Archive for the ‘Leaving California’ category

NewGeography.com: “A Generation Plans an Exodus from California”

September 11, 2018

Wow! What a column about Leaving California: The state is hemorrhaging people, particularly among the family-formation age demographic critical to the state’s future. Since the recovery began in 2010 the state has lost half a million net migrants with most leaving Los Angeles and Orange Counties.

Also, a recent Redfin report suggests that the San Francisco Bay Area, the focal point of California’s boom, now leads the entire country in outbound home searches, which could suggest a further worsening of the trend.

A great summary about California’s elites on this topic is this:

“California’s media and political elites like to bask in the mirror and praise their political correctness. They focus on passing laws about banning straws, the makeup of corporate boards, prohibiting advertising for unenlightened fundamentalist preaching or staging a non-stop, largely ineffective climate change passion play. Yet what our state really needs are leaders interested in addressing more basic issues such as middle-class jobs and affordable single-family housing.”

See the complete column here.

One focus of this blog has been to address California’s perennially difficult business environment. Joseph Vranich, who helps companies throughout the United States find great locations in which to grow, is the Principal of Spectrum Location Solutions.

 

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Another Fortune 500 Company Moves HQ Out of California & Legislators Couldn’t Care Less

September 8, 2018

As California legislators wrap up a year of passing laws to increase regulations and energy costs for businesses, raise housing costs for residents – and set the stage for higher taxes on everyone – they will continue to turn a blind eye toward company migrations out of the state.

The latest is San Francisco-based Core-Mark Holding Co. Inc. which will move its headquarters to Westlake, Texas, in the Dallas/Fort Worth metro area. While only a hundred or so jobs are involved, they are high paying jobs.

Company President and CEO Scott McPherson cited lower operating costs and taxes as the main reasons relocating the Fortune 500 company. He added that the new area is “employee friendly with a really high quality of life.”

The Dallas Morning News reports that “Companies are fleeing California’s taxes and regulations, which firms see as burdensome, and a soul-crushing freeway slog that detracts from the quality of life, said Joe Vranich [of Spectrum Location Solutions]. Texas beckons with a pro-business climate and a goodly supply of land.”

Also, Core-Mark was drawn to the natural beauty of the tree-dotted region along with “the talent and the ability for our employees to have a life balance.” The move is “not driven by incentives.”

According to Stephen Simpson, a financial writer at Seeking Alpha, in late 2017, margins had become a problem for Core-Mark along with costs at two of its West Coast locations, writing: “For a company that operates with razor-thin margins and virtually no room for mistakes, that was a serious problem that management had to address and there were already some signs of progress in the first quarter. Second quarter results showed another big step forward, along with some other expected improvements … the sharp upward move in the shares more than adequately reflects the improvements in the business.”

Significant cost savings on the horizon are certain considering the differences in the California versus Texas business environment – with Texas being the clear winner.

Time and again costs are a factor when companies relocate work out of California.

For example, 533 jobs will be lost through October, 2019 as Amneal Pharmaceuticals merges with Impax Laboratories and closes its facility in Hayward, which also is in the San Francisco Bay Area. Amneal expects to transfer products manufactured there to lower-cost facilities in the U.S. and India, but didn’t identify specific locations.

Don’t expect any of these developments to soften California’s business-hostile environment. Last year, one of Gov. Jerry Brown’s representatives met with a group of company owners objecting to new costly regulations. Although he listened a long time, he finally said, “Look, we don’t care.”

And they won’t care next year, or the year after that, and so on, as long as California’s electorate continues to put people in office who couldn’t care less about fairness to business interests.

One focus of this blog has been to address California’s perennially difficult business environment. Joseph Vranich, who helps companies throughout the United States find great locations in which to grow, is the Principal of Spectrum Location Solutions.

Business Exodus From California Is More Troubling Than Sanctuary Policies

May 5, 2018

Really pleased that Chief Executive magazine recognized my research in today’s column, “Business Exodus From California Is More Troubling Than Sanctuary Policies.” Excerpts:

“California is facing a bigger issue than its tussle with the Federal government over sanctuary cities. According to a November report from the U.S Census Bureau, the Golden State has had 142,932 more residents exit to live in other states than people arriving from other states. This domestic outmigration was the second largest outflow in the U.S. behind New York and New Jersey ….

“[M]ore serious is the number of California-based companies that have left or signaled their intention to leave the state. Last year marks the first anniversary of the announcement that Carl’s Jr., a California burger icon for more than six decades, was relocating its headquarters to Nashville. It’s a symbol for what’s become a stream of businesses that have quit California. What was once an almost quiet exodus of companies now looks more like a stampede.

“In addition, two dozen California companies have said they are tired of the business-bashing in Sacramento, along with the high taxes — and are now threatening to leave the state.

“Business relocation expert Joe Vranich who, as president of … Spectrum Location Services … told Investor’s Business Daily (IBD) that from 2008 through 2015 …. that as many as 10,000 companies have left [California] in recent years.”

Here is the link to the full article: https://chiefexecutive.net/business-exodus-california-troubling-sanctuary-policies/

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.

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.

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 NewGeography.com, 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 NewGeography.com, 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.

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.

To Business Owners: Keep a Low Profile When Leaving California

January 25, 2017

Time and again I’ve encouraged smaller companies planning to escape California’s business-hostile environment to avoid publicly discussing their move. What follows is the story of an honest business owner expressing his legitimate concerns about operating in the state – and the unfortunate blowback that resulted.

city-of-los-angeles-sealHouman Salem, who owns a small apparel design and manufacturing business, wrote in the Los Angeles Times that higher labor costs are forcing him to leave California for Nevada. His article contained common sense, non-incendiary views:

“The biggest reason [to relocate] is the minimum wage, which will rise to $15 by 2021 in the county and by 2022 statewide. I write with some hesitancy, because I’m in no way an opponent of higher pay. When you have a company with fewer than 50 employees, you get to know them pretty well and have a genuine concern for them as individuals. But that has to be balanced with concern for keeping your clients, who can always take their business to other countries or states.”

He added, “When the $15 minimum wage is fully phased in, my company would be losing in excess of $200,000 a year (and far more if my workforce grows as anticipated). That may be a drop in the bucket for large corporations, but a small business cannot absorb such losses. I could try to charge more to offset that cost, but my customers – the companies that are looking for someone to produce their clothing line – wouldn’t pay it. The result would be layoffs.”

The reaction on social media was one of rage rather than reflection, according to Michael Saltsman of the Employment Policies Institute, writing in the Orange County Register:

“Good riddance,’ said one of the top comments on Facebook. ‘If you can’t pay your employees a living wage, you don’t have my sympathy,’ said another. Other comments accused Salem of being a bad businessman, of keeping too much money for himself and of exploiting his employees. Some readers even left negative reviews of his business online – even though they’d never met him or done business with him.”

Salem, the founder and CEO of ARGYLE Haus of Apparel, said he fears that the outraged reaction will discourage other affected businesses from speaking out and telling their own story.

He is correct. As a consultant who helps companies find business-friendly locations in which to locate, I encourage clients to keep a low profile. Otherwise, they will be hammered without mercy from an uninformed public and sometimes from public officials who know little about what it takes to run a business.

Publicly held corporations must divulge a relocation because that is considered a “material” event.  That is why within just a few years we’ve seen media coverage of many companies moving jobs out of Los Angeles County to out-of-state locations. Examples: Toyota, Hilton Hotels, Sony Pictures Imageworks, Occidental Petroleum, Northrop Grumman and Walt Disney Co.

Salem also said he is “contacted on an almost daily basis by other L.A.-based companies in my industry who are scared about the future. They are looking to me for leadership, and want to talk about my decision to leave the state.”

He added that “When politicians talk about an ‘economy working for everyone’ – let me tell you, it’s not working for the small business owner.”

Salem chafed at critics who suggested he’s taking advantage of his employees. He has always paid above minimum wage even though doing so causes increases in payroll taxes and workers compensation.

Saltsman wrote: “Despite the challenges of doing business in California, Salem (unlike some of his competitors) is still committed to making his products domestically. ‘I’m an American – I want this country to do well, to succeed….’ He told me he’s not opposed to raising wages – but that the entire burden can’t rest on small business owners. ‘I need the government to meet me halfway. In California, unfortunately, that kind of compromise doesn’t exist.’”

Other businesses have cited the minimum wage increase while loading moving vans, namely: California Composites of Santa Fe Springs when shifting work to Texas (the company owner said if he were to stay “it would probably make me a nonprofit within a couple years or so”); Competitive Edge Research & Communications that relocated from San Diego to Texas; and Woof & Poof of Chico, which makes handcrafted pillows and stuffed figures, when transferring work to North Carolina.

I noticed something about this event that adds insult to injury. Salem’s website states, “Based in the San Fernando Valley of Los Angeles, ARGYLE Haus is a founding member (emphasis added) of the L.A. Mayor’s Fashion Council, an organization dedicated to building and reinforcing the vibrant fashion and apparel industry in the greater Los Angeles area.”

A founding member? Have public officials shown any gratitude? Well, not that I know of from politicians like Gov. Jerry Brown, Los Angeles Mayor Eric Garcetti or any member of city council. I wonder if any of them think they could run ARGYLE Haus better than Mr. Salem has.

It’s hardly surprising that Salem concluded, “We need more stable, blue-collar jobs in places like the San Fernando Valley – the kind I thought I was helping create. California, however, has put up a giant ‘Go Away’ sign.’”

Mr. Saltsman’s Orange County Register column is here: “Los Angeles’ ungracious response to minimum wage consequences.”

Mr. Salem’s Los Angeles Times opinion column is here: “Leaving for Las Vegas: California’s minimum wage law leaves businesses no choice.”

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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.