Archive for the ‘Best States for Business’ category

California Lithium Battery Maker Heads to Appalachia

January 5, 2018

It’s rare that I replicate posts from other sources. However the piece below by Wendell Cox, which appeared today in, may appeal to readers interested in corporate location issues.

It is starting out to be a happy new year in Pikeville, Kentucky. Little in technology is more “cutting edge” today that lithium battery manufacturing. Elon Musk last year chose Nevada, not California for his mega plant a few years ago. Now, lithium battery manufacturer Ener Blu has announced plans to move, “lock stock and barrel” from Riverside-San Bernardino, east of Los Angeles, to Appalachian Kentucky, with its plant to be located in Pikeville, to be built on what was a surface coal mine. Plans are to create 875 manufacturing jobs. Ener Blue also will move its headquarters to Lexington, Kentucky’s second largest metropolitan area and the home of the University of Kentucky.

Pikeville: A Unique Move

This could be a very significant move. On the surface, it looks fundamentally different from the many corporate moves that have left high-cost California behind as companies seek the greener pastures of lower taxes, less regulation and lower costs of living (driven largely by better housing affordability) in their efforts to recruit talented staff. The most significant examples are Japanese car manufacturers that have moved their US headquarters to Dallas-Fort Worth and Nashville, which have become major metropolitan areas capable of competing for just about any company looking to move, not to mention households seeking better opportunities as well as urban amenities at an affordable price.

But Pikeville is no Dallas-Fort Worth or Nashville. It is not even a micropolitan area, much less a metropolitan area. The city (municipality) had a population of under 7,100 in 2016, up just 200 from the 2010 census. Pikeville is the county seat of Pike County, which has a population of 61,000, down from 65,000 in 2010.

Appalachian Poverty

Pike County is at the core of one of America’s poorest regions, the Appalachians. Pike County’s economy has long been dependent on coal and even before recent setbacks, Appalachian coal regions have had more than their share of poverty. The recent declines in coal employment have been legendary. Eastern Kentucky has been particularly hard hit. In the last six years, nearly 75 percent of its coal jobs have been lost.

The latest data from the Appalachian Commission shows Pike County to have a poverty rate of 22.9 percent, 48 percent above the national poverty rate. Its poverty rate is more than double the overall poverty rate for the entire Appalachian region, which stretches from Upstate New York to Mississippi. The median household income is approximately 40 percent below the national figure.

Appalachian Hope

But not all see Pikeville as a place without a future. This would include prolific demographer Lyman Stone, who wrote more than one year ago about the progress that has been made in Pikeville, even as the rural and coal economy surrounding it declines. Pikeville has been rejuvenated by the expansion of its small university, the University of Pikeville, which has more than doubled its enrollment over the past two decades. Stone anticipates continued growth.

Moreover, there is more good news for Eastern Kentucky than just Pikeville. Braidy Industries has embarked on a project to build the first new aluminum plant in the United States in 30 years in Greenup County, on the south bank of the Ohio River west of Huntington, West Virginia. After the plant opens there are plans for more than 500 full time employees.

The tendency over the past few decades has been for the US to shed its manufacturing functions to lower cost venues overseas. At the same time, many areas have been left behind. As the cost of living differences expand between the more expensive metropolitan areas and the rest of the United States, it may be that US corporate interests, and others, will identify opportunities for profitable operation, while at the same time rejuvenating places that have been left behind, like Pikeville and Greenup County.

Meanwhile, back in Pikeville, Kentucky Governor Matt Bevin, Congressman Hal Rogers and Pikeville state Senator Ray Jones II, were present for Ener Blu’s Pikeville announcement. The Governor, according to U.S. News and World Report predicted that the company’s arrival would transform an area where the coal jobs have disappeared. Congressman Rogers added “this is where we’ve got a lot of workers needing work that are … capable, ready to go,” An elated Mayor Jimmy Carter referred to the development as revolutionary “for the city of Pikeville and all of Eastern Kentucky.”

Jones, the Democratic Kentucky Senate minority leader, acknowledged partisan differences with Republican Governor Matt Bevin, but added that he has nothing but praise for the Governor’s efforts to revitalize eastern Kentucky. He added that, first the Greenup County Braidy announcement and now Ener Blu are two of the most positive economic news in this state in many years.

The Beginning of a Trend?

The real question is whether Pikeville and Greenup County are just blips in the continuing decline of small town America. There are many more small towns that have been left behind in the changing economy. Indeed, there is a broad view that small towns have little or no future, the theme of a New Year’s Day Wall Street Journal feature, “The Divide Between America’s Prosperous Cities and Struggling Small Towns.” Nobel Laureate Paul Krugman even wonders if there is a future for some major metropolitan areas, such as Rochester, New York.

Yet the developments in Eastern Kentucky suggest the potential for an alternate narrative. Greenup County could indicate a revived potential for traditional manufacturing even in the post-industrial age. Pikeville could indicate the potential for “cutting edge” technology to find a home in small towns. Many small towns may not die at all, as they are rejuvenated by public policies in places like [business-hostile] California, where the cost of living and cost of doing business has increased by such a degree so that even the most advanced industries seek other venues.

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

[Note: my research found that other California companies have relocated jobs or facilities to Kentucky, the most recent of which was Cafe Press Inc., which in 2016 closed its Hayward office and moved employees to its Middletown, Ky. headquarters. CafePress was founded in a California garage in 1999. The company moved its headquarters to Kentucky in 2012 – the same year it went public – Joe.]

One focus of this blog has been to address California’s perennially difficult business environment. 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.

I’m grateful to Joel Kotkin, Executive Editor of, for permission to reprint the above column. The photo of the University of Pikeville and the map were extracted from a City of Pikeville Economic Development Video.


The Big Mystery: Will a Coastal or Interior City Win Amazon’s HQ2 Project

October 19, 2017

Today is deadline day at Amazon for cities and states to file their proposals to become home to the company’s second headquarters, commonly referred to as HQ2.

I can’t count the number of times I’ve been asked what decision Amazon will make. Well, Amazon isn’t my client so how would I know? Even if they were, under non-disclosure rules I wouldn’t breath a word about the company’s project.

A little speculation can’t hurt, so here goes …

I think Amazon will seriously consider metropolitan areas located in the nation’s interior. While the smaller ones won’t make it simply because the workforce isn’t there, others have characteristics that are superior – often far superior – to coastal areas.

Many people think the winning bid will be the one that offers the highest value in economic incentives, but that isn’t always the case. It’s true that incentives can be a significant factor, but not necessarily a decisive one.

At times, a community offering the most attractive incentives can lose if it fails to meet certain parameters. For example, putting a warehouse located a half-mile from an Interstate highway will beat out a community that is situated 25 miles from an Interstate.

Countless examples like that exist.

So incentives are only part of the puzzle. Selecting the optimum location is a balancing act that weighs many important factors, such as the extent of workers in the area with appropriate talents, availability of shovel-ready land on which to build, tax rates and how they are applied, and laws that regulate labor factors such as overtime — the list is a lot longer than this.

Also important are quality-of-life factors for employees, such as the cost of living (especially housing costs), quality of the local school system, traffic congestion during peak commuting times, recreational and cultural opportunities, taxes and crime rates.

I predict that one state Amazon won’t put its HQ2 is California because of the state’s harsh business and legal environment.

Just one example: Employers can be fined or sued for a mistake on a paycheck stub (not the check, just the stub). Challenges facing workers include super-expensive housing, the highest taxes in the nation and long commuting times caused in part by highway improvements that have long been neglected.

Two days ago the Tax Foundation released its 2018 State Business Tax Climate, which showed California ranking as the 48th worst state beating out only New York and New Jersey.

Next year the tax picture may worsen as California legislators again try to revise Proposition 13 to put business and residential properties into two groups – and then place still-higher taxes on all types of office, industrial and commercial property.

Legislators are motivated by plans to once again increase state spending despite needing reserve funds to pay down state and local debt that now exceeds $1.3 trillion.

So it’s little wonder that the California Business and Industrial Alliance in Sunland has placed a full-page ad in the Seattle area to warn Amazon away from locating its HQ2 in the state. According to the San Fernando Valley Business Journal, “The headline warns the Seattle online retailer that while the weather is nice in California, the business climate is not.”

All of that represents the formula for California being scratched off the list, especially because of this Amazon specification: “A stable and business-friendly environment and tax structure will be high-priority considerations for the Project.”

Since Illinois, New York and New Jersey mimic California’s awful public policies, I won’t be surprised if Chicago, New York City and Newark also disappear as candidates.

Finally, I wish I could be in Amazon’s office as each proposal was unveiled. I know this is serious business, but I also think it would be fascinating, exciting and fun, too.

Note: Three excellent stories appeared today regarding the project:

CNBC’s – Bids for Amazon’s second headquarters are due Thursday — here are the cities in the running – This story states: “Although we don’t know exactly which cities have officially submitted their proposals so far, there are more than 100 cities and counties that have expressed interest in placing a bid, according to previous reports. There could be more, as some cities are keeping their bids secret, at least through Thursday, for competitive reasons.”

Wall Street Journal – As Cities Woo Amazon to Build Second Headquarters, Incentives Are Key

PoliticoThis Is What Really Happens When Amazon Comes to Your Town.

One focus of this blog has been to address California’s perennially difficult business environment. 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.

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.

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One focus of this blog has been to address California’s difficult business environment.

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.

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One focus of this blog has been to address California’s difficult business environment.

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 perennially difficult business environment. 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.


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 perennially difficult business environment. 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: 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.

One focus of this blog has been to address California’s perennially difficult business environment. 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.

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