Archive for the ‘San Francisco’ category

Businesses Joined by Non-Profits in Leaving California for Friendlier States

September 21, 2017

Friends in economic development agencies and in the site selection consulting world have asked why I haven’t posted anything in quite awhile. My answer is simple: I’ve been exceptionally busy. It certainly isn’t because there aren’t things to write about.

Another question I’m usually asked is whether businesses are still leaving California.

They are, especially with the state legislature again failing to provide tax or regulatory relief to its home-state companies. Overall, taxes, fees and regulations have gotten worse. Such a difficult business environment, combined with grim treatment by local governments, have caused operating costs to grow faster in the San Francisco Bay Area and Los Angeles than in virtually every other metropolitan area in the nation.

So large corporations and small business entities – joined by non-profit organizations – continue to look for ways to partially or fully exit the state. Today alone brought two examples, which by coincidence both involve Nevada.

The first is a loss for Los Angeles with Virtual Guard, Inc. leaving the city’s Sherman Oaks section. The company plans to relocate its headquarters and interactive command and control center to Clark County (Las Vegas area), citing an “unfriendly economic environment” in California. The move is likely to occur later this year.

There, Virtual Guard  is expected to hire 80 new employees within its first two years of operations. The video monitoring company is also a developer and integrator of technology in the perimeter security sector and its solutions are being used throughout the United States and Canada.

California, which a long time ago was a haven for aerospace companies, will lose another one next year.

ERG Aerospace Corp. plans to relocate its Oakland operations to McCarran, Nevada and make the Silver State its headquarters. The company manufactures materials and components for the aerospace, national defense, semiconductor manufacturing, biotech and other high technology industries. The target date for the move is the second quarter 2018, with operations to commence in the same quarter.

Several months ago, a non-profit organization said it would relocate out of state, too. Horizon University, a private, Christian school that started classes in 1993 in San Diego is heading to Indianapolis.

Horizon’s President Bill Goodrich calls the decision “a no-brainer.” He said Indiana offers a “climate” that was slipping away in California, and by that he wasn’t referring to San Diego’s sunny days. Goodrich said that the university helps people “grow academically” while integrating the “strong biblical teachings and we find in Indiana, there’s an openness to that.”

The move will allow the, accredited university to grow on a 97-acre spread – in a state with less “red tape” – and attract more students.

Thanks to high costs, a sizeable non-profit move is upcoming: Toastmasters International will shift its headquarters from its birthplace in Orange County to Colorado.

With about 180 employees, Toastmasters CEO Daniel Rex said costs in California were a concern. “When you look at the availability of workers, when you look at the cost of commerce and real estate, this is something that makes sense.” The organization is spending $19.5 million to buy a building in Englewood, south of Denver. Toastmasters is a legendary California institution, founded in 1924 in Santa Ana. Since 1990 it’s been based in Rancho Santa Margarita.

Business people who endure the decline in California’s business climate and pervasive cost increases can take some comfort knowing that some non-profit brethren are members of the same club.

I’ll write more about how California treats its commercial enterprises. But first let’s see how many business-helpful bills and business-damaging bills Gov. Jerry Brown will sign into law.

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.

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Another High-Tech Co. to Ease Out of San Francisco Bay Area?

December 19, 2013

Word has it that another California high-tech company is looking for an out-of-state location to house a growing part of its business. Depending upon how much more cost-effective the locality proves out to be, it’s possible that later on more jobs will be relocated to the new community.

One specification is that the state and locality must be “friendly” to business – which brings me to some unfriendly targeting of a well-regarded company, Google.

Last week, headlines reflected mean-spiritedness hitting the streets of San Francisco. That’s when protesters blocked a Google bus from taking employees to their jobs at the company’s headquarters in Mountain View. How radical were those who impeded the lawful operation of a shuttle bus? Well, consider the extremists’ demand as illustrated by this headline: “Protesters Block Google Bus, Demand $1 Billion.”

Anti-Business California

The action reinforced my belief that California’s hostility to successful businesses will spill over to hostility to successful employees, who are guilty of, well, doing absolutely nothing wrong.

To Google officials I say – I hope you continue to meet with officials from economic development agencies representing places that show understanding toward job-creating companies. Places where being gracious remains part of the social fabric.

Google already knows plenty about friendly areas. Consider stories that have run this year alone about Google expanding in Pennsylvania (“Google to add hundreds of new employees to Pittsburgh office”), North Carolina (“Google announces $600M Lenoir data center expansion”) and South Carolina (“Google to invest $600 million, add 3rd data center in Berkeley County”).

I for one applaud Google for their elsewhere-in-the-nation expansions. So much of California’s electorate is anti-business, anti-corporate, anti-profit, anti-“rich people,” anti-urbanite, anti-suburbanite, and anti-just about anything that doesn’t fit their peculiar worldview. These less-than-stellar people elect radicalized politicians to public offices, and one result is a harsh business environment.

The protester’s justification for targeting Google? The San Francisco Chronicle says the private buses “have, for some, become a symbol of tech-fueled gentrification, economic inequality and soaring housing prices in the city.”

Fake Google Employee Outed

During the bus incident, someone who was being obnoxious claimed he worked for Google.

The Wall Street Journal reported that a “Google employee” who “jumped off the blocked bus, yelled and cursed at demonstrators, and pretended to blame them for their concerns about housing costs and gentrification” was really a union organizer – and he doesn’t even live in San Francisco. The Daily Mail posted a video of the incident.

KGO-TV in reporting on the protest said, “this may not be the end.” Really? If so, I suggest those who provide private shuttle bus services to their employees – Google, Facebook, Apple, Yahoo and Genentech – to more aggressively examine out-of-state options. Many states are more than suitable for your next facility.

In particular, businesses in San Francisco ought to re-think their location. There are about 3,000 non-California counties in the United States that are welcoming to commercial enterprises – places where protesters won’t insult your employees on public streets. Places where you won’t be “blamed” for bringing more wealth into a community.

Contempt for Bus Owner

One “demand” is that private bus operators be fined $1 billion. And the “crime” that warrants such action? Apparently, the tech industry’s private shuttles use more than 200 MUNI  (San Francisco Municipal Transportation Agency) bus stops, allegedly without contributing funds to support the “public infrastructure” at bus stops.

But private bus companies and their customers do financially support public infrastructure. For example, the owner of that bus pays 76.2 cents per gallon of diesel fuel – 51.8 cents of which goes to California (pdf) — the highest in the entire United States (pdf), a good portion of which is diverted from roads to subsidize transit operations like MUNI, BART, Caltrain’s peninsula commuter service and even bicycle trails.

Private bus operators pay hefty taxes when buying those expensive double-decker vehicles; pay sales taxes on every part down to the smallest bolt required for maintenance; and write checks for annual taxes and fees on business property and business licenses. Oh, and let’s not forget real estate taxes on offices and garages and vehicle registration fees – two taxes that Sacramento would like to increase next year.

Meanwhile, a MUNI, BART or Caltrain vehicle produces no sales or property taxes for the localities or the state. In fact, their purchase and operation requires continual taxpayer subsidies – paid for in part by the owner of the private bus that protesters blocked and the Google employees who were on the bus.

San Francisco’s radicals denounce self-supporting transit operations while advocating tax-absorbing operations. The city’s extremists obstructed a private bus driver who is unlikely to participate in a work stoppage while supporting BART where unions have gone on strike multiple times since 1976. Just how much more irresponsible can the city’s activists become?

High-Tech Companies Due Praise

The companies providing convenient shuttle services for employees generate enormous wealth for California and its counties and municipalities

For example, fat income tax revenue flow to the state as a result of job creation. With the state’s difficult business environment, and with alarming job losses in far northern California and the San Joaquin Valley, thank goodness the tech companies are creating lots of jobs.

Those jobs attract well-educated, highly motivated employees. These are well-compensated workers who pay huge amounts into the state’s “personal income tax” category that amounts to 61 percent of California’s revenues. Such ample funds allow irresponsible politicians in Sacramento – like Senate president pro tem Darrell Steinberg and Assembly Speaker John Perez – to indulge in their worst-in-the nation spending sprees.

Income taxes from well-compensated high-tech employees also underwrite recent pay raises for California legislators – already the most highly paid in the nation.

I won’t get into the real estate taxes, sales taxes and special fees generated by California’s high-tech firms. To mimic MasterCard’s commercial, for the state treasury they are “priceless.”

Protesters who blocked the Google bus either don’t know such facts or don’t care.

Tech Expansions Go Inland

A more reasonable civic environment is what Google found when it expanded in Oklahoma and Pennsylvania. Ditto for Adobe and eBay in Utah, Apple in North Carolina, PayPal and Intel in Arizona, McAfee in Texas, LinkedIn in Nebraska, Hewlett-Packard in Arkansas, Intuit in Nevada, SumTotal Systems in Florida – well, you get the idea.

Finally, the San Francisco area’s traffic congestion is just about the worst in the nation. Virtually everywhere else, an employer doesn’t even need to operate private shuttle buses for its staff. But where they do, the evidence is that the community appreciates it.

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.