California’s ‘Score’ for Business Deteriorates

Posted September 12, 2014 by bizlocate
Categories: Best States for Business, Business Location, Business Relocation, Businesses leave California, California Business Environment, California Regulations, California taxes, Economic Development, Gov. Jerry Brown, Site Selection, Worst States for Business

Down again.

That’s what we can say about California’s “business attractiveness” as it lost its tenth place ranking in a survey of site consultants, published yesterday by Area Development Online. Here is what Editor Dale Buss had to say about the state losing the ranking it had in last year’s survey:

“The state’s reputation with site consultants keeps taking hits — witness Toyota’s announcement earlier this year that it plans to move its corporate headquarters and 4,000 jobs to suburban Dallas from southern California. And so this year, California placed in the top states in only three of the 18 sub-categories, notably ranking third for access to capital and project funding, no doubt a legacy of the continued success of Silicon Valley.”

The new survey was interesting in other respects, too, in that Georgia took over the top spot, with Texas moving to second place. States in the South and mid-South dominate the list because of their continuing momentum in business development. Also, some states in the Midwest “are scratching their way back into position as major players in the U.S. economic-development derby.”

Area Development did an excellent job explaining the survey’s findings. For the story, along with state profiles, see “Top States for Doing Business 2014: Georgia Unseats Texas, Industrial Midwest Rises.”

The finding should unnerve California business leaders because site selectors surveyed over the years by the publication have been kind to California – especially when compared with other surveys that usually portray conclusions that are less kind.

I would be remiss if I failed to remind business owners and corporate leaders that this year Chief Executive magazine found California to be the “worst state for business” — for the tenth year in a row. CEO’s comments include: “California could hardly do more to discourage business if that was the goal.” “The state regulates and taxes companies unreasonably.” “California is getting worse, if that is even possible.”

Moreover, CNBC’s 2013 “Top States for Business” scored states on 51 measures of competitiveness, weighted states based on other criteria, and found California ranked low at 47.

As if that weren’t enough, 24/7 Wall St. ranked California 50th in its evaluation – for the third year in a row.

Incidentally, after reading the Area Development story, the next item to pop up on my news screen was headlined, “California Rocket Company Moving to Texas.” Turns out Firefly Space Systems of Hawthorne will relocate its headquarters to Cedar Park, near Austin, where it will hire up to 200 workers, mostly highly paid engineers. It will develop rocket engines in collaboration with the University of Texas.

Twenty-five years ago California was among the best states for business. Sadly, it’s lost that distinction, and I expect little improvement in the business climate. When I consider the strength of business-hostile interest groups, the attitudes of elitist voters along the coast, and Gov. Jerry Brown surrounding himself with business-clueless advisors, I see more regulations and higher taxes in the future for California businesses.

Joseph Vranich of Spectrum Location Solutions, based in Irvine, California, helps companies find optimal locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of business owners relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability.

© Excerpts from this blog may be used, but only if attribution is given to “Joseph Vranich of Spectrum Location Solutions in Irvine, Calif.”

It’s official: Tesla selects Nevada for its ‘Gigafactory’

Posted September 5, 2014 by bizlocate
Categories: Site Selection

Elon Musk, Chairman and CEO of Tesla Motors, announced today that the company has selected Nevada in which to locate its $5 billion battery Gigafactory. The company’s news release is here.

Why Nevada over California? Well, for a few insights about that question, see the Oakland Tribune editorial published today, “Tesla’s Reno deal is another example of California’s bad business climate.”

I’ve had the pleasure of working with representatives in Nevada — in the Governor’s Office of Economic Development and the Economic Development Authority of Western Nevada. These are some great people and I’m sure they’ve worked hard on this project. I presume they will participate in a well-deserved celebration tonight.

Joseph Vranich of Spectrum Location Solutions helps companies find great locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of businesses relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability.

California Gas Prices to Jump 13-to-20 Cents per Gallon Jan. 1— This is Not a Joke

Posted August 27, 2014 by bizlocate
Categories: Best States for Business, Businesses leave California, California Out-Migration, California Regulations, California taxes, cap-and-trade, gas tax, Gov. Jerry Brown, Leaving California, Worst States for Business

Tags: ,

It isn’t often that I’m speechless — but I’m speechless.

California Gov. Jerry Brown and the legislature refuse to stop an unprecedented increase in gasoline prices. So, effective January 1st, the cost of a gallon of gasoline in California will spike between 13 and 20 cents per gallon. No other state will do this.

The price hike is an outgrowth of a state law, the California Global Warming Solutions Act, AB 32, which created a cap-and-trade system relating to carbon emissions. Even though the state issues only about 1 percent of the world’s greenhouse gases, it nevertheless has instituted draconian regulations that will cost industry billions of dollars in fees to purchase carbon credit allowances. The gasoline price increase will result from energy companies being required to pay higher fees, which will be passed onto businesses and consumers.

And it could get even more expensive. California’s Legislative Accounting Office found that increases resulting from cap-and-trade penalties could exceed 50 cents per gallon by 2020.

All of this is on top of California’s current gasoline tax. The Tax Foundation puts the state in 1st place nationwide with the highest rate of 52.89 cents per gallon. Adding in the 18.4 cent federal excise tax means California consumers now pay 71.29 cents per gallon to various public treasuries.

The new requirement will harm business operations in California for several reasons:

  • Any company with a union agreement that ties compensation to the cost-of-living will see an increase in labor costs as soon as contract provisions permit. (Keep in mind that Californians are now seeing costs increase for taxes, apartment rentals, utilities and food.)
  • Next, countless small businesses that rely on gasoline-powered pickup trucks and delivery vans (e.g., farmers, contractors, retailers) will see costs rise.
  • Finally, much of the new “river of  revenue” to the state will be wasted, in typical Sacramento fashion, further entrenching the state’s 373 public agencies, commissions and boards.

Anyone with a heart will recognize the harm done to individuals, particularly the poor, or people in agricultural areas who must drive long distances for their jobs.

Measures like cap-and-trade are supported by more than environmentalists — they are promoted by the ultra-rich and celebrities living in their San Francisco, Silicon Valley and Los Angeles enclaves.  That group, I presume, will celebrate the New Year with extra high-fives all around. That is, before they head off to their limousines.

See more about this sad state of affairs in two stories in the Sacramento Business Journal“Steinberg: Cap-and-trade expansion will not be delayed” (Aug. 26 story) and “Analyst: Cap-and-trade will push gas prices up as much as 20 cents” (Aug. 7 story).

Joseph Vranich of Spectrum Location Solutions, based in Irvine, California, helps companies find optimal locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of business owners relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability.

 © Excerpts from this blog may be used, but only if attribution is given to “Joseph Vranich of Spectrum Location Solutions in Irvine, Calif.”

Arthur B. Laffer: ‘Making Excuses for Companies’ Flight’

Posted May 24, 2014 by bizlocate
Categories: Site Selection

Tags: , , , , , ,

The Times is delusional about why companies leave California

The Los Angeles Times long has been an apologist for California’s welfare state, which may be OK when the consequences are benign. But those consequences are no longer benign, and the evidence is no longer even slightly ambiguous.

In “Was Toyota driven out of California? Not so fast,” the Times pooh-poohs the “new round of hand-wringing” following the U.S. headquarters of Toyota’s highly publicized departure from Torrance to Plano, Texas.

Read more at ‘Making Excuses for Companies’ Flight’

Toyota ‘Forgiven’ for HQ Move to Dallas Area

Posted May 23, 2014 by bizlocate
Categories: Best States for Business, Business Relocation, Businesses leave California, Dallas, Economic Development, Leaving California, Los Angeles, Site Selection, Texas, Worst States for Business

“I forgive you, Toyota” is the eye-catching lead of an excellent column about the company’s planned headquarters relocation from Torrance, Calif., to Plano, Texas.

The writer, Joe Mathews, a long-time journalist and observer of California events, describes his positive impressions of Plano and also Frisco, where presumably many Toyota employees will live. As a site selection consultant, I dig deeper into community characteristics than just about anyone else. Hence, I can verify that data-driven comparisons support the positive views in the column.

I try to avoid touting one community over another, and my reports to clients are objective and based on facts. However, I’ve visited those Texas communities and my eyes opened wide when I saw their attributes.

Irvine, Calif., an upscale place, is my home town. When visiting those Lone Star State locations I found myself looking at scores of gleaming new facilities, super-clean streets and great schools. I thought, “This resembles Irvine.”

Also, I’ve met economic development representatives from those Dallas-area communities as well as from Richardson, Allen, Irving, Denton and McKinney. All were highly professional and refrained from pointing out California’s business negatives. They stayed focused on their educational, transportation and workforce assets and community cohesiveness. And their business-friendly policies results in commercial growth and job creation in virtually every industry.

My point here is that some Californians who should know better ridicule communities in Texas and other states. The Dallas area is a case study in how many areas around the United States offer a lifestyle that’s superior to the very places the California critics live.

See Go Ahead, Texas: Just Try to Recruit This Californian.

Joseph Vranich of Spectrum Location Solutions, based in Irvine, California, helps companies find optimal locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of business owners relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability.

 © Excerpts from this blog may be used, but only if attribution is given to “Joseph Vranich of Spectrum Location Solutions in Irvine, Calif.”

This Ain’t Rocket Surgery

Posted May 18, 2014 by bizlocate
Categories: Site Selection

Originally posted on Barberbiz:

I remember my brother, who was then a resident of Los Angeles County, telling me something that was hard for me to fathom at the time but has stuck with me.

Jim has since passed away, but I distinctly recall him saying that he had to get permission from local government to cut down a dead oak tree in his back yard.

I was living in Alabama at the time and said something to the effect, “Jim, if you lived here in Alabama, that would be your tree on your property. You wouldn’t have to get permission from anybody to cut it up for firewood.”

Another friend, also a resident of California, told me about all the rigmarole it took for him to get a contractor to remove a buildup of bird crap off a roof section at his home. The environmental regulations did not permit what should have been…

View original 1,437 more words

Chief Executive Magazine Issues 2014 State Biz Climate Rankings

Posted May 11, 2014 by bizlocate
Categories: Best States for Business, Business Relocation, Businesses leave California, California Out-Migration, California Regulations, California taxes, Chief Executive, Income Tax, Leaving California, Los Angeles, manufacturing, Retroactive Tax, Site Selection, Worst States for Business

In its latest survey, Chief Executive magazine again ranked Texas the best state for business, followed by Florida, Tennessee, North Carolina and South Carolina.

I’ve publicly predicted that the survey would rank California the worst state for business for the 10th year in a row because of what has been happening with tax increases and more employer-unfriendly labor laws. Out-of-control public pension obligations are also a concern because they represent “tax increases in waiting.”

Well, that 10-year mark is exactly what happened. So, again, California ranks 50th. Rounding out the bottom five are New York, Illinois, New Jersey and Massachusetts.

Here are some of the magazine’s observations:

California has gained breathing space since Governor Jerry Brown took office and is credited with a budget surplus. But despite the return of fiscal discipline, it has exchanged acute problems for merely chronic ones. It is a state that continues high personal income tax rates and regulates with a very heavy hand. Its top, marginal tax rate of 33 percent is the third-highest tax rate in the industrialized world, behind only Denmark and France.

Note: I have no intention of starting an argument with the fine folks at Chief Executive. However, considering Sacramento’s plans to increase spending by billions of dollars on wretched projects, and with new tax increases being proposed, I doubt that we in this state have a “return of fiscal discipline.”

The magazine also states:

“California likes to say that Texas can have all those low-wage jobs,” says Richard Fisher, CEO of the Dallas Federal Reserve, “but from 2000 to 2012, job growth percentage change by wage quartile was better in Texas.” Texas won another bragging right last February when Site Selection magazine reported that it surpassed California in global technology exports in 2012.

Congratulations to JP Donlon, Editor-in-Chief of Chief Executive and to the magazine’s team for a remarkable and valuable survey.

See 2014 Best & Worst States for Business and the State Rankings. Clicking on the name of a state in the rankings column will bring you to additional information.

Joseph Vranich of Spectrum Location Solutions helps companies find great locations in which to grow. Joe also is a keynote speaker on the challenges and benefits of businesses relocating out of high-tax, high-cost, over-regulated states. More information is available at Biography and Speaking Availability.


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