Joseph Vranich, president of site selection consultants Spectrum Location Solutions (VLS) in Irvine, places the blame on the Golden State's "hostile" business environment.
The 2015 Chief Executive Magazine annual survey of business climates was completed by 511 CEOs across the U.S. States were measured across three key categories to achieve their overall ranking: Taxes and regulations, quality of the workforce, and living environment, which includes such considerations as quality of education, cost of living, affordable housing, social amenities and crime rates.
For the 11th year in a row, Chief Executive Magazine found California to be the "worst state for business in 2015." This placement is not "near the worst" but actually "THE WORST" ranked as 50 out of 50, the lowest rank possible for each of 11 years. CEO's comments include: "California could hardly do more to discourage business if that was the goal." "The state regulates and taxes companies unreasonably." "California is getting worse, if that is even possible."
But despite the growing anti-business environment, California's economy grew for decades due to wonderful scenery and climate, a workforce with technical expertise, and trade access to Asian nations.
But since the start of the Great Recession and accelerating after Brown's election as governor in 2009, a mass exodus of businesses from the not-so-Golden State to more "friendly" locations like Texas and Nevada occurred.
Between 2011 and 2012, Bureau of Labor Statistics data compiled by Bloomberg News indicated that California lost ground in a related category: the number of business establishments: "There were 1.3 million businesses in California at the end of 2012, 5.2 percent fewer than in the previous year (that's about 73,000 fewer)." Florida, another state hard hit by the bursting of the real estate bubble, and the state with the second most businesses, added new businesses at the nation's seventh-fastest rate.
The top 10 states that California businesses have relocated to over the last seven years are in the following order: (1) Texas; (2) Nevada; (3) Arizona; (4) Colorado; (5) Washington; (6) Oregon; (7) North Carolina; (8) Florida; (9) Georgia; and (10) Virginia.
Los Angeles was at the top of the list of the 10 California counties that suffered the highest number of disinvestment events. L.A. was followed by: (2) Orange, (3) Santa Clara, (4) San Francisco, (5) San Diego, (6) Alameda, (7) San Mateo, (8) Ventura, (9) Sacramento, and (10) Riverside counties.
The Report claims that the California government has a "dismissive attitude toward any suggestion that California has become economically uncompetitive." One example in 2014 when Toyota Motor Corp. announced it will move its Torrance headquarters to Plano, Texas, Gov. Brown revealed his aloofness towards business challenges 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."
Another example of concerns is evident in a comment by Ehsan Gharatappeh, Chief Executive Officer of CellPoint Corp. of Costa Mesa. In early 2015, when launching a new facility in Fort Worth, he said in testimony in Sacramento "Even if California were to eliminate the state income taxes tomorrow, that still would not be enough to put my manufacturing operations back in California."
The Report concludes that "business interests have provided an encyclopedic accounting of California's difficult environment to Gov. Brown and the Legislature to no avail." Well, SB 863 made workers' compensation a little bit less costly. But in the big scheme of things will it make any difference and stop dsinvestment in California? Read More...