Study Finds More Companies Leaving California – Urges More to Exit the State

No surprise here.  The largest pharmaceutical firm in the State is leaving for Texas.  A $3 billion San Diego firm is leaving for Texas—you know friends and family leaving the former Great State of California.  You also know the reasons—out of control government causing high taxes, high cost of living and using regulations to kill off small business.  This is a State where San Fran gives out free syringes for folks to over dose, while crying that a plastic straw is going to kill the Planet.  Sacramento is sick.

“California’s business climate has deteriorated to the point that a consultant who specializes in helping companies find new locations is now – for the first time in his career – openly encouraging businesses to relocate out of state.

The recommendation comes in a massive new study about companies departing California for business-friendly states. It estimates that 1,800 relocation or “disinvestment events” occurred in 2016 (the most recent year available), setting a record yearly high going back to 2008 – and that about 13,000 companies left the state during that nine-year period.

“Departures are understandable when year after year CEOs nationwide surveyed by Chief Executive Magazine have declared California the worst state in which to do business,” said Joseph Vranich, President of Spectrum Location Solutions LLC and study author.

For many firms it is a failure of fiduciary responsibility if they stay in California.  A CEO that builds or expands in this State is making a major financial mistake.  Freedom?  Not in California.  Success?  Only if government smiles on you.

welcome to Texas 2

Study Finds More Companies Leaving California – Urges More to Exit the State

Business Relocation Coach, 12/12/18

California’s business climate has deteriorated to the point that a consultant who specializes in helping companies find new locations is now – for the first time in his career – openly encouraging businesses to relocate out of state.

The recommendation comes in a massive new study about companies departing California for business-friendly states. It estimates that 1,800 relocation or “disinvestment events” occurred in 2016 (the most recent year available), setting a record yearly high going back to 2008 – and that about 13,000 companies left the state during that nine-year period.

“Departures are understandable when year after year CEOs nationwide surveyed by Chief Executive Magazine have declared California the worst state in which to do business,” said Joseph Vranich, President of Spectrum Location Solutions LLC and study author.

“The top reason to leave the state no longer is high taxes,” he said. “The legal climate has become so difficult that companies should consider locating in jurisdictions where they will be treated fairly.”

In California, a “tipping point” has been reached with a new statute that puts businesses in a legal “lose-lose” situation.

The new Immigrant Worker Protection Act states that an employer that follows Federal immigration law is now violating California law, is committing a crime, and is subject to fines. However, it’s also a crime if employer fails to follow Federal immigration law.

“Think about it. California may penalize someone in business who is a legal citizen operating a legal business that is in compliance with every Federal, state and local law, who pays state and local taxes, and who creates employment – and all that counts for nothing in the state’s eyes,” said Vranich. “Signs are that California politicians’ contempt for business will persist.”

“For years the American Tort Reform Foundation said California is among the nation’s worst ‘Judicial Hellholes’ for businesses, a label I’m confident will persevere considering the nature of this new law alone,” he said.

“The fact that the law deals with immigration is irrelevant because it makes us wonder what comes next. Why impose insufferable legal penalties only for immigration? Elected officials are capable of enacting more laws that only they could imagine – such as arresting a factory manager for cooperating with a Federal OSHA inspector or imposing fines on a movie producer for speaking with Federal EEOC officials,” Vranich said. “Where does this stop?”

Three previous California Governors – Gray Davis, Pete Wilson and George Deukmejian – cited findings from an earlier version of Vranich’s study when expressing concerns about companies shifting their operations out of state.

The study is brimming with information including naming the companies that departed, describing the locations they left and places they went to, and relaying what CEOs have said about their decisions.

The top ten states starting in the order of those that gained the most from California business relocations were (1) Texas, which has held the first-place distinction for at least a decade, (2) Nevada, (3) Arizona, (4) Colorado, (5) Oregon, (6) Washington, (7) North Carolina, (8) Florida, (9) Georgia and (10) Virginia.

The top ten municipalities gaining company migrations from California were (1) Austin, (2) Reno, (3) Las Vegas, (4) Phoenix, (5) Seattle, (6) Dallas, (7) Portland (Ore.), (8) Denver, (9) San Antonio and (10) Scottsdale. Also, cities unfairly disparaged for being in “flyover” country are successful in attracting California companies, with Pittsburgh, Atlanta, Fort Worth, Houston, Indianapolis and Nashville among the top twenty.

The top ten nations attracting California businesses were (1) Mexico, (2) India, (3) China, (4) Canada, (5) Philippines, (6) Costa Rica, (7) Malaysia, (8) Singapore, (9) Thailand, and Japan and Taiwan tied for tenth place.

The top ten California counties losing the most companies were (1) Los Angeles, (2) Orange, (3) Santa Clara, (4) San Francisco, (5) San Diego, (6) Alameda, (7) San Mateo, (8) Ventura, (9) San Bernardino and (10) Sacramento.

More headquarters leave California than any other type of facility and more manufacturers than any other industry.

During the study period, $76.7 billion in capital funds were diverted out of California along with 275,000 jobs – and companies acquired at least 133 million square feet elsewhere – all of which are understated because such information often went unreported in source materials.

The report addresses the state’s 40 years of hostility toward businesses, high utility and labor costs, punitive regulations, worrisome housing affordability for employees, signs that workers plan to depart California, and how the state lags behind other states in acquiring facilities that are being reshored from overseas.

The report has a rather bold title, “It’s Time for Companies to Leave California’s Toxic Business Climate,” and may be purchased at https://spectrumlocationsolutions.com/california/

Joseph Vranich is a site selection consultant providing location advisory services to corporations and small businesses throughout the United States. In recent years he has discussed California’s business environment with more than 100 economic development agencies located in North America and Europe. The official name of his company is Spectrum Location Solutions LLC, but he also has been known as the Business Relocation Coach.

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. Nothing new here, Stupid is as Stupid does…. and Democrat is the definition of Stupid.

    One of the hopes is tech firms like Apple will soak up the jobs. But in fact the there are not enough of these type of jobs to counter the exodus.

  2. The problem I see is with the rank and file workers who have grown up in the tax and spend /entitlement minded California are taking their Liberal/Progressive (i.e. Communist) voting habits with them and are ruining otherwise sensible conservative destinations. Austin, Texas come to mind. If the companies would just leave “Jerrys’ kids” behind when they leave the State, just maybe the Country would become a better place again.

    • Just like they just did in Colorado…
      San Franfreakshow has exported dozens of smaller tech companies, who brought their liberal millennial technocooolies with them and flipped Colorado into East California….
      We’ve been “Californicated” and one of the primary actors described in detail in “The Blueprint” is about to be installed as Governor of Colorado….
      Financial headwinds to begin here in 3….2….1…

  3. If the idiotas in Sacramento don’t realize that their manufacturing base is important to their economic futures AND their constituents, they’re going to preside over an unsustainable economy…
    But no one ever accused these genuiuses of being intelligent, just good at promising something for everyone who’s on the Dole with their hands out in exchange for votes…
    California is a banana republic…..

  4. Another state that isn’t mentioned for high tech and defense industry is Huntsville, alabama. Home of the Army’s MIssile and Aviation Command and Marshall space Flight Center. A well educated population, low taxes and housing is plentiful and affordable.
    Weather-wise the humidity is bad in the summer and very light snow in the winter. What is not too like?

  5. Publicly traded companies that stay in high taxed states are doing their shareholders injustice. The taxes take away from dividends and capital.

  6. The pols know this, which is why they want to tax services and repeal Prop 13. they are attempting to compensate for the looming loss of business tax revenue by placing it on the public.

  7. Commiefornia will shortly be known as “Venezuela, Part 2″…

  8. The tipping point will eventually be reached. Enough of the earners and producers will have left the state to leave it with no way to pay for those with their hands out who remain. The day of reckoning is coming. As others here have noted, the issue is that so many of those moving out are taking their liberal mindsets to other locales, and they will, in time, ruin them as well.

  9. I forgot to mention Clark County, Nevada (known as East L.A.around the vast majority of the Counties in Nevada. The massive Left Wing nut machine of the unions and Harry Reid together with the Cali transplants are poised to bring this once great State down to the level of California. The Tax and Spenders against all common sense won not only the Governors Office but a Feinstein look a like with Pelosi voting habits. Go figure…

  10. ALL THOSE IN FAVOR OF A YELLOW VEST TAX REVOLT IN CA……Raise your hand……

  11. What really gets me is the fact that these “transplants” will come to Nevada and turn our state blue knowing why they left Commiefornia in the first place. Makes no sense.

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