Wednesday, January 6, 2016

New Eight-Year Relocation Study Shows Companies Still Leaving California

California's difficult business environment was highlighted in a new study that shows thousands of companies have departed for business-friendly states and foreign nations over the last eight years.

Dollars diverted to out-of-state locations totaled $70.5 billion in the 2008-2015 period, only a fraction of the actual experience because few information sources specified capital costs.

The report by Spectrum Location Solutions provides by company name whether the relocation was partial or complete, their new location, and hundreds of quotes from company leaders saying what they found appealing about their new place of business.

"I prepared the report because California’s public officials fail to take seriously the issue of business exits,” said Joseph Vranich, an Irvine-based site selection consultant. "Using an accepted statistical model, it’s estimated that ten thousand companies have disinvested in California in the last eight years."

Companies include Fortune 500 firms down to small family owned businesses that headed for locations offering more satisfying business and lifestyle outcomes.

"Departures can have a long-lasting effect when a company establishes a foothold elsewhere and grows there big time,” he said. "One high-tech company opted for a new location, has expanded there eight times, and has hinted at a ninth iteration. 

“Anyone can verify each event on the Internet, which is a strength of the study,” Vranich said. “The study’s description of concerns by business leaders argues against plans in Sacramento for new spending and an astonishing array of new taxes and harsh regulations.”

“Companies often find operating cost savings of 20 to 35 percent in other states, which permits them to reinvent themselves if need be,” said Vranich. "The appeal isn’t necessarily to the lowest-cost states, but to lower-cost locations with the proper workforce.”

“There also is an increasing inclination to consider lifestyle factors such as housing costs, traffic congestion, crime, and secondary school performance – and many communities around the United States win out over Los Angeles and San Francisco in particular,” said Vranich. “There is considerable disenchantment with the treatment businesses receive from politicians and public agencies in those cities.”

The study finds that as California’s business climate worsens, more companies will seek a new location that is friendlier to their interests.

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 2008-2015updated Jan. 14, 2016.

Joseph Vranich is known as the Business Relocation Coach while the formal name of his business is Spectrum Location SolutionsJoe 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 to explore whether a project makes sense. See a summary of the process under "The Three Phases of a Location Project" at Finding Help for Your Location or Relocation Project.

Joe is a keynote speaker on the benefits of businesses relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. More information is available at Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsultant.