Archive for the ‘California Taxes’ category

Spectrum Location Solutions Leaves Business-Unfriendly California for Pittsburgh Metro Area

April 18, 2018

PITTSBURGH, April 18, 2018 – A company that identifies favorable out-of-state locations for firms seeking to free themselves of California’s harsh business climate has itself departed the state for greener pastures.

Spectrum Location Solutions, which for ten years has been based in Irvine, in Orange County, has moved to Cranberry Township, a growing suburban community in Western Pennsylvania.

“I moved for three reasons – taxes, regulations and quality-of-life,” said Joseph Vranich, president of the boutique consulting firm.

“About taxes. Pennsylvania’s flat income tax rate allows my family to save a considerable sum compared to California’s progressive system – and sales taxes and real estate taxes are lower, too. California taxpayers shouldn’t expect any relief, as evidenced by the multitude of new taxes under consideration in the legislature,” Vranich said.

Next, I’ll have greater freedom in my business now that I’m free of California’s notorious regulatory environment and threats of frivolous lawsuits that hurt small businesses like mine,” he said.

“Finally, we are enjoying a superior quality-of-life here. We bought a house larger than what we had in California for about half the cost. We can afford to engage in more activities because the cost-of-living in Cranberry Township is 44 percent lower than in Irvine,” he said.

Concern about California’s costs is widespread. Statewide, 58 percent of Millennials and 65 percent of parents echoed the sentiment that “I am considering moving away from California because of the high cost of living,” according to a recent poll by the PR firm Edelman.

Gov. Jerry Brown’s spokesperson once said few companies would leave California for “desolate locations” elsewhere.

“Well, this area is the opposite of ‘desolate,’” said Vranich. “Pittsburghers are justifiably proud of their neighborhoods, cultural attractions, sports teams, scenic vistas, and transformation to a place where more than 10,000 innovative tech firms call home.”

About Us

Spectrum Location Solutions provides site-selection consulting services to help companies find optimal places for relocations, expansions or consolidations. Industries served have included manufacturing, electronics assembly, aerospace, software, financial services, healthcare, consumer goods, education, insurance, transportation and professional services. The company identifies candidate areas by evaluating workforce availability, operating costs, logistics patterns, building and land availability, taxes, economic incentives and quality-of-life factors. Mr. Vranich has also served as an Executive Coach and has been known as The Business Relocation Coach.

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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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.

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.

Los Angeles KTTV Editorial – ‘California Losing Companies & Jobs’

October 7, 2016

Now here is an editorial that gets to the point about California’s business departures, saying, “Governor Brown: Your attitude needs to change…. Creating a climate that is business friendly should come from the top and be a priority.”

ch-11-point-of-view-calif-losing-jobsThe piece runs a lengthy news crawl at the bottom of the screen that shows the names of some of the companies that have relocated in full or in part out of California.

The commentary cites my study issued in January, entitled, “California Business Departures: An Eight-Year Review 2008-2015.”

The views expressed by the station’s Vice President and General Manager, Bob Cook, are in concert with the assessments held by business leaders throughout the state.

See KTTV’s “Point of View: California Losing Jobs.”

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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.

Another Firm Says ‘Bye’ to California: Moves Silicon Valley Headquarters to Indiana

June 16, 2016

Determine, Inc., a software company, will relocate its headquarters to Carmel, Indiana, about 30 miles north of Indianapolis. The company’s announcement said the new headquarters will provide a home base as of this month (June) for its worldwide business, which includes offices in California, Georgia, France and the United Kingdom.

Indiana-StateSeal.svg“It was a big decision to leave Silicon Valley,” said Patrick Stakenas, Determine’s president and CEO. “Locating in Carmel offers us an extremely solid business environment and a quality of life that will allow us to attract and retain talented employees. Due to these key points, the bulk of our future U.S.-based growth will be in Indiana.”

Note the reference to attract and retain employees. While I’m not privy to the company’s retention rate, it’s well known that employees in Silicon Valley and San Francisco are job hoppers extraordinaire.

Gov. Mike Pence said, “In Indiana, we maintain a balanced budget and have cut costs and taxes, creating a fiscally predictable environment that allows entrepreneurs and job creators to invest in what matters most – their business and their employees.”

The company’s enterprise customers include AOL, Cushman & Wakefield, Endo Pharmaceuticals, Nordstrom, and Sony Music Entertainment.

The Indianapolis Star reported that Determine Inc. has been based in the heart of Silicon Valley in San Mateo.

Inside Indiana Business said Determine is hiring for customer support, professional services, software development and financial positions. The company was founded in 1996 under the name Selectica.

A study, California Business Departures: An Eight-Year Review 2008-2015, published this January, included a sampling of other California-to-Indianapolis moves.

For example, Memory Ventures, in looking for a location for the growing company’s new headquarters, avoided Los Angeles. “The business environment in California is very challenging,” CEO Anderson Schoenrock said, citing the tax structure, government regulation and the high cost of living. “Over time, that grinds on you and your employees.” The company was founded in 2007 with its first brand, ScanDigital, and has been featured on the Inc. 500 and Deloitte’s Technology Fast 500 lists.

Last year, Emarsys, a Vienna, Austria-based digital technology company, located its North American headquarters in Indianapolis. Emarsys has a handful of employees in California, and decided to settle in Indianapolis after considering San Francisco.

Finally, Appirio Inc., another software company, moved its headquarters from San Francisco to Indianapolis.

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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.

 

Orange County Register editorial: California stoking job growth – in the moving industry

May 29, 2016

Californiaocr R has earned quite a reputation for being openly hostile to business, as confirmed by numerous studies and surveys. Its plethora of taxes and regulations are driving away legions of entrepreneurs and workers, but they are doing wonders for one segment of the economy: the moving industry. It is almost as though that industry is secretly lobbying the state Legislature for its anti-business policies.

Joe Vranich, as president of Spectrum Location Solutions, an Irvine business relocation consulting firm, knows all about what drives businesses’ decisions to give up and leave for greener pastures.

See more of the editorial, which contains quotes from company CEO’s, 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.