Let’s talk about business growth in California

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The Golden State. Land of Enchantment. Land of What Might Have Been.

CalifornRick Perry presidential candidate on campaign ...ia was once the place where businesses flocked and people moved in droves. Democrats have not only halted that trend, they’ve reversed it.

A decade or so ago Intel built a new plant in California and about the time they were getting ready to move in the manufacturing equipment somebody called the CEO and told him that they could scrap the plant in California, buy the land and build another plant in Chandler, AZ and pay for the whole thing with the savings on workers’ compensation insurance in Arizona vs. California. Today Intel has a huge complex in Chandler employing about 12,000 people.

The CEO of HP, a Silicon Valley staple, announced a few years ago that they would never add another job in California.

Today, Toyota, a fixture in Southern California since 1957, announced that they would be closing their sales and marketing headquarters in Torrence. It’s moving to business friendly Texas.

California politicians and news media are painting a silly picture of the move, the LA Times notes that “…about 75% of the Toyota branded vehicles sold in the U.S. are built in America — many of them at plants in Texas, Mississippi and Kentucky.”

Guess what? They’re not moving sales and marketing to be close to manufacturing even though the new CEO of Toyota North America is consolidating all headquarters operations. They’re leaving California for one reason. The cost of doing business in California.

Toyota could also save money in an environment of lower business taxes, real estate prices and cost of living.

Frank Scotto, Torrance’s mayor, said he had no warning of Toyota’s decision. He said he did know that the automaker planned a corporate announcement for Monday.

“When any major corporation is courted by another state, it’s very difficult to combat that,” Scotto said. “We don’t have the tools we need to keep major corporations here.”

The mayor said businesses bear higher costs in California for workers’ compensation and liability insurance, among other expenses.

“A company can easily see where it would benefit by relocating someplace else,” Scotto said.

Toyota’s not the first and it won’t be the last.

Occidental Petroleum Corp. said in February that it was relocating from Los Angeles to Houston, making it one of around 60 companies that have moved to Texas since July 2012, according to Texas Gov. Rick Perry.


Toyota isn’t the first automaker to leave Southern California. In late 2005, Nissan announced it was moving its North American headquarters from Gardena to Franklin, Tenn., just outside of Nashville. About 550 employees left for Tennessee; an additional 750 left jobs at Nissan to stay in Southern California.

“The costs of doing business in Southern California are much higher than the costs of doing business in Tennessee,” Nissan Chief Executive Carlos Ghosn said at the time. He cited cheaper real estate and lower business taxes as key reasons for the move.

California is a permanent resident at the bottom of the Best States to do Business list. Huge regulatory costs, especially for manufacturers, among the highest overall tax rates in the land, an insane workers’ comp system (though not as bad as it used to be), and a general business climate that is just horrible.

Jerry Brown was laughing at Rick Perry advertising Texas as a great place to do business. Here’s what Jerry had to say about Perry’s campaign.

One day after Texas Gov. Rick Perry released a radio ad in California criticizing the Golden State’s business climate and encouraging businesses to relocate to Texas, California Gov. Jerry Brown said today that Perry’s campaign is “barely a fart.”

“It’s not a serious story, guys,” the Democratic governor told reporters at a business event here. “It’s not a burp. It’s barely a fart.”

Barely a fart.

Tell that to the 5,300 Toyota employees who are either moving to Dallas or losing their jobs. And to the Occidental employees. Or the employees of one of the other 60 companies who have already moved to Texas.

Hell of a job Jerry. You and your party have turned the Golden State into the Pyrite State.




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