Cuomo’s Start-Up NY Development Program Blasted for its Absurdity

Posted April 16, 2015 by bizlocate
Categories: Best States for Business, Business Relocation, Economic Development, New York, Site Selection, Worst States for Business

Finally, someone has exposed New York’s wasteful, ineffective program where it spent $53 million and created only 76 jobs. An unlikely coalition from New York’s political right and left has called for the suspension of Gov. Andrew Cuomo’s Start-Up NY economic development program, a coalition that includes the state Conservative Party and the state chapter of the National Federation of Independent Businesses from the right along with the left-leaning Working Families Party and Fiscal Policy Institute.

Also, even though the highest unemployment rates are in upstate New York, nearly one-third of the companies admitted to the program last year are in Long Island or New York City.

Cuomo is virtually advertising his recklessness regarding economic development. How? Well, he will soon undertake a foreign trade mission to a small, impoverished island nation that outlaws free enterprise — Cuba.

See more at Groups from left, right join to blast Cuomo’s Start-Up NY development program and Cuomo’s Sluggish “Start-up.”

Joe 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-cost, high-tax, over-regulated states. More information is available at Biography and Speaking Availability.

Los Angeles-Area HR Consultant Needed for Company Relocation HR Issues

Posted March 22, 2015 by bizlocate
Categories: Business Relocation, Businesses leave California, California Business Environment, HR Consultant Needed, Human Resources, Los Angeles, Site Selection

Spectrum Location Solutions is serving a client based in the Los Angeles area that is planning to relocate a certain number of jobs to another state. We are representing the company, whose identity is closely held at this time.

The company’s workforce is stable and only selective relocations have occurred in the past. The scope is different with this project and assistance is needed with the Human Resources aspects of the upcoming move – e.g., development of a relocation policy that includes the usual elements such as retention bonuses, travel packages that underwrite employee familiarization/house-hunting trips, and household moving costs.

A separate element is organizational – possible work on org. charts and determining who goes where (a considerable number of employees are volunteering for the out-of-state move). Furthermore, the assignment might address training and recruiting issues, which are to be determined, and, possibly, gross-up estimates.

There is no need for outplacement services.

To be considered for this assignment, please examine the services that have been provided to the client by going here and noting Phases I, II and III. We are in the midst of Phase III, which illustrates how far along the company is in the relocation process.

Next, contact us by completing the form mail on the Contact Us page. There, please provide your company’s name, a brief summary of your work in this arena, and a link to your website and/or to a summary of your services. If you wish to call, the number is on the contact page. However, call only after you have sent a message via that page so that we have some idea of who you are and what your scope of services are.

Please call only during these days and times (California time):

  • Monday, March 23 – 2:00 pm to 6:00 pm
  • Tuesday, March 24 – 2:00 pm to 6:00 pm
  • Wednesday, March 25 – 2:00 pm to 6:00 pm
  • Thursday, March 26 – No calls
  • Friday, March 27 – No calls
  • Saturday, March 28 – Noon to 6:00 pm

Deadline: Please respond as early as possible, but no later than Saturday, March 28, at 6:00 pm California time.

Joseph Vranich
Spectrum Location Solutions
Irvine, California

Joe 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-cost, high-tax, over-regulated states. More information is available at Biography and Speaking Availability.

No Surprise: Small Businesses Unhappy in California

Posted March 17, 2015 by bizlocate
Categories: Business Location, Business Relocation, Businesses leave California, California Business Environment, Leaving California, Site Selection, Worst States for Business

Based on a new survey, 20 percent of small businesses in California are considering leaving the state. Today, the Orange County Register published an editorial on the topic, which concluded: “When one-in-five small businesses express a desire to leave the state, it is time to admit that there is a problem with California’s business climate.” Yours truly is gratified to have contributed to the article. See more at “Survey: Don’t go West, small businesses.”

Joe 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-cost, high-tax, 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.”

Onshoring: Ford Shifts Some Manufacturing from Spain & Mexico to Cleveland Area

Posted March 9, 2015 by bizlocate
Categories: Business Location, Business Relocation, Cleveland, Manufacturing, Nearshoring, Offshoring, Ohio, Onshoring, Site Selection

The Ford Motor Co. branded an engine EcoBoost, a name designed for a motor that reduces fuel consumption and emissions. However, when it comes to Northeast Ohio, EcoBoost could also mean “Economy Boost” as Ford moves production from Spain and Mexico to the region.

An official from the Federal Reserve Bank of Cleveland recently said the city is enjoying a genuine economic turnaround — a view that the Cleveland Plain Dealer said was a “strong message of optimism” they’re not used to hearing.

Mark Schweitzer, a senior vice president at the bank, noted that Cleveland’s economic performance today is healthier than in the last decade and a key for the future will be the ability of businesses to be innovative and develop new products.

Ford is doing its part by shifting production of EcoBoost engines for North America from Valencia, Spain to its plant located in Brook Park, a Cleveland suburb.

This is the first time the technologically advanced engines are being produced in the United States; they will be used in the all-new Ford Edge, Mustang, Explorer and Lincoln MKC.

Starting in 2013, Ford invested nearly $200 million and added 450 jobs at the plant to support production for the EcoBoost. The facility also builds other engines.

The Plain Dealer reports: “Officials say the surviving plant’s 1.7 million square feet are fully in use now, with more than 1,300 workers…. Elsewhere in Northeast Ohio, Ford is shutting its plant in Walton Hills but investing $168 million in Avon Lake to take over production of F-650 and F-750 trucks from Mexico.”

For some time now, the Northeast Ohio region has seen employment growth in sectors such as biomedical, professional, scientific and technical services. Also, aerospace represents a significant cluster in the region.

The area’s manufacturing sector has expanded somewhat in the last couple of decades — growth that will be boosted further by the onshoring of EcoBoost production to Ohio and upcoming nearshoring work from Mexico.

Sources:

Plain Dealer: “Cleveland is enjoying economic revival, Fed official says, while nation overall continues to rebound”

Plain Dealer: “Ford in Brook Park now making four-cylinder EcoBoost engines”

Company news release: “Ford Cleveland Engine Plant Begins Production….”

Team NEO (Northeast Ohio): “January 2015 Quarterly Economic Review: Northeast Ohio’s Economy Diversifies”

Joe 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-cost, high-tax, 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.”

 

California: The Land of Double Taxation for Small Businesses

Posted November 26, 2014 by bizlocate
Categories: Business Tax, California Business Environment, California Regulations, California taxes, Double Taxation, Gov. Jerry Brown, Tax abuse, Worst States for Business

Tags: , , ,

Just think: You run a small company. Your partner embezzles from you and you are reeling – you feel like you’ve been punched in the gut. Next, California’s state government shows up and slaps you around. When you object, Sacramento offers no apology, no comfort. You’re on your own.

Farfetched? Read on to see what happened to a California Limited Liability Company (LLC) that tried to play by what it thought were common-sense rules.

First, an LLC is a form of business that permits the owner to avoid double taxation. In California, such companies must pay an annual minimum franchise tax of $800, which is the highest of any state (in 40 other states the fee is $100 or less) and may be subject to additional fees based on revenue.

An article by Mike Dazé in Bloomberg BNA – Corporate Close-Up: The Burden of California’s Taxes and Fees on Limited Liability Companies – points out that the State Board of Equalization “illustrates the challenges businesses face when trying to reduce their liability for taxes and fees in California. A company filing two short-period returns in tax year 2010 unsuccessfully protested the imposition of the minimum tax and LLC fee in each short period.”

In short, they objected to double taxation.

The company, Bay Area Gun Vault, LLC, converted from a two-member entity into a single-member LLC after one of the two members was caught embezzling money and was removed. So the company filed two returns for 2010, one as a two-member LLC and the second as a single-member LLC.

In the first return, the company timely paid the annual tax of $800 and an extra LLC fee on profit. In the return for the second period, the company did not pay the LLC annual fee, but did pay the tax.

Despite two tax returns, the company clarified that the income was for the same business with the same tax ID number and assets and was operating in the same location. So the company should owe only $800 in tax and an LLC fee of $6,000.

But the removal of the embezzler caused a “technical termination” of the original LLC because 50 percent or more of the interests changed hands. Hence, the resulting single-member LLC was a “new entity for tax purposes” and owed the minimum tax and LLC fee during the same year.

Mr. Dazé wrote, “The logic of the company’s argument is appealing: LLC taxes and fees should not be imposed twice in the same year on the same business.”

The Board claims there is no statutory support for that position.

Well, if the Board is correct, why did legislators let an unfair law stand? Do Sacramento lawmakers use no foresight in determining whether technical provisions in business-oriented laws might cause future injury?

Actually, I know the answers to my own questions. Here is why the legislature doesn’t care how its actions harm the business community:

  • First, the Franchise Tax Board (California’s version of the Internal Revenue Service) has projected revenue from LLC taxes and fees to be $753 million in fiscal year 2014-2015. Sacramento wants to collect every single penny of that revenue.
  • Next, California’s legislature is packed with people who will use taxpayer funds to support the latest half-baked ideas. But they routinely turn a deaf ear to requests from the business community for fair taxation and regulatory policies.
  • Finally, most Sacramento politicians are clueless about what it takes to run a business.

To amplify on that last point – only “18 percent of the Democrats who control both houses of California’s full-time legislature worked in business, farming or medicine before being elected,” wrote former California Assemblyman Chuck DeVore. “The remainder drew paychecks from government, worked as community organizers, or were attorneys.”

In business-friendly Texas, “Democrats are more than twice as likely as their California counterparts to claim private-sector experience outside the field of law,” continued DeVore, and “75 percent of the Republicans earn a living in business, farming, or medicine….” All that can be found in his book, The Texas Model: Prosperity in the Lone Star State and Lessons for America.

The analysis was for a couple of years ago, but the makeup of both legislatures remains virtually the same.

California is replete with demands for “environmental justice,” “social justice,” “income justice,” “sexual justice,” “workplace justice” – oh, the list goes on and on. What California needs more of is “entrepreneurial Justice,” “business justice” and “tax justice.”

Gov. Jerry Brown and legislative leaders should reverse tax-confiscatory policies and refund overpayments to that LLC and others in similar positons. If not, California will perpetuate its mean-spiritedness towards corporations – even the one-person kind.

Joe 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

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

Crossposted at Fox&Hounds Daily

New Study: California Has Highest Workers’ Compensation Rates

Posted October 25, 2014 by bizlocate
Categories: Business Relocation, Site Selection

Tags: , , , , , , ,

Oct. 24, 2014: California businesses concerned about labor-related costs are learning that their state now has the most expensive workers’ unemployment rates in the nation. That finding is despite reforms that were designed to lower costs from when the state also had the worst ranking in the past. The high-cost states following behind California are Connecticut, New Jersey, New York and Alaska, in that order.

The least expensive states were North Dakota, Indiana, Arkansas, Virginia and Massachusetts.

Workers’ Compensation Premium Index Rates

2014 Workers' Compensation Premium Index Rates

The source of the rankings (and the map) is a study issued by the Oregon Department of Consumer and Business Services, which updates such work every two years and provides the findings to the Oregon legislature. The agency has been conducting such studies since 1986.

According to the Los Angeles Daily News, Jerry Azevedo, a spokesman for the California-based Workers’ Compensation Action Network, said:

“California’s workers’ compensation system is incredibly inefficient. It does not do a good job of achieving its goal. For as much as employers pay, they don’t get a lot out of it. … You would think that since California has the highest cost system that we’d also have the most generous benefits — but we don’t. We plow a lot of money into the system but too little of it ends up in the hands of injured workers.”

Much of the money goes to lawyers who dispute medical treatments, while other money goes to commissions paid to brokers and various administrative costs, Azevedo said. The Daily News reported that California’s system is experiencing more claims — particularly in the Los Angeles region. See more of the story at  California ranks highest for workers’ compensation costs.

The researchers provided a comparative column that shows at a glance how far up or down the scale a state has moved since the last report in 2012, which is shown below.

Workers’ Compensation Premium Rate Ranking
2014 2012   Index Percent of Effective
Ranking Ranking State Rate study median Date
1 3 California 3.48 188% 01/01/14
2 2 Connecticut 2.87 155% 01/01/14
3 7 New Jersey 2.82 152% 01/01/14
4 5 New York 2.75 148% 01/01/14
5 1 Alaska 2.68 145% 01/01/14
6 6 Oklahoma 2.55 137% (A)
7 4 Illinois 2.35 127% 01/01/14
8 14 Vermont 2.33 125% 04/01/13
9 30 Delaware 2.31 125% 12/01/13
10 15 Louisiana 2.23 120% 01/01/14
11 8 Montana 2.21 119% 07/01/13
12 9 New Hampshire 2.18 118% 01/01/14
13 10 Maine 2.15 116% 04/01/13
14 19 Idaho 2.01 109% 01/01/14
17 13 Washington 2.00 108% 01/01/14
17 16 South Carolina 2.00 108% 09/01/13
17 12 Pennsylvania 2.00 108% 04/01/13
20 27 New Mexico 1.99 108% 01/01/14
20 20 Rhode Island 1.99 107% 07/01/13
20 17 Minnesota 1.99 107% 01/01/14
21 36 Missouri 1.98 107% 01/01/14
22 19 Tennessee 1.95 105% 03/01/13
23 12 Wisconsin 1.92 104% 10/01/13
24 25 Iowa 1.88 101% 01/01/14
25 23 South Dakota 1.86 100% 07/01/13
27 35 Hawaii 1.85 100% 01/01/14
27 25 North Carolina 1.85 100% 04/01/13
28 29 Florida 1.82 98% 01/01/14
29 21 Alabama 1.81 97% 03/01/13
30 33 Nebraska 1.78 96% 02/01/13
31 31 Wyoming 1.76 95% 01/01/14
32 27 Georgia 1.75 95% 07/01/13
33 28 Ohio 1.74 94% 07/01/13
34 32 Michigan 1.68 91% 01/01/13
35 34 Maryland 1.64 88% 01/01/14
36 38 Texas 1.61 87% 06/01/13
37 37 Arizona 1.60 86% 01/01/14
38 42 Mississippi 1.59 85% 03/01/13
39 41 Kansas 1.55 83% 01/01/14
40 22 Kentucky 1.51 82% 10/01/13
41 43 Colorado 1.50 81% 01/01/14
43 40 West Virginia 1.37 74% 11/01/13
43 39 Oregon 1.37 74% 01/01/14
45 45 Utah 1.31 71% 12/01/13
45 47 Dist. of Columbia 1.31 70% 11/01/13
46 46 Nevada 1.26 68% 03/01/13
48 44 Massachusetts 1.17 63% 09/01/10
48 48 Virginia 1.17 63% 04/01/13
49 49 Arkansas 1.08 58% 07/01/13
50 50 Indiana 1.06 57% 01/01/14
51 51 North Dakota 0.88 47% 07/01/13
(A) In Oklahoma, the dates are 1/1/12 for the State Fund and 1/1/14 Private
Notes: Starting with the 2008 study, when two or more states’ Index Rate values are the same, they are assigned the same ranking. The index rates reflect adjustments for the characters of each individual state’s residual market. Rates vary by classification and insurer in each state. Actual cost to an employer can be adjusted by the employer’s experience rating, premium discount, retrospective rating, and dividends. Link to previous reports and summaries.
Employers can reduce their workers’ compensation rates through accident prevention, safety training, and by helping injured workers return to work quickly.
Source: Oregon Department of Consumer & Business Services, Information Technology and Research Section

The study is based on methods that put states’ workers’ compensation rates on a comparable basis, using a constant set of risk classifications for each state. The study used classification codes from the National Council on Compensation Insurance (NCCI) with a focus on 50 classification codes. Certain weightings were assigned to control for differences in industry distributions among the states.

The full report will be published later this year, but a summary is available here.

Information about how the study was done can be found here.

Joe 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

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

Special ‘California Alert’ to the U.S. Site Selection Community

Posted October 21, 2014 by bizlocate
Categories: Businesses leave California, California Business Environment, California Regulations, California taxes, Cap-and-Trade, Economic Development, Gov. Jerry Brown, Worst States for Business

Tags: , , , , , , , ,

California, long known to be unfriendly to business, is now inhospitable to site selection consultants. Gov. Jerry Brown’s Office of Business and Economic Development has banned commissions that have long been a tradition in the business in the United States and internationally. Or perhaps it’s better to say the state is limiting commissions.

According to the Sacramento Business Journal, the agency, known as GO-Biz, has placed on ban on commissions to consultants for aiding companies in securing a tax credit should they decide to move to or expand in the state.(1)

Since the story appeared, one consultant clarified that commissions are still permissible under some circumstances, but the state limits the ability for consultants to earn more than what the state deems reasonable.

Regardless of whether it should be called a ban or a limitation, a tax consultancy firm has filed suit against what it calls “regulatory overreach that impacts the ability of taxpayers to obtain representation to pursue their right to a tax credit for driving economic growth and job creation.”

In all candor, the GO-Biz restriction doesn’t affect my business.

My projects are done on a flat-fee basis, so no commissions are involved. Moreover, a good part of my client work involves companies seeking out-of-California locations with friendlier business environments.

When I’ve had companies interested in establishing a presence in California, I “ran the numbers” on a completely objective basis. The data on taxes, workers’ compensation, unemployment insurance, cap-and-trade fees to reduce global warming – and more and more – caused them to do what I call a “U-Turn” and head off to other states.

Said one client, “We knew California was going to be more expensive, but we thought we could afford to move there anyway so we began the planning.” After reviewing the cost comparisons with its current community, the company will stay put in its Mountain Time Zone location.

California’s voters seem determined to reelect politicians who could be called “California’s Wrecking Crew” – people who are hostile to business, love hiking taxes again and again, and waste tax dollars on boondoggles – with Gov. Jerry Brown but one example.

The state’s business environment is sure to worsen in 2015, 2016, and who knows for how long after that. Doubters should consider Gov. Brown’s plan to toughen carbon regulations to an unprecedented degree, thus increasing costs (again) on all businesses in all parts of the state.

When that happens, Sacramento will once more demonstrate that it’s the “marketing department” for the site selection consulting profession.

(1) See: Allen Young, “Dallas company sues GO-Biz over tax credit,” Sacramento Business Journal, Oct. 3, 2014 http://www.bizjournals.com/sacramento/news/2014/10/03/dallas-company-sues-go-biz-administration-over-tax.html


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