Updated: California's Hostile Business Climate - 114 'Moving-Out-of-State' Events

It's no mystery what causes companies to leave California -- high taxes, undue regulation, workers' comp costs, a legal environment stacked against businesses, and lengthy and costly construction permitting requirements.

Other contributing factors include agencies being staffed with individuals unsympathetic or even hostile to business concerns. Wildly excessive government spending contributes to unpredictable government behavior at the state level and also the local level.

Apparently, No state agency keeps track of enterprises that move out of California or which companies elect to expand in other states even though they are headquartered here. That lack of knowledge is quite convenient for elected officials who deny that state's anti-business attitudes and policies hurt commercial enterprises. Hence, without a central repository, it's difficult to determine how many jobs are lost specifically because of California's unfriendly business environment.

In this blog, I've attempted to note facility moves and disinvestments in California on a catch-as-catch can basis based on incomplete media reports. Below is a roundup of activity that I've been able to find since I started this blog in July, 2009. This imperfect and incomplete list is the "tip of the iceberg" about the loss of commercial enterprises in California:

• Abraxis Health, a unit of Los Angeles-based Abraxis BioScience Inc., opened a new plant that will create 200 jobs in 2010 -- in Phoenix. This follows the company's Phoenix expansions that occurred in 2007 and 2008.

• Alza Corp. in 2007 eliminated about 600 jobs in drug R&D while also exiting its Mountain View, Calif., HQ. At the time the company said that its 1,200-person Vacaville facility will continue to operate. But the Vacaville Reporter on Oct. 23, 2009 revealed that the plant is being offered for sale by J&J, its parent company. It's unclear if more layoffs are in the facility's future.

• American AVK, a producer of fire hydrants and other water-related products, moved from Fresno to Minden, Nevada.

• American Racing moved its auto-wheel production to Mexico, ending most of its 47-year operation in California.

• Apple Computer has expanded in other states, most recently with a $1 billion facility planned for North Carolina.

• Audix Corporation relocated from Redwood City, Calif., and to accommodate growth moved to a 78,000-square-foot facility in Wilson, Oregon.

• Apria Healthcare Group of Lake Forest is shifting jobs from California to Overland Park, Kansas, a K.C. suburb.

• Assurant Inc. cut 325 jobs in Orange County and consolidated positions in Georgia, Ohio and South Carolina.

• Automobile Club of Southern California placed 1,100 jobs in Texas.

• Barefoot Motors, a small "green" manufacturer, moved from Sonoma and will grow in Ashland, Oregon.

• Bazz Houston Co. located in Garden Grove, has slowly been building a workforce of about 35 people in Tijuana. In early 2010 the company said it expects to move more jobs to Mexico, citing cost and regulatory difficulties in Southern California.

• Beckman Coulter, a biomedical test equipment manufacturer headquartered in Brea, relocated part of its Palo Alto facilities to Indianapolis, Indiana, two years ago. In early 2010, it's making a multimillion-dollar investment to expand and create up to 100 new jobs in Indiana. The company said the area offers a "favorable business environment and lower total cost of operations, plus a local work force with strong skills in both engineering and manufacturing." 

• Bild Industries Inc., which specializes in business news, directories and market reports, moved to Post Falls, Idaho, from Van Nuys, a part of the San Fernando Valley in Los Angeles.

• Bill Miller Engineering, Ltd., suffering under the "hostile business climate" in California and Los Angeles County, moved from Harbor City to Carson City, Nevada.

• BMC Select has conducted an unusual relocation. The company, which had shifted its headquarters from Idaho to San Francisco, relocated its H.Q. back to Boise in January 2010. The building materials distributor said that regaining its footing in Boise retained access to high-quality employees while reducing wage and occupancy costs.

• BPI Labs, which formulates, manufactures, and fills personal care products for the health and beauty industry, relocated from Sacramento to Evanston, Wyoming, a move the company's owner called "very successful . . . . It felt good and I’ve never looked back.”

• Braxton Technologies moved its headquarters and some operations from Pleasanton to Colorado Springs, Colo., where it created 100 new jobs in 2008.

• BRP Billet Racing Products moved from Laguna Hills to Colorado Springs, Colorado in 2009.

• Buck Knives after 62 years in San Diego moved to Post Falls, Idaho.

• CalPortland Cement has announced in late 2009 closure of its Riverside County plant because of new environmental regulations from a state law (AB 32). The company's CEO wrote, "A cement plant cannot be picked up and moved, but the next new plant probably won’t be built in California meaning more good, high paying manufacturing jobs will be lost to Nevada or China or somewhere."

• California Casualty Group left San Mateo for Colorado, cutting operating costs to remain competitive.

• CalStar Products Inc., headquartered in Newark, Calif., in the San Francisco Bay Area, in January 2010 was awarded $2.44 million in federal clean energy tax credits. The company said in the future it expects to build additional plants in the Mississippi Valley and the East Coast. In late 2009 CalStar opened a plant in Caledonia, Wisconsin.

• Cessna Aircraft Co. moved its Long Beach, Calif., service center to the Phoenix-Mesa Gateway Airport in Mesa, Arizona in February 2009. About 65 percent of the 75 maintenance workers accepted Cessna’s offer to relocate from Long Beach to Mesa.

• Checks To-Go moved to Utah where workers' comp rates helped make the troubled company healthier.

• Chivaroli & Associates, a healthcare-related insurance service based in Westlake Village, Calif., moved a regional office to Spokane, Washington.

• CoreSite, A Carlyle Company, is delaying a Santa Clara project while it expands its data center in Reston, Virginia.

• The Council on Education in Management moved from Walnut Creek to Charlotte, NC, in 2000.

• Creators Syndicate may flee L.A. because it operates like a “banana republic.”

• Creel Printing Left Costa Mesa for Las Vegas in 2009 and SoCal lost 60 more jobs.

• Dassault Falcon looked at building an aircraft services facility in Riverside County but instead located in Reno.

• DaVita Inc. moved its HQ from Los Angeles to Denver; expects to see millions of dollars in savings over time.

• Denny’s Corp. – the large restaurant chain – once had its headquarters in La Mirada, later in Irvine, Calif, and then moved to Spartanburg, South Carolina. In fairness, I note the move occurred in the early 1990s. However it's noteworthy because the company was founded in California and its growth over time created HQ jobs in another state with an economic ripple effect in the untold millions of dollars.

• Deutsch Industrial Products Division closed its Banning, Calif., facility and moved the jobs to Tennessee in 2009.

• Digital Domain, the Academy-Award-winning visual effects studio based in Venice, Calif., placed new studios in Vancouver, British Columbia, and Port St. Lucie, Florida, which combined will have about 500 employees. The facilities will allow the company to reduce costs while continuing to deliver cutting-edge work. 

• Dimensional Fund Advisors moved its headquarters from Santa Monica to Austin, Texas, with the move to be completed in 2010.

• Ditech, headquartered in Costa Mesa, announced in January 2010 a 269-job cut and is moving most activities to the GMAC Financial Services (parent company) headquarters in Fort Washington, Pennsylvania. In 2007, Ditech relocated some workers from Costa Mesa to Phoenix. A once robust Costa Mesa facility employing hundreds will be down to 20 or 30 workers.

• DuPont Fabros Technology suspended a $270 million Santa Clara data center project in favor of one in Ashburn, Virginia. 

• eBay, based in San Jose, will create 450 jobs in Draper, Utah, in a new $334 million operations, customer support and data center.

• EDMO Distributors, Inc., a world-wide wholesaler of aircraft avionics, test equipment, and pilot supplies, moved its HQ from Valencia, Calif., to Spokane Valley, Wash. Since, it has built a larger headquarters in the city's Mirabeau Point community complex.

• Edwards Lifesciences based in Irvine will expand with 1,000 employees – not in California but in Draper, Utah, according to an October 2009 announcement.

• EMRISE Corp. completed its HQ move from Rancho Cucamonga to Eatontown, NJ, in May 2009. The company said the move "will result in additional annualized cost savings of approximately $1 million and facilitate improvements in operating efficiency. . . . The cost savings associated with relocating our corporate headquarters will start immediately. . . The aggregate total of these expense reductions will increase our profitability and cash flow in this and succeeding years and, over time, substantially improve our ability to further reduce our long term debt.”

• Facebook, based in Palo Alto, will expand in a major way in Oregon by locating a custom data center in Prineville. It will be a 147,000-square-foot facility costing $180 million and will employ 200 workers during construction and another 35 full-time once operating in 2011.

• FallLine Corporation Left Huntington Beach, where they were being "hammered" with multiple governmental regulatory fees, for Reno, Nevada.

• Fidelity National Financial left Santa Barbara for Florida, spurred by California's "oppressive" business environment.

• First American Corp., based in Santa Ana, will open a call center in March 2010 not in California but in Phoenix, where it expects to employ about 400 people within two years.

• Fluidmaster was reported by the Los Angeles Times in October 2005 to have shifted some work from "two California plants" (I believe in San Juan Capistrano and Santa Fe Springs) to factories in Mexico and China.

• Fluor Corp. moved its global headquarters from Aliso Viejo to Irving, Texas, with about 100 employees asked to relocate while the company planned to hire the same number there. In 2006, when Fluor moved into its new headquarters building, a company statement said: "The official dedication had a decidedly Texas theme" as a horseshoe was raised on the building, a time-honored Texas tradition.

• Foxconn Electronics, a large contract electronics maker, moved some of its Fullerton operations to Dallas.

• Gregg Industries, owned by Neenah Enterprises Inc. in Wisconsin, closed a 300-employee foundry in El Monte foundry under pressure from the South Coast Air Quality Management District to make $5 million in upgrades. The company didn’t want to make the investment in the difficult economic climate so it decided instead to leave the state.

• Hawker Beechcraft Services closed its Van Nuys, Calif., maintenance facility on March 31, 2009, relocating to Phoenix-Mesa Gateway Airport (IWA) in Mesa, Arizona.

• Hayden Automotive, an auto-parts maker in Corona, Riverside County, is relocating its entire operation to facilities in Grapevine and Lewisville, Texas, in 2010. The company said it will lay off 73 people between April 1 and Oct. 1.

• Helix Wind Inc. may move its research and development, engineering, and testing departments from San Diego to "more supportive" Oregon.

• The Hershey Co. closed its chocolate plant in Oakdale, in Stanislaus County, Calif., and 600 jobs were lost by February 2008. Hershey's kisses with almonds and Hershey's syrup were transferred to a plant in Pennsylvania and Hershey's miniatures to a plant in Mexico.

• Hewlett-Packard, HQ'd in Palo Alto, at various times has moved jobs to Tennessee and Texas.

• Hilton Hotels Corp. in 2009 is moving from its longtime corporate H.Q. in Beverly Hills to a new office in Tysons Corner, Virginia.

• Hino Motor Manufacturing USA moved from California to Williamstown, West Virginia, in 2007, where it now employs about 100 workers. The company has growth plans to "Raise Hino’s presence from medium-/heavy /heavy-duty trucks to all ranges of trucks" and an aggressive program to improve fuel economy and emissions. The company builds trucks under its own brand and also manufactures Toyota-branded vehicles.

• Intel Corporation, HQ’d in Santa Clara, has chosen to expand operations in neighboring states.

• Intuit of Mountain View created a customer support office (110 people) not in California but in Colorado because of lower operating costs.

• Intuit placed a data center near Quincy, Washington.

• Intuit also located Innovative Merchant Solutions LLC in Las Vegas as part of a $1.8 million investment in Nevada.

• J.C. Penney closed it Sacramento call center and moved the work to five out-of-state centers.

• Kimmie Candy Co., a manufacturer that was started in 1999, moved from Sacramento to Nevada in 2005. "I really don't have a lot of regrets about moving up to Reno," said owner Joe Dutra.

• Klaussner Home Furnishings in closing its La Mirada manufacturing plant will maintain its NC and Iowa operations.

• Knight Protective Industries moved to Oregon "where 4-day work weeks were permitted by the state" and wanted by the employees.

• Kulicke & Soffa Industries Inc. announced in February 2010 that it is reducing work at its Irvine plant, laying off 56 people, and will shift work to Malaysia and Singapore. The facility had been owned by Orthodyne Electronics Corp., which Kulicke & Soffa bought in 2008. 

• LCF Enterprises, which makes specialized high-end amplifiers used by researchers, medical professionals and others, moved from Camarillo, Calif., to Post Falls, Idaho.

• Lennox Hearth Products Inc. in Orange, Calif., will lay off 71 workers and by March 2010 will transfer the jobs to Nashville and Union City, Tennessee, "to reduce costs and increase operating efficiencies."

• Lyn-Tron, Inc., a supplier of electronic hardware, moved from Los Angeles to Spokane, Wash. Their website has a rather California(ish) statement: "Our commitment is to maintain a manufacturing environment that is progressive and safe, where our employees are able to achieve their personal objectives, thereby adding to their quality of life and to the community in which they live."

• Malibu Boats is moving from Merced to Knoxville in 2010. Details are difficult to come by except that it's known some Merced employees are buying houses in Knoxville.

• Mariah Power, a "green" manufacturer of small wind turbines, moved from California to Nevada and in 2009 teamed up with another company to begin production in Manistee, Michigan. 

• Maxwell America, a boating equipment maker, in February 2010 closed its Santa Ana offices and moved them to Hanover, Md. One reason given was the indirect impact of California environmental regulations. A company official said over the years many California boat builders relocated to the Midwest and East where they don't face the same restrictions.

• MiaSolé, based in the Silicon Valley, was reported in January 2010 to be planning a 500,000-square-foot plant, which could be one of the largest solar factories in the United States. The location is not near its in Santa Clara headquarters but in the Atlanta, Georgia, area where its workforce eventually could exceed 1,000. The news came one week after MiaSolé received $101.8 million in federal tax credits.

• MotorVac Technologies announced in February 2010 that it's leaving Santa Ana for Ontario, Canada. MotorVac's CEO said he "really fought hard to keep MotorVac here, but unfortunately the numbers didn’t support it." The move cuts costs because it's new owner, UView, has its own plant with excess capacity in Canada. “And the general cost of doing business in California is much more expensive.”

• Nissan North America moved its Los Angeles headquarters to Nashville, Tenn.

• Northrop Grumman by 2011 will relocate its Los Angeles H.Q. to the Washington, DC metro area. It's the last major aerospace company to leave Southern California, the birthplace of the aerospace industry.

• Olhausen Billiards relocated its headquarters, manufacturing and distribution operations from the San Diego area to Portland, Tenn. The action, completed in June 2006, brought about 130-150 new jobs to the region. The company said moving to Tennessee helps to better manage costs and stay ahead of customer demands.

• One2Believe, a specialty religious-toy maker, left California for East Aurora, New York.

• Patmont Motor Werks, Inc. (GoPed manufacturer), after being hit by California regulators for hundreds of thousands of dollars in small fines even though his company has a stellar safety record, moved to Nevada.

• Paragon Relocation Resources moved from Rancho Santa Margarita to Dallas, a move that was completed on January 1, 2010.

• Pixel Magic, headquartered in Toluca Lake, Calif., (Los Angeles metro area), is locating a studio in Lafayette, Louisiana, where it will create 40 new jobs between 2010 and 2013. The company, which provides digital effects for motion pictures and television, said the Louisiana people they were in contact with have an immediate understanding of technology and data handling.

• Plastic Model Engineering, Inc., a custom plastic injection molder and mold manufacturer, moved from Sylmar, Calif. to the "Inland Northwest," notably Post Falls, Idaho.

• Precor will stop manufacturing fitness machines in California and re-open in North Carolina.

• Premier Inc., the largest healthcare alliance in the nation, will move its HQ from San Diego to Charlotte, involving an investment of $17.7 million and adding 300 jobs in North Carolina. The announcement was made Oct. 14, 2009.

• Pro Cal of South Gate, in Los Angeles County, a unit of Myers Industries, expanded its Sparks, Nev., operations to become the company’s primary West Coast production and distribution facility. Pro Cal is a plastics manufacturer of nursery containers and a big recycler.

• Race Track Chaplaincy of America started 2010 by shifting its headquarters from Los Angeles to Lexington, Kentucky. The non-profit group said it had wanted to relocate from the Hollywood Park Race Track for several reasons, one of which is the significant cost of doing business on the West Coast.

• Red Truck Fire & Safety Company left Fresno for Minden, Nevada in 2007 because of California’s myriad fees and regulations that meant "death by thousand cuts."

• Ropak West shut its manufacturing plant in La Mirada, Calif. in 2005, affecting 200+ employees, and moved equipment to their Illinois and Texas plants. A company insider said, "Costs and excessive regulations led to the move."

• SAIC will move its headquarters east, from San Diego to McLean, Virgina, which the Washington Post called "Another Coup for Area." The announcement was made Sept. 24, 2009; it is unclear how many employees will move east in 2009 and 2010.

• Scale Computing, a data-storage developer and manufacturer, is leaving Silicon Valley for Indiana.

• Schott Solar Inc. will close its sales and customer service office in Roseville and will relocate the office to Albuquerque, NM.

• SimpleTech transferred its manufacturing work from Santa Ana to Asia more than a year ago.

• Smiley Industries, an aerospace manufacturer, moved to Phoenix, where productivity improved.

• Solaicx, based in the Silicon Valley, said in early 2010 that it will expand its manufacturing plant in Portland, Oregon. Solaicx received $18.2 million in federal tax credits as part of Washington's efforts to advance green energy.

• SolarWorld, a maker of solar technology founded in Camarillo, consolidated manufacturing in Oregon after that state offered property tax abatement and business energy tax credits. The company will employ about 1,000 in Oregon by 2011.

• Special Devices Inc. brought 250 jobs to Mesa, Arizona, from Moorpark, Calif.

• StarKist headquarters is leaving San Francisco for Pittsburgh, Pa.

• Stasis Engineering moved from Sonoma County to West Virginia, a "friendlier business climate."

• Stata Corp., which specializes in data analysis and statistical software, moved from Santa Monica, California to College Station, Texas.

• Sterling Electric, Inc., which was founded in Los Angeles in 1937 and moved to Irvine in 1968 relocated to Indianapolis effective March 1, 2007.

• Tapmatic, a metalworking firm whose owners were "fed up with the onerous business environment," moved from Orange County, California to Post Falls in northern Idaho.

• Teledesic moved to Washington state in anticipation of better capital gains.

• Telmar Network Technology Inc. completed its move from Irvine to Plano, Texas, in July 2009, consolidating some 150 workers there.

• Terremark postponed a Santa Clara project earlier this year to invest $50 million in a Culpeper, Va. project.

• Terumo Cardiovascular Systems is moving R&D from OC to Ann Arbor, Michigan, involving 65 jobs and $3.5 million in investments.

• Toyota will stop making cars in Fremont, will idle 4,700 workers, and move work to Canada and San Antonio, Texas.

• True Games Interactive Inc. will move its H.Q. from Irvine to Austin, Texas, where it expects to have about 60 workers by the middle of 2010.

• TTM Technologies will leave L.A. & Hayward and move to other states and China to achieve big cost savings.

• Twentieth Century Props of L.A. has gone out of business as film-making has moved to lower-cost states.

• Understand.com moved from the San Francisco Bay Area to Reno, a loss for California in that the company is a leader in web-based patient education content and shows strong growth. The company was named 2007 Innovator of the Year by a Northern publication and the company's founder and received a media and Reno-Tahoe Young Professionals Network “20 Under 40” award and was selected as a 20/20 Business Visionary by Nevada Business Magazine.

• US Airways is realigning operations and California is no longer considered part of its "core." The airline is closing its John Wayne Airport maintenance station and in early 2010 will redistribute the mechanics across its system.

• US Press shifted work from Los Angeles and San Diego to Portland, "where union rules were almost rational."

• USAA Insurance closed its 625-person Sacramento campus in favor of other states.

• Workforce Management -- a magazine that focuses on human resources issues -- will move from Irvine to Chicago in mid-2010.

• Yahoo opened a data center in Quincy, Washington, a community that now hopes to land high-tech manufacturing.

The list will grow as Sacramento considers more measures that will increase corporate taxes, increase workers' comp costs, increase regulatory reporting requirements (along with higher fines for minor infractions), increase gasoline and diesel-fuel taxes, increase water rates, increase electric-power rates, and increase assorted fees that will cause services to become more expensive.

California officials will go to great lengths to avoid admitting companies are leaving for locations elsewhere, although one state economic development official admitted that in 2007 (before the economic meltdown) the state lost "only" 1,000 businesses. The official did not comment on the California Manufacturers and Technology Association study that showed the state lost 25 percent of its total manufacturing employment between 1990 and 2007. For additional perspective, see: "California factory jobs have disappeared."

Notes:

• There is a disproportionate number of listings of companies moving to northern Idaho and the Spokane area. This is primarily because the Spokane Spokesman-Review has done a superior job of covering companies moving into the region; hence, the moves are easier to find online.

• It appears that more companies are leaving Orange County than are leaving Los Angeles, but that's because The Orange County Register more routinely covers business departures while the Los Angeles Times fails to report as thoroughly on the topic. It's virtually certain that Los Angeles -- the epicenter of hostility to business (worse than Sacramento) -- loses more businesses than Orange County.

• A handful of the moves listed are from the 1990s (when there was a substantial exodus from California) and I've listed them because of one compelling factor or another. For example, it's relevant that an aerospace-related company would leave aerospace-intensive Southern California. My latest research shows that I could add another 80 or so companies, but they would have been from the 1990s and were not major moves so I'll leave them off the list.

Source: The Orange County Beta Register
Jan Norman on Small Business
Blog Posted by Joseph Vranich
The Business Relocation Coach
businessrelocationcoach.com

March 18, 2010

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