant far-left” politicians, electric blackouts, and a breakdown in public safety.

The question is, will California politicians change their ways? Or will California’s voters finally get tired of losing to Texas and vote differently?

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. Arlene Wohlgemuth says

    The answer to your question is sadly no. The union controlled state will continue as the middle class is hollowed out leaving only the subsidized poor and unaffected uber-wealthy. After at least 4 decades of public school indoctrination into Socialism, the voters don’t connect the actions of the super-majority legislature with the demise of their freedoms and livelihood.

    Good article, Chuck DeVore.

  2. Rico Lagattuta says

    The one major problem with Texas is prpoerty taxes. While an $800,000 house in California with a 1.2% (tax rate plus bonds, fees, etc) cost $9,600 in property taxes, that same house in Texas costs $400,000 but with a 2.68% tax rfate the tax is $10,720. Yes, thee is no State income tax in Texas which is a savings but the property tax rate is up there.

  3. The eventual problem will be the transferred from Silicon Valley will pollute Texas with their entitlement voting habits California has become the “cancer” to the rest of the Country.

  4. Richard Wahl says

    Rico – I have looked at homes in Amarillo. The tax rate you are referring to occurs in major cities. If you live outside a city, the rate is far lower. I found home tax rates comparable to here – below 2%. When moving to Texas – live in the country near a city. Or better yet – way out in the country.

  5. I haven’t checked every one of the 254 Texas counties, but in looking at quite a few, the property tax rates are equally high no matter what part of the state one is in. Ten years ago, my mother-in-law had a $135,000 house and a $3,200 property tax bill in a rural county about an hour southwest of Fort Worth. There are no Proposition 13 limits on annual property tax increases in Texas, so whatever the assessment district decides can spike those taxes radically in just one year. Sales tax is at least 8.25% which is lower than California population centers, but slightly higher than the smaller California counties and cities. Electricity costs are somewhat less, but thanks to the Green New Dealers pushing wind power, the prices are considerably higher than they should be with conventional generating sources, and in comparison with surrounding states. Also, given the temperature extremes in much of the state (both summer and winter), one needs to use far more energy for heating and cooling.

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