Sunday, June 19, 2016

Another Los Angeles-Area Tech Company Creates Lots of Jobs . . . 800 Miles Away & Out of State

PCM, an El Segundo-based IT services provider, will open a sales center in Rio Rancho, New Mexico this summer, with the first of more than 200 employees coming on board in August.

El Segundo to Rio RanchoGov. Susana Martinez and other state officials, on a recent trade mission to California, asked the company’s CEO to consider New Mexico.

PCM provides technology support to clients that include the NFL’s Cincinnati Bengals and Green Bay Packers, Sea World, Wendy’s, GE, and others. Salaries of the sales positions will range between $45,000 and $65,000.

Frank Khulusi, CEO and founder of PCM, said, “Meeting with Gov. Martinez and her team in California was a game changer. Learning about New Mexico’s improved business environment and talented workforce was a deciding factor in expanding our operations to this state.”

The publicly traded company will generate $2.2 billion in sales this year.

See the complete story at the Albuquerque Journal"Calif. tech company brings more than 200 jobs to Rio Rancho.”
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One focus of this blog has been to address California’s difficult business environment, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, (PDF) updated Jan. 14, 2016.

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.

Wednesday, June 15, 2016

Another California Firm Heads East: Silicon Valley Headquarters Relocates to Indiana

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.

*  *  *

One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, (PDF) updated Jan. 14, 2016.

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.

Thursday, June 9, 2016

California Loss: Swiss Company Puts U.S. HQ in Phoenix, not San Francisco

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.


According 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.


*  *  *
One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, (PDF) updated Jan. 14, 2016.

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.

Friday, June 3, 2016

California Business Alert: 'Sanders Effect' to Move the State Further Leftward

In the volatile Trump versus Clinton battle now underway, one result of Bernie Sanders’ campaign deserves more attention – particularly if you run a business in California and are concerned about higher taxes and more regulations.

SandersA column in today's Wall Street Journal by editorial writer Allysia Finley points out that even if Bernie loses to Hillary in the June 7 primary "he could be a winner for California’s liberal politicians: The self-described socialist is expected to turn out masses of young people, and that could be a boon for down-ballot left-wing candidates for the state legislature."

Agree. And I'd add that is also true for candidates for county and municipal offices.

She explains how in California's open primary "The Sanders effect could give Democrats a supermajority in Sacramento, pulling the party – and the state – even further to the left than it already is." Democrats need only to pick up one Senate and two Assembly seats to hold a supermajority, and "This time around, thanks to Bernie Sanders, a Democratic supermajority would likely be much more liberal than the last one."

While voters are moving leftward, California businesses are moving eastward. Within just the last week, I’ve learned about several companies opting to put facilities in other states.

For example, another aerospace company is saying Adios. C&S Propeller, in the state for 50 years, is moving its Burbank headquarters to Fort Worth, Texas. According to the Dallas Business Journal, the company said it's looking forward to a lower cost of living for its employees and "greater flexibility in our day to day operations." (I'll bet that the reference to flexibility reflects the more liberal overtime regulation in Texas versus California's inflexible overtime rule.)

General Magnaplate Corp., which has made reinforced parts for the aerospace, transportation, medical, oil and other industries for 36 years, decided to shut down its California facility in Ventura altogether. According to the Orange County Register, “This is a very sad day for our employees and for my family, who have a long history of job creation in this area, but the simple fact is that the state of California does not provide a business-friendly environment,” CEO Candida Aversenti said. "Increases in workers’ compensation costs and government regulations, combined with predatory citizens groups and law firms that make their living entirely by preying on small businesses, have left us with no other choice but to shut down our California facility. This is in stark contrast to our New Jersey and Texas facilities, which are flourishing in small business-friendly environments created by the respective local governments and environmental agencies.”

By the way, General Magnaplate has been quite an asset to California, as described here: "Newest Company to Leave California: An Environmentally Friendly One."

Next, Jacobs Engineering Group Inc. will move its Pasadena headquarters to Dallas, Texas, with CEO Dan Noble saying, "The big move from California is being made for business reasons, such as lower taxes and the business friendly environment." That story is in the Dallas Business Journal.

In Northern California, a food company is moving by the end of the year. According to the Oroville Mercury Register, "Mary’s Gone Crackers is building a manufacturing plant in Reno that will also include research and development and the company’s headquarters, all of which are done now in Gridley and Chico."

California also experiences opportunity costs when a company that would have considered moving here goes elsewhere. Such is the case when Silent Aire, a Canadian company, decided to establish a U.S. presence, it selected Arizona. Its leaders knew they wanted to be West of the Mississippi River – but they quickly ruled out California, where the cost of relocating and doing business was too high, vice president of operations Brett Manning said, according to the Arizona Republic.

The disinvestments in California mentioned above are ignored by Sacramento politicians. And if indeed the Sanders campaign helps put more business-hostile Democrats in the legislature, then I predict even more companies will have little choice but to leave California in the future.

Finally, getting back to that Wall Street Journal column, rarely do I identify anything as a "must read," but I do for this one. See more at "California Liberals Await the Bernie Effect."

*  *  *

One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, updated Jan. 14, 2016.

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. He offers an introductory phone consultation at no cost to help company leaders understand the Site Selection process and explore whether a project makes sense. Also, he has established a Confidential One Day Coaching Program for Business Owners as a safe, economical way to explore location options in a more detailed way.

Joe is a keynote speaker on the benefits of relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. For more information, see Biography and Speaking Availability

On Twitter, Joe is known as @LocationConsultReach Joe directly through his Contact Page

Sunday, May 29, 2016

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

California 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 hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, updated Jan. 14, 2016. Joe 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.

Sunday, May 8, 2016

KFI Audio Clip: Leaving California, Leaving San Francisco, Minimum Wage & More

Yours truly appeared on the 'John & Ken' show on KFI Radio, Los Angeles, regarding companies continuing to leave California, why so many people want to move out of San Francisco, and the hidden costs of the state's new minimum wage and how it will hit businesses hard for reasons few people seem to understand.

The interview was sparked by the Jamba Juice Inc. announcement that it's moving its headquarters from Emeryville, Calif. to Frisco, Texas. The Smoothie company has had a long history with California because that is where it opened its first stand 25 years ago.

Two years ago Toyota Motor Corp. announced it will move its Torrance headquarters to Plano, Texas, one of Frisco's neighboring jurisdictions.

At that time, Gov. Brown revealed his aloofness towards the challenges of running a business in California by saying, “We’ve got a few problems, we have lots of little burdens and regulations and taxes, but smart people figure out how to make it.” The Wall Street Journal came back with this: “California’s problem is that smart people have figured out they can make it better elsewhere."

The show, which aired on Friday, May 6, also explored some of the reasons that an estimated 10,000 companies have left California during the last eight years for other states or nations.

Because John and Ken have a huge listenership on KFI, which broadcasts at 50,000-watts, the program is the No. 1 local radio talk show in the United States. The audio link to the segment (about 14 minutes long) is here.

*  *  *
One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, updated Jan. 14, 2016.

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. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and explore whether a project makes sense. Also, he has established a Confidential One Day Coaching Program for Business Owners as a safe, economical way to explore location options in a more detailed way.

Joe is a keynote speaker on the benefits of relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. For more information, see Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsultReach Joe directly through his Contact Page

Friday, April 29, 2016

New Option for Companies Wanting to Leave Unfriendly States Like California

As the business environment in California continues to deteriorate because of the onslaught of new regulations and taxes, I’ve established a new program for business owners to help them determine whether to stay or move out of the state.

Companies located in Illinois, New York, New Jersey and Connecticut – states that also rank high in “business unfriendliness” – may also find the program useful.

Based on my experience as an executive coach, I created a one-day coaching session to demystify the site selection process and help business owners have a better understanding of the many options available to them.

After all, when considering a company relocation or expansion to a new state or community, it’s common in privately owned businesses for uncertainty to prevail. This is normal because such companies generally lack staff experienced in identifying optimum communities. Also, it is common for there to be differences of opinion among co-owners about business and lifestyle factors.

The one-day coaching session is held in a company’s headquarters or off-site location to address three basic questions:
  • “Should we stay or should we go?”
  • “If we go, where do we go?”
  • “How much will a location project cost?”
In the session, I facilitate discussions to determine the current and future priorities of the principals. Coaching can be done in a group setting, in one-on-one sessions, or a mixture of both – and confidentiality is guaranteed.

The coaching follows a structure that encourages productive communications, reveals positive and negative attitudes about various locations, and sparks discussion about business and personal goals.

And I have to say it’s interesting how many times personal concerns become a major part of the conversation.

I also provide value by outlining how consultants gather data from a multitude of far-flung places, in what way taxes and labor rates differ in various locations, what the pros and cons are in obtaining economic incentives from public agencies, and how to work with governments in other states who nearly always are enthusiastic about a company being interested in their communities.

My coaching experience includes serving executives in the aerospace, financial, manufacturing, airline, software and entertainment businesses along with entrepreneurs in start-ups and owners of well-established businesses. Also, I’ve been published by the Professional Coaches & Mentors Association.

*  *  *
One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, updated Jan. 14, 2016.

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. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and explore whether a project makes sense. Also, he has established a Confidential One Day Coaching Program for Business Owners as a safe, economical way to explore location options in a more detailed way.

Joe is a keynote speaker on the benefits of relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. For more information, see Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsultReach Joe directly through his Contact Page

Friday, April 15, 2016

Newest Company to Leave California: An Environmentally Friendly One

Sometimes a news release so succinctly tells why a company is leaving California that all I need do is to replicate it, which I'm doing, below. But before doing so, I'll mention that if you follow the subhead "Environmentally Friendly" that comes after the news release, you will see just how valuable the company is that has decided to exit California.

General Magnaplate To Close California Facility After 36 Years
County of VenturaVENTURA, Calif., April 15, 2016 /PRNewswire/ -- General Magnaplate Corp has announced this week that it will be closing its Ventura, CA, facility and will serve West Coast customers directly from its Arlington, TX and Linden, NJ operations. The engineering coatings company has reported two main reasons for the facility closure: difficult business conditions created by the State of California and the settlement of a potential lawsuit against subsidiary General Magnaplate California threatened by the Environmental Defense Center (EDC) of Santa Barbara, CA. The EDC claimed that General Magnaplate Corp. had violated the Clean Water Act, which the Company vigorously denies. 
"After 36 successful years in Ventura we have made the extremely difficult decision to close our facility," reports Candida Aversenti, CEO of General Magnaplate Corporation, a woman owned company. "This is a very sad day for our employees and for my family who have a long history of job creation in this area, but the simple fact is that the State of California does not provide a business friendly environment. Increases in Workers Compensation costs and government regulations, combined with predatory citizens groups and law firms that make their living entirely by preying on small businesses, have left us with no other choice but to shut down our California facility. This is in stark contrast to our New Jersey and Texas facilities which are flourishing in small business-friendly environments created by the respective local governments and environmental agencies." 
Reacting to the allegations by the EDC that the company's facility was discharging polluted storm water into the Santa Clara River, General Magnaplate's President and COO, Edmund Aversenti, commented, "General Magnaplate is not in violation of the Clean Water Act and ongoing investigations suggest that the alleged polluted storm water runoff from our facility actually came on to our property from neighboring properties exempt from CWA compliance. We have agreed to settle with the EDC for purely economic reasons. This is particularly upsetting given that we have a strong SWPPP (Storm Water Pollution Prevention Plan) in place at the California facility and have contracted consultants to insure that we are in compliance. General Magnaplate takes great pride in being environmentally responsible corporate citizens." 
Candida Aversenti added, "General Magnaplate's coatings have an inherently positive effect on the environment, something that our founder, Dr. Covino, promoted many years before the current environmental trend." 
"He believed that the advancement of metal coatings would have a positive impact on the use of natural resources. Because our coatings improve the performance of metals, more abundant common metals can be used as substitutes, thereby preserving rare alloy ores. And by using coatings to preserve the life of metal parts, our customers are also able to reduce the amount of raw materials required for manufacturing and decrease the amount of scrap. Furthermore, reducing the need to make new parts also conserves energy used in manufacturing processes. There are many, many positive environmental effects to be had from the use of coatings for metal components." 
Anthony Strauss of the Strauss Law Group, which represented General Magnaplate in its case with the EDC, commented, "It is sad to see yet another employer leave the area. California is earning a reputation as a non-friendly business state and it's the employees that are paying the ultimate price."
Environmentally Friendly

So, what kind of company is saying goodbye to California? Well, I found this information in a holiday message to employees:
General Magnaplate would like to share with you some of the ways we contribute to charitable causes, and humanitarian and educational programs in our community and worldwide. 
General Magnaplate has continued its membership with the Intrepid Sea, Air and Space Museum’s Anchor Society. The Society supports the Museum’s many education programs, exhibitions and maintenance of their extensive collection of historic artifacts. Since 1982, the mission of the Intrepid, a National Historic Landmark, has been to promote the awareness and understanding of history, science and service to honor our heroes, educate the public and inspire youth. 
In 2015 a new program was launched for returning military personnel with traumatic brain injury and psychological health conditions and their families. Educational programs were also expanded this past year for adults in transitional housing and children in foster care, reaching over 1100 individuals. Previously, we made a donation to the Intrepid to help rebuild the Space Shuttle Enterprise’s pavilion damaged by Superstorm Sandy. 
In past years, we have donated to Puppies Behind Bars, Heifer International, the American Red Cross, the Leukemia and Lymphoma Society, Kaleidoscope of Hope, Special Olympics, and the American Cancer Society. 
General Magnaplate set up scholarships with Endicott College and Pepperdine University, to fund programs which enable single parents to have a residential college experience with their child, and for foster children to complete their education. 
Here in Linden [New Jersey], we support our local community, contributing to emergency services, arts and education programs, donate to our town’s food bank and hire help from ARC, a county agency which helps those with disabilities find employment. 
In our plants, we’ve celebrated Earth Day for many years, cleaning up our work areas and parking lots, planting flowers and trees, and continue to enjoy vegetables from our company garden. We recycle plastic bags, bottles, cans and paper. Our California facility had solar panels installed to reduce their energy consumption, and we continue to look for ways to conserve energy and resources. We greatly appreciate the assistance of all our employees in helping us to help others and the environment all year long.
California Politicians

Will California's business-bashing politicians like Gov. Jerry Brown or his "jobs czar" Mike Rossi apologize to General Magnaplate employees for perpetuating an environment that is causing them to lose their jobs?

Will Senators Kevin de Leon or Fran Pavley, who represent parts of the Los Angeles metropolitan area, stop their continual support of the kind of regulatory madness that abuses businesses like General Magnaplate?

I don't think so. That's why we will see more companies departing California in general and the Los Angeles region in particular.

The company's leaving California news release is here.

General Magnaplate's holiday message that outlines it's impressive environmental and community contributions is here.

*  *  *
One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, updated Jan. 14, 2016.

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. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and explore whether a project makes sense. Also, he has established a Confidential One Day Coaching Program for Business Owners as a safe, economical way to explore location options in a more detailed way.

Joe is a keynote speaker on the benefits of relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. For more information, see Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsultReach Joe directly through his Contact Page

Wednesday, April 13, 2016

Cities With ‘Top Talent’ Win in Business Location Decisions

Today's Wall Street Journal carries an excellent story about the challenges companies face in finding locations that have employees with the proper skills. In my experience, talent availability is the top consideration in selecting communities as destinations for relocating or expanding companies.

US Map in BlueI received an email summarizing the story from Andy Levine, President and Chief Creative Officer of Development Counsellors International in New York. Its such a good digest that I'm passing it along (with his permission, of course) here:

“Firms Flock to Cities with Top Talent” is the headline of an article in today’s Wall Street Journal by reporter Lauren Weber.
For Salesforce and Cisco Systems, two companies profiled in the article, recent location decisions focused on a simple question: Where can we find the right talent? The article suggests companies are using new data sets to answer this increasingly important question:
  • A new tool called LinkedIn Economic Graph to identify the locations of potential job candidates with targeted skill sets
  • A close look at four-year universities and high-quality community colleges with relevant majors that can serve as feeder systems for a specific labor force
  • Review of online job ads to assess supply and demand for specific positions
In an interesting reversal, one unnamed aerospace company used “troves of resume and other data” to identify cities that had relevant workers with migration patterns that suggested a willingness to relocate for new job opportunities. They then spent their recruitment budget seeking to woo candidates from these talent-rich cities to their location in Seattle.
Read the full WSJ article here.

I thank Andy at Development Counsellors International, whose site is here.
* * *
One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, updated Jan. 14, 2016.

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. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and explore whether a project makes sense.

Joe is a keynote speaker on the benefits of relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. For more information, see Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsultReach Joe directly through his Contact Page

Wednesday, March 30, 2016

California Legislature Considers More Business-Bashing, Job-Killing Bills

As each year passes the California legislature introduces and often enacts increasingly severe measures that damage the state's business climate.

We need only look at the newest summary of legislation that the California Chamber of Commerce issued yesterday. Seeing some of the shocking language in the bills – note especially the italicized parts – makes me wonder what planet Sacramento legislators came from, or perhaps I should say what solar system California voters came from.

Calif State Assembly logoAfter reading the list, will anyone wonder why some businesses can’t wait to leave California for a friendlier state?

A shortened and edited version of the announcement follows:

The California Chamber of Commerce released a preliminary list of job killer bills to call attention to the negative impact that proposed measures would have on the state’s job climate and economic recovery if they were to become law. The list is preliminary because CalChamber expects to add more bills to the list as legislation is amended.

“These job killer bills represent the worst of the worst legislative proposals currently under consideration by lawmakers,” said Allan Zaremberg, President and CEO of the Chamber.
“Whether they create barriers to providing affordable housing for workers, or increase costs for companies trying to grow or stay in business, these job killer bills should not become law,” he said.

Calif Senate LogoThe preliminary list of 2016 bills along with 2015 carry-over bills follows:

Increased Labor Costs

SB 1166 (Hanna-Beth Jackson; D-Santa Barbara) Imposes New Maternity and Paternity Leave Mandate — Unduly burdens and increases costs of small employers, with as few as 5 employees, as well as large employers by requiring 12 weeks of protected employee leave for maternity or paternity leave, in addition to up to four months of existing pregnancy disability leave, for employees who have worked for the employer one day, as well as exposing employers with 50 or more employees to lawsuits for failing to provide 24 weeks of protected leave in a 12-month period.

SB 878 (Connie Leyva; D-Chino) Mandated Scheduling Requirement — Eliminates worker flexibility and exposes employers to costly penalties, litigation, and government enforcement, by mandating employers in the retail, grocery, or restaurant workplace, including employers who have hybrid operations that include a retail or restaurant section, to provide a 21-day work schedule and then face penalties and litigation if the employer changes the schedule with less than 7 days notice, even when the change is at the request of the employee.

SB 3 (Mark Leno; D-San Francisco) Automatic Minimum Wage Increase — Unfairly imposes a potential 50% increase in the minimum wage by 2022 (actually an 87% increase over an 8-year period when combined with the last increase just implemented in January 2016), and automatically adjusts minimum wage beyond 2018 according to national inflation, with no “offramps” to suspend the indexing if employers are struggling with other economic factors or costs.

Tax Increases

SCA 5 (Loni Hancock; D-Berkeley) Split Property Roll — Undermines the protections of Proposition 13 by unfairly targeting commercial property owners and increasing their property taxes by assessing their property based upon current fair market value instead of acquired value. Such costs will ultimately be passed on to consumers and tenants through higher prices and will result in job loss as businesses struggle to absorb such a dramatic tax increase.

ACA 8 (Richard Bloom; D-Santa Monica) Lowers Vote Requirement for Tax Increases — Adds complexity and uncertainty to the current tax structure and adds pressure to increase taxes on commercial, industrial and residential property owners by giving local governments new authority to enact special taxes for storm and wastewater infrastructure, including parcel taxes, by lowering the vote threshold from two-thirds to fifty-five percent.

Burdensome Environmental Regulations

SB 32 (Fran Pavley; D-Agoura Hills) Slows Economic Growth — Strengthens the already excessive authority of the California Air Resources Board and Increases costs for California businesses, makes them less competitive, and discourages economic growth by adopting further greenhouse gas emission reductions for 2030 without regard to the impact on individuals, jobs and the economy.

SB 654 (Kevin de León; D-Los Angeles) Creates Unworkable Hazardous Waste Permitting Process — Discourages investment in upgrading and improving hazardous waste facilities by shutting down hazardous waste facilities if the Department of Toxic Substances Control (DTSC) fails to take final action on the permit renewal application within a specified timeframe, even if the permit applicant acted diligently and in good faith throughout the permit application process.

California Oil Production Barriers

AB 2729 (Das Williams; D-Santa Barbara / Tony Thurmond; D-Richmond) Gas Price Increase — Jeopardizes the production of California based fuel supply and increases costs to the industry by revising the definition of an idle well and requiring permanent closure of 25% of California’s long-term idle wells each year.

AB 1759 (Rob Bonta; D-Alameda) Gas Price Increase — Jeopardizes the production of California based fuel by banning the use of hydrogen fluoride and hydrofluoric acid at facilities that use more than 250 gallons and are located within two miles of a residence, notwithstanding the fact that there are significant safety regulations in place at the local, state and federal levels.

AB 1882 (Das Williams; D-Santa Barbara) Gas Price Increase — Jeopardizes the production of California based fuel by substantially complicating the existing permitting process for the Underground Injection Control program by imposing duplicative requirements and requiring the Division of Oil, Gas and Geothermal Resources to cede aspects of its permitting authority to the regional water quality control board.

Affordable Housing Barriers

AB 2162 (Kasen Chu; D-San Jose) Erodes Housing Affordability — Increases the cost of and delays housing and other development projects by eliminating existing mitigation options for impacts to oak woodlands under the California Environmental Quality Act and instead imposes an entirely new and separate permitting process for the removal of even one valley oak tree.

AB 2502 (Kevin Mullin; D-South San Francisco / David Chiu; D-San Francisco) Erodes Housing Affordability — Increases the cost and reduces the supply of housing by authorizing local governments as condition of development to impose a costly and inflexible price-controlled inclusionary housing requirement and, in doing so, legislatively repeals an established court decision upholding developers’ ability to set initial rental rates for new dwelling units.

SB 1150 (Mark Leno; D-San Francisco) Erodes Housing Availability — Increases risk and the cost of residential loans by allowing a party not on the mortgage loan to interfere with appropriate foreclosures and creates a private right of action for violations of overly complex and burdensome requirements.

SB 1318 (Lois Wolk; D-Davis) Erodes Housing Affordability— Inappropriately leverages necessary affordable housing in order to solve infrastructure issues with the consequence that the housing won’t be built by imposing requirements on water or waste water districts to serve certain communities first.

Meritless Litigation

SB 899 (Ben Hueso; D-Logan Heights) Increased Meritless Litigation Costs — Drives up consumer costs and increases frivolous litigation similar to the disability access lawsuits in California, by prohibiting a retailer or grocery store from discriminating against a person on the basis of gender with the price of goods and subjecting them to a minimum $4,000 of damages for each violation.

Arbitration Discrimination

AB 2667 (Tony Thurmond; D-Richmond) and AB 2879 (Mark Stone; D-Scotts Valley) Arbitration Agreements Discrimination — Unfairly discriminates against arbitration agreements and therefore is likely preempted by the Federal Arbitration Act, which will lead to confusion and litigation. Such will be the result by prohibiting arbitration of Unruh Civil Rights violations made as a condition of a contract for goods or services (in AB 2667) and by prohibiting an employer from requiring an individual who is a member of the military to sign a mandatory arbitration agreement as a condition of employment (in AB 2879).

To see future changes to the CalChamber list, go to www.cajobkillers.com

If you are a California resident and want to see your legislator’s record on business-related votes in 2015, see here.

One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, updated Jan. 14, 2016.

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. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and explore whether a project makes sense.

Joe is a keynote speaker on the benefits of relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. For more information, see Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsult.

Friday, March 25, 2016

Will be on KABC 790 AM LosAngeles radio at 10:36 this morning

On with host Peter Tilden to address the tough California business environment. Listen here: http://www.kabc.com/peter-tilden/

Thursday, March 24, 2016

We Must Create Accountability or California Will Keep Bashing Businesses

Recently, when my firm completed a study that found about ten thousand companies left California in the last eight years, it hardly surprised leaders in the business community.

Some say there is one thing in California worse than taxes – and that is the complex set of directives enforced by unforgiving state inspectors. In fact, many business owners consider the state’s regulatory environment to be worse than its notorious tax burden.

Kathye & Jim Rietkerk, Kallisto Greenhouses
Kathye & Jim Rietkerk,
Kallisto Greenhouses
California’s political elite and their regulatory enforcers don’t understand that business owners enjoy running their enterprises and virtually all of them try to do the right thing. One example can be found in Kallisto Greenhouses, which closed in Fontana in response to Sacramento stinging them from many directions like a group of killer bees.

Suffocating a Nursery

Even a non-polluting, greenhouse-gas reducing, job-creating, tax-paying, greenhouse run by good employers can’t escape the punishing regulatory noose.
Kallisto Greenhouses operated with a peak of 36 employees shipping tropical indoor plants to ten western states and Calgary Canada since 1977. But the owners padlocked the doors because of actions by the California Air Resources Board (CARB) and California's Occupational Safety and Health office (Cal-OSHA).

CARB Calif Air Resources BoardCARB required heaters that underperformed despite costing tens of thousands of dollars and also insisted that their truck – which almost certainly would be legal in most states – be replaced by a new vehicle with an unaffordable price tag.

"Contributing factors included the ripple effect of an increase in the minimum wage and addition of paid sick leave," said Kathye Rietkerk, co-owner. "But the nail in the coffin was Cal-OSHA. We got a letter saying we had the choice to invite in a visit by a Cal-OSHA consultant to review employee manuals or take the chance of being visited by an inspector."

Outrageous Fine for Simple Mistake

Naturally, the company opted for help from the state’s consultant. Upon his arrival he noted that a numerical calculation on a certain OSHA form was in the wrong column, which resulted in a $5,000 fine. Not that the number was incorrect. Only that it was in the wrong place on the form.

By the time he was done, the fines he felt he could assess had he visited not as a consultant but as an "inspector" would have been in the hundreds of thousands of dollars for similar mistakes.

Cal OSHA“Also, the corrections to procedures and existing manuals were deemed not exact enough to suit the Cal-OSHA consultant, so it took six months of staff time to satisfy him.” she said. “They wanted us to be rigorous on things that aren’t that important.” (Note: Cal-OSHA rules are more stringent than required by federal OSHA regulations.)

For example, the agency wanted a requirement that mandatory disciplinary proceedings be initiated for certain employee mistakes even if the employer doesn’t want to treat long-term employees that way.

“To be forced to be inflexible makes you an adversary to your employees, and we should be allowed to determine when discipline makes sense and when it does not,” Rietkerk said. I contacted workplace expert Tom Martin of People Management Professionals in Riverside, Calif., who confirmed her viewpoint that Cal-OSHA indeed makes inflexible “one size fits all” demands.

Company Hit Hard

Meanwhile, the company's operating costs kept increasing as water bills rose despite having installed $300,000 in sophisticated water-saving technology, health insurance prices went up, electricity became more expensive, and taxes continued to climb.

“The day after the OSHA consultant left we called the developers who had been seeking to buy our property for yet another distribution warehouse to serve ‘products imported from abroad,'" Rietkerk said. The company owned ten acres, six of which were covered by 257,000 square feet of greenhouses.

Kallisto Greenhouses had loyal employees (76 percent with more than 20 years of service) and offered health insurance since the early 1980’s, three weeks vacation to long-term employees, seven paid holidays and flexible working conditions.

Kallisto Greenhouse
Kallisto Greenhouse
“We were forced to make decisions we never dreamed of because of the incredibly hostile small business environment in California,” she said. “It is sad that government programs that are ideally intended to protect employees can result in complete job loss instead."

“We got into business because it was enjoyable and we loved producing a product that enhanced people’s lives. People who create jobs are not ‘the enemy’ and we were grateful to have choices when the onslaught of regulations made the choice of closing more attractive,” Rietkerk said.

It appears that the majority of California legislators, Gov. Jerry Brown's "jobs czar" Michael Rossi, and state bureaucrats are just fine with ignoring the hardships the state imposed on Kallisto Greenhouses and continues to inflict on other businesses.

Hold the State Accountable

It's time we make life uncomfortable for state inspectors who have been allowed to remain anonymous while inflicting unreasonable demands on entrepreneurs.
I have such a way – it’s called accountability.

Let’s begin requiring that California regulatory agencies publish online the names of inspectors every time a business shuts down or leaves the state because they decided there was a regulatory “failure.” The inspector would be free to list the details of infractions, but, in the same posting, an option should be available for the company’s leadership to tell their side of the story.

Doing so would help journalists and the public better understand how harsh treatment by public agencies motivates companies to transfer jobs and capital to other states or close their doors.

California needs such disclosures because the majority of voters are ill-informed about what it takes to run a successful enterprise. Such voters elect majorities of business-bashing politicians to the state legislature and to city councils in liberal strongholds like Los Angeles and San Francisco.

Consider the popularity of Presidential Candidate Bernie Sanders, a fierce socialist who attracted a huge crowd in San Diego on Tuesday. It seems that the ranks of voters antagonistic toward business are expanding.

If we fail to expose how California politicians and their regulatory armies treat companies, the proverbial man in the street will continue to be unaware of the pain that leaders of commercial enterprises have to endure.

An Astonishing Contrast

Many California Democrats represent a Jekyll-and-Hyde disorder by being contemptuous toward business interests while coddling state agencies that are guilty of far worse behavior.

Calif HSRAFor example, legislators recently blocked the State Auditor from examining financial mismanagement at the California High Speed Rail Authority (CHSRA); they did that after eliminating the rail agency’s obligation to report twice yearly on a project likely to cost in excess of $100 billion. Now, the CHSRA must report only once every two years despite evidence of serious cost overruns, dubious changes in plans and multiple statements that lack credibility.

Members of the Authority’s board ignore the stipulations contained in Proposition 1A, which voters passed into law in the 2008 election. California propositions that pass at the ballot box become law, and that high-speed rail law is being violated in so many ways that the list is too long to publish here.

Members of the Authority’s board continue to ignore the stipulations contained in Proposition 1A, which voters passed into law in the 2008 election. California propositions that pass at the ballot box become law, and that high-speed rail law is being violated in so many ways that the list is too long to publish here.

Can you imagine the outcry if Kallisto Greenhouses had copycatted the High Speed Rail Authority by demanding elimination of audits by the California Franchise Tax Board or the Internal Revenue Service? Or obfuscated details in documents required by state law?

The double standard in the way California treats businesses and public agencies is enough to turn the stomach of any business owner. Without more voters becoming concerned, we will continue to see company relocations to friendlier states, or – as in the case of Kallisto Greenhouses – simply go out of business.

One focus of this blog has been to address California’s hostility toward business, as addressed in the new study, California Business Departures: An Eight-Year Review 2008-2015, updated Jan. 14, 2016.

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. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and explore whether a project makes sense. See a summary of the three phases of the project at Finding Help for Your Location or Relocation Project.

Joe is a keynote speaker on the benefits of relocating out of high-tax, high-cost, over-regulated states (California, New York, Illinois and Connecticut are among the worst) to friendlier business environments. For more information, see Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsult.