Archive for the ‘Best States for Business’ category

Uber Regulations Mean San Francisco Loses While Phoenix and Pittsburgh Win

December 23, 2016

Any business person who has dealt with California’s frustrating laws, regulations and bureaucrats was nonetheless surprised to see a story with the headline, “Uber Ships Self-Driving Cars to Arizona After California Ban.”

uber-cars-on-flatbed-truckReally? A state ban on Uber? The poster child of the billion-dollar-plus startup, tech-guru, market-disruptor club? Why would Sacramento give Uber, of all people, a bad time?

Reuters said Uber Technologies Inc. pulled its fleet of self-driving cars from the streets of San Francisco and sent them to Arizona’s friendlier territory:

The California Department of Motor Vehicles banned Uber’s self-driving cars from San Francisco just days after they first deployed. In response, Uber picked up and moved out. “Our cars departed for Arizona this morning by truck, Uber said… . We’ll be expanding our self-driving pilot there in the next few weeks, and we’re excited to have the support of Governor Ducey.”

Gov. Doug Ducey wooed Uber on social media the evening when the ride-hailing company pulled its self-driving test from San Francisco. “California may not want you; but AZ does!” he wrote on Twitter. The next morning, Uber’s fleet was headed his state’s way.

California moved to revoke registrations for Uber’s automobiles, but Uber said its vehicles require oversight by a human driver and shouldn’t qualify under California’s autonomous-driving rules. Nonetheless, the state Attorney General and soon-to-be Senator, Kamala Harris (loyal to unions and hostile to business interests), threatened legal action if the company continued operating automobiles without a permit.

Uber in Arizona

Gov. Ducey’s full statement reads:

Arizona welcomes Uber self-driving cars with open arms and wide open roads. While California puts the brakes on innovation and change with more bureaucracy and more regulation, Arizona is paving the way for new technology and new businesses. In 2015, I signed an executive order supporting the testing and operation of self-driving cars in Arizona with an emphasis on innovation, economic growth, and most importantly, public safety. This is about economic development, but it’s also about changing the way we live and work. Arizona is proud to be open for business. California may not want you, but we do.

Anthony Levandowski, the head of Uber’s Advanced Technologies Group, argued that because the company’s self-driving system is an early prototype and requires test drivers to keep their hands on the steering wheel at all times. It’s no different from driver-assist systems already on the market — and those are exempt from the requirement for a California permit.

Levandowski said that it isn’t clear why the DMV is requiring a permit now when they’ve known that Ubers have been on the streets of San Francisco over a month and have been operating safely for months in Pittsburgh, “where policymakers and regulators are supportive of our efforts.”

Last year, Uber opened its Center for Excellence in Phoenix, where it serves U.S. customers and Uber users worldwide. Now, it seems that more development work will occur in Phoenix. That’s what happens when a state is friendly to business interests.

Uber in Pittsburgh

Uber has been successfully testing autonomous-driving vehicles in Pittsburgh for some time. An extensive Wall Street Journal story in September — Uber’s Self-Driving Cars Debut in Pittsburgh — described how Uber is turning the city into an “experimental lab” where it will have as many as 100 specially equipped Volvo XC90s operating. Also, reported the WSJ, the city has its quirks — like the “Pittsburgh left turn” — which makes it a great location for testing autonomous vehicles.

It is customary for the first driver at a stoplight who is signaling a left turn to have priority over oncoming traffic when the light turns green. People in the oncoming lanes generally allow that leftward dash and are puzzled or even angry if it doesn’t occur. Uber has programmed its cars to allow other cars to make the ‘Pittsburgh left’ but not to make it themselves. The city is also notoriously difficult to drive through with steep hills and three rivers that make streets twist and turn unpredictably… . “If you can drive successfully in Pittsburgh, you’re pretty much done,” said Ragunathan Rajkumar, a professor at [Carnegie Mellon University] who specializes in autonomous vehicles.

Last year Uber opened an Advanced Technologies Center in Pittsburgh and this year is developing its second research facility there as part of a massive brownfield redevelopment site. Uber says it likes Pittsburgh’s “world-class research universities and engineers and a thriving technology community.”

Uber entered into a strategic partnership with Carnegie Mellon University to help create its new technology center and also to rely on the university’s National Robotics Engineering Center to do R&D in mapping, vehicle safety and autonomy technology. Safety is one of Uber’s major concerns.

Uber also selected Pittsburgh because of the clustering of robotics companies such as Carnegie Robotics and RedZone Robotics.

Although California prides itself on the pool of technical talent found in San Francisco and Silicon Valley, Uber has found justification to praise Phoenix and Pittsburgh for the the talent available from local universities and the community support of technology and innovation.

Uber’s experience in San Francisco shows that venture capitalists, Ph.Ds in robotics and software engineers are no match for an all-knowing California bureaucracy.

* * *

One focus of this blog has been to address California’s difficult business environment, as described in the study, California Business Departures: An Eight-Year Review 2008-2015, (PDF) updated Jan. 14, 2016.

Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow. Also, Joe has been a Keynote Speaker for more than 20 years – see A Speaker Throughout the U.S. and in Europe and Asia.

 

Two Reporters Walked Into a Bar ….

August 1, 2016

Well, not really. Two reporters moved from California to Texas and last week both of them wrote stories about companies moving to the Lone Star State.

Dallas Morning NewsIn the Dallas Morning News, Jill Cowan wrote a piece about how financial firms are shifting their business operations out of hyper-expensive New York City to “lower cost, more business-friendly environments.” Although Phoenix won the top spot, Dallas, San Antonio and Austin came in second, third and seventh, respectively, for financial services job growth in the 2008-2013 period. If you are in the financial services industry, this is an excellent story to read. See “Y’all Street: Could Dallas oust New York City as a global financial capital?”

Meanwhile, another former Californian, Katie Burke, reported on a high-growth software company, Rev-Ignition, relocating its headquarters from Ontario, Calif. to Texas. See the San Antonio Business Journal story “Payment software company relocates CA headquarters to San Antonio.”

My studies show that for many years Texas has ranked as the number one state to which California companies migrate.

* * *

One focus of this blog has been to address California’s difficult business environment, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, (PDF) updated Jan. 14, 2016.

 Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow. Also, Joe has been a Keynote Speaker for more than 20 years – see A Speaker Throughout the U.S. and in Europe and Asia.

California Loss: Swiss Company Puts U.S. HQ in Phoenix, not San Francisco

June 9, 2016

The Kudelski Group, a Switzerland-based global technology company, has an office in San Francisco, but selected the Phoenix area for the location of its  350-job U.S. headquarters.

Arizona-StateSeal.svgAccording to the Phoenix Business Journal, “We wanted to be in a business-friendly environment,” said Richard Fennessy, CEO of Kudelski Security, the Group’s cybersecurity division. “The governor made it clear we’d find that (in Arizona).”

“We’re bringing our global finance, human resources, administration, legal and information technology divisions to Phoenix,” Fennessy said, which includes moving employees from Switzerland.

See the complete story at “EXCLUSIVE — Kudelski Security CEO: Phoenix made ‘best business case’ for HQ.”

*  *  *

One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, (PDF) updated Jan. 14, 2016.

Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow.

 

New Eight-Year Relocation Study Shows Companies Still Leaving California

January 7, 2016

California’s difficult business environment was highlighted in a new study that shows thousands of companies have departed for business-friendly states and foreign nations over the last eight years.

Dollars diverted to out-of-state locations totaled $70.5 billion in the 2008-2015 period, only a fraction of the actual experience because few information sources specified capital costs.

The report by Spectrum Location Solutions provides by company name whether the relocation was partial or complete, their new location, and hundreds of quotes from company leaders saying what they found appealing about their new place of business.

“I prepared the report because California’s public officials fail to take seriously the issue of business exits,” said Joseph Vranich, an Irvine-based site selection consultant. “Using an accepted statistical model, it’s estimated that ten thousand companies have disinvested in California in the last eight years.”

Companies include Fortune 500 firms down to small family owned businesses that headed for locations offering more satisfying business and lifestyle outcomes.

“Departures can have a long-lasting effect when a company establishes a foothold elsewhere and grows there big time,” he said. “One high-tech company opted for a new location, has expanded there eight times, and has hinted at a ninth iteration.

“Anyone can verify each event on the Internet, which is a strength of the study,” Vranich said. “The study’s description of concerns by business leaders argues against plans in Sacramento for new spending and an astonishing array of new taxes and harsh regulations.”

“Companies often find operating cost savings of 20 to 35 percent in other states, which permits them to reinvent themselves if need be,” said Vranich. “The appeal isn’t necessarily to the lowest-cost states, but to lower-cost locations with the proper workforce.”

“There also is an increasing inclination to consider lifestyle factors such as housing costs, traffic congestion, crime, and secondary school performance – and many communities around the United States win out over Los Angeles and San Francisco in particular,” said Vranich. “There is considerable disenchantment with the treatment businesses receive from politicians and public agencies in those cities.”

The study finds that as California’s business climate worsens, more companies will seek a new location that is friendlier to their interests.

***

One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, updated Jan. 14, 2016.

Joseph Vranich is known as the Business Relocation Coach while the formal name of his business is Spectrum Location SolutionsJoe helps companies find great locations in which to grow. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and to explore whether a project makes sense. See a summary of the process under “The Three Phases of a Location Project” at Why Get Help.

Joe also is a keynote speaker on the benefits of businesses relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. More information is available at Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsultant.

Good Choice: Faraday Nixes California, Selects Nevada for $1B Manufacturing Plant

December 10, 2015

The Los Angeles Times headline said, “Electric car startup Faraday Future picks Nevada over California to build plant.” I’ll go further and say that the electric-car maker made an excellent decision to locate its new manufacturing facility in the Silver State.

North Las Vegas City SealIt’s been fairly well known that Faraday Future had been searching for a location for its first U.S. factory. It was natural to consider California considering that the company is headquartered in the state, a number of California-based Tesla employees were lured to the company, and some shipping will probably occur through the Ports of Los Angeles and Long Beach.

However, after Faraday Future also considered Nevada, Louisiana and Georgia, the company selected a site in North Las Vegas for the $1 billion facility.

Faraday Future Factory Design

The venture is backed by Jia Yueting, a Chinese billionaire, entrepreneur, and founder and CEO of Beijing-based holding company LeTV.

The company and its products have been called “mysterious.” In an unusual take on the story, Matthew DeBord, Business Insider’s transportation editor, wrote, “Faraday Future could be building … anything. An electric car. An infotainment system. A self-driving electric car. A self-driving electric car with an infotainment system. Or … not even a car! Maybe a self-drivingelectric-car-sharing service!” See more at Everything about Tesla competitor Faraday Future is strange and confusing.

A company news release states:

We plan to construct something more than an ordinary ‘assembly line’ – we’re creating a 3 million square foot workshop for passionate creators and diligent visionaries, where new concepts will be refined and implemented; where new discoveries will be conjured and crafted; and where new possibilities can be made, well, possible. After we get this manufacturing plant up and running, we will be directly staffing it with 4,500 new jobs. These positions will include a wide variety of professional and manufacturing employment opportunities, offering competitive pay and benefits.

Yes, that is a bit confusing. In any event, there are several reasons why I believe this was an excellent decision.

  • A California manufacturer can save between 20% and 35% in operating costs, depending upon which state it relocates to and what products it makes.
  • From a workforce standpoint, any challenge in recruitment should be eased by several factors. First, military people have excellent work habits, and nearby Nellis Air Force base offers a steady stream of potential employees as people leave the military. Also, workers can afford to buy homes in the Las Vegas area that on an equivalent basis would be far costlier in California, so potential home ownership is a lure for those willing to relocate. Finally, to the degree training is needed for Nevada residents, Gov. Brian Sandoval will ask lawmakers to develop a new job-training program through the Department of Employment, Training and Rehabilitation.
  • Airline service out of Las Vegas is outstanding in number of destinations served, frequency of flights and extent of non-stop services.
  • Being near I-15 and the planned new Interstate highway, I-11, and the extension of a Union Pacific Railroad line – as well as proximity to that well-served airport – all offer advantages from a freight logistics standpoint.
  • Finally, the company hopes to leverage Las Vegas tourism to offer tours of its plant, which seems like a smart marketing move.

The Wall Street Journal reported that “Faraday’s plan is to break ground on the plant in early 2016 and begin production sometime in 2017. It is considering a rebuild of an existing factory or building a new plant from the ground up.”

According to the Las Vegas Review-Journal, Faraday has been described as an international team with employees in 40 countries, a facility in suburban Los Angeles and other offices in Beijing and Dusseldorf, Germany.

When it comes to evaluating and deciding on a location for a new factory, somebody at Faraday Future knows what they’re doing.

***

One focus of this blog has been to address California’s hostility toward business, as addressed in our study, Businesses Continue to Leave California – A Seven-Year Review, issued in November 2015.

Joseph Vranich of Spectrum Location Solutions helps companies find great locations in which to grow. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and to explore whether a project makes sense. See a summary of the process under “The Three Phases of a Location Project” at Why Get Help.

Joe also is a keynote speaker on the benefits of businesses relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. More information is available at Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsultant.

Top Destination for California Company Relocations: Texas

December 9, 2015

Today, the Dallas Morning News published a big spread online about businesses migrating from California to Texas. The story is based on our new study of 9,000 companies leaving California in the last seven years “with about 15 percent finding a home in the more business-friendly Lone Star state.” (The print version will appear sometime next week.)

California FlagExcerpts:

“This report echoes what businesses that relocate to Texas continue to say – they are sick and tired of being over-taxed and over-regulated and are making the economically sensible choice to move to Texas,” said John Wittman, deputy press secretary for Texas Gov. Greg Abbott’s Office.

Texas Flag“Texas is an easier place in which to conduct a business,” said Joseph Vranich, president of Spectrum Location Solutions in Irvine, Calif. “Why is that so? A lot of people think it’s taxes, but in my view the No. 1 benefit is an easier regulatory environment. California’s regulatory regime is so harsh that it causes companies to look at all kinds of states to go to.”

California … is one of the costliest states in which to do business, with expenses 20 percent to 35 percent higher than other states, Vranich says.

Of all U.S. cities, Austin was No. 1, gaining 86 California corporate sites or expansions. Dallas ranked sixth (20 companies), San Antonio was No. 8 (16), Houston was No. 11 (11), Plano and Irving tied with Hillsboro, Ore., for No. 13 (9) and Fort Worth tied with Tempe, Ariz., for No. 14 (8).

The online version has a drop-down menu that permits searches by year, company, city, industry and product/service.

See the full Dallas Morning News story here.

***

One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, Businesses Continue to Leave California – A Seven-Year Review, issued in November 2015.

 Joseph Vranich of Spectrum Location Solutions helps companies find great locations in which to grow. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and to explore whether a project makes sense. See a summary of the process under “The Three Phases of a Location Project” at Why Get Help.

Joe also is a keynote speaker on the benefits of businesses relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. More information is available at Biography and Speaking Availability. On Twitter, Joe is known as@LocationConsultant.

 

California: Awful Ranking in Business Tax Survey; How One Company Owner Said ‘Goodbye’

November 18, 2015

The Tax Foundation issued its 2016 State Business Tax Climate Index, a highly respected report on the topic. For the fourth year in a row California ranks at No. 48 – meaning that taxes on businesses are worse only in New York and New Jersey.

Calif FTB LogoBefore saying more about the Index, let’s bring to light how some business owners feel about taxes in California.  I recently came across comments by Erica Douglass, a young tech entrepreneur, who moved the headquarters of her company, Whoosh Traffic, from San Diego to Austin, Texas. Although what she said is several years old, her comments remain relevant today:

Dear California, I’m leaving you. One thing I’ve struggled with for years is a government that is notoriously business-unfriendly – with everything from high taxes on business earnings to badgering businesses into more work to satisfy the bureaucracy. California decided that businesses grossing over $100,000 a year should have an account to report quarterly on the sales tax customers pay for goods sold. But my company sold services – not products – which aren’t taxed. When I closed the account with the state (by going into a local office and spending nearly an hour explaining my situation), they forced it open again and sent me a nastygram explaining that I would owe fines for not filing the quarterly reports. It takes time to fill them out, even if you owe nothing. Also, the state charges a 10% income tax on all income over $47,055 in addition to an 8.25-9.25% sales tax (depending on where you buy products). I paid enough in California income tax in one year alone to hire another worker for my business. I’d bet that I’m far more efficient at creating jobs as a small business owner than the state is given the same amount of money. And a really dumb law for small business owners is an annual $800 fee just to have a corporation in California. Most states only charge you a few dollars annually. California’s is exorbitant. (Her comments were edited for brevity.)

How many other business owners share Ms. Douglass’s frustration? With the state ranking at No. 48, the answer is “plenty.”

Back to the Tax Foundation. The organization compiles the Index each year to rank the 50 U.S. states across more than 100 variables in the areas of corporate income tax, individual income tax, sales tax, property tax, and unemployment insurance tax. The Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how states structure tax systems and provide a roadmap for improvement.

Improvement? There will be numerous proposals to increase taxes (business and personal) considered by the California legislature in 2016 as well as ballot propositions to do the same. I don’t know of a single serious proposal to reduce state taxes in California.

Key findings from Tax Foundation

The top ten states are Wyoming, South Dakota, Alaska, Florida, Nevada, Montana, New Hampshire, Indiana, Utah, and Texas. The bottom ten states are Maryland, Ohio, Wisconsin, Connecticut, Rhode Island, Vermont, Minnesota, California, New York, and New Jersey.

Source: 2016 State Business Tax Climate Index

Note: The Tax Foundation, a non-partisan research think tank, based in Washington, D.C., is the nation’s leading independent tax policy research organization. Since 1937, its principled research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels.


%d bloggers like this: