California encourages business flight

December 21, 2012 - By Joseph Perkins

ChevronDec. 21, 2012

By Joseph Perkins

Employees at Chevron’s San Ramon corporate headquarters received an unexpected email yesterday. It notified them that a quarter of their jobs are being moved from California to Texas.

The oil giant, the Golden State’s largest corporation, offered no detailed explanation for the mass transfer. But I suspect it had something to do with California’s decidedly unfriendly business climate.

Indeed, Forbes magazine this month ranked California one of the 10 worst states for business based on six factors: business costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life.

“California is littered with problems,” the magazine decries.

It ranks last, Forbes noted, in Pollina Corporate Real Estate’s study of the states with the best financial incentive programs and state economic development efforts. Moody’s rates California’s bonds A1, the second lowest of any state. And a study by the Mercatus Center, “Freedom in the 50 States,” ranked California’s regulatory climate the fourth worst among the states.

Meanwhile, California has the fourth-highest tax burden, according to a study by the Tax Foundation. And energy costs here in the Golden State are 33 percent above the national average.

What amazes is that lawmakers in Sacramento don’t think the state’s business climate so bad. They actually think that California is a great state for business.

Chevron obviously disagrees. That’s why it’s transferring 800 jobs from San Ramon to Houston. And the oil giant’s move is no aberration. Corporations are fleeing California for states that don’t view big business as a necessary evil.

Leaving

Indeed, Forbes noted that Comcast shut down its Northern California call centers this year, citing “the high cost of doing business in California.” Some 1,000 workers lost their jobs.

It also mentioned Campbell’s Soup, which padlocked its Sacramento factory, displacing some 700 workers. The company decided to move production to Texas, North Carolina and even Ohio of all places.

That’s not to say there are no benefits to doing business in the Golden State. Indeed, Forbes lists several.

The state has a $2 trillion economy, the world’s ninth largest, which is projected to expand 3.6 percent annually over the next five years (Lord willing and the creek don’t rise).

Some 10 percent of the nation’s 1,000 largest public and private companies are based in California. And they are staffed at the highest levels by very well educated workers, many of whom are products of the state’s first-rate universities.

Venture capital

California’s venture capital community continues to spur innovation, investing some $36 billion in promising home grown companies over the past three years, four times the total of any other state.

And, of course, California has the best weather in the country.

Those attributes keep many California corporations from following the examples of Chevron, Comcast, Campbell’s Soup and numerous others that have moved some or all their operations to more business-friendly states.

But even those California loyalists may eventually decide to flee if Sacramento continues to raise taxes, impose regulations and otherwise pursue policies that make it prohibitive to do business in the Golden State.

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Comments(32)
  1. RT says:

    It’s not only that business are leaving in droves, but added to that number is the number of start up business that die due to having to deal with the anti business climate that is California.
    Another issue is all those that are unemployed as the result of the anti business climate in California.
    We are losing businesses and the qualified workers that employers need.

  2. us citizen says:

    I totally agree. Plus we are being invaded by other countries that want us to change for them.

  3. Rex the Wonder Dog! says:

    The oil giant, the Golden State’s largest corporation, offered no detailed explanation for the mass transfer
    ==
    It is speculation, but with good reason, if they are moving for CA’s business climate. They should have said that if that was indeed the case….CA cannot fix their problems unless they are made aware, not that they dont already know, but it helps to say why.

  4. Hondo says:

    There is no way Kali’s economy will expand 3%, not with the huge tax increases at all levels of govt after the last election. Sure, a thousand huge business are based on Kali and are doing ok, but few of them are expanding here. The rest of the thousands of businesses in Kali are in shock, what with the tax increases and Obama care(the largest tax increase in the history of the world on the lower and middle class) on the way.
    The liberals here think that the dems are succeeding economically with an unemployment rate at over 10% for 3 years now. When the rest of the country, including dem run states, are coming back nicely. There is no place on earth that has more ways to make more economic growth and jobs than Kali.
    Tell me you fine liberal writers, who do you blame for this catastrophe the dems have wrecked here. Aaanold governed like a dem. How bout Bush? No, how bout Reagan? The Koch bros don’t hang here. Inform me.
    Hondo…

  5. SeeSaw says:

    I blame the lax rules in our country that allow corporations to set up shop in other countries and use slave/child labor to manufacture their goods, while at the same time, denying workers in this country the opportunity to make a living. They then import those goods into our country and charge our citizens cut-throat prices to purchase them. And you blame the dems for everything? Don’t you suppose there are some Republicans in on that!

    I blame Wall Street in conspiring on the housing bubble, which was the final straw in our downslide. If you don’t know what I am talking about, you need to rent the documentary film, “Inside Job”.

    The Koch Bros. don’t have to hang here, in person, to affect CA politics with their multi-million dollar donations to various campaigns all over the U.S., Hondo. It was speculated that they are one player behind the secret “dark” money, $11,000,000, that was funneled through a non-profit AZ group, meant to defeat Props 30, and pass Prop. 32. I hope that will be clarified in the future, and those responsible will be charged for illegal money-laundering.

    In the end, CA voters, Dem and Republican alike were smarter than anyone gave them credit for, when all those millions did not defeat Prop.30 and did not pass Prop. 32. I was beginning to wonder when the CA voters elected GAS–stupidist political move by voters anywhere! And, I was not one of them!

  6. Those people won't be moving with their jobs to Texas says:

    The average worker at the San Ramon Chevron headquarters enjoys the good life of the San Francisco Bay Area. They’ll find something else in the area.

  7. jimmydeeoc says:

    Seesaw…….

    a serious question: Which planet DO you live on?

    Anyone with an IQ bigger than their hat size can see this state has been on the shnide for two decades now. (Check migration stats if you don’t believe me.)

  8. The Modified Ted Steele Methodologies (tm) says:

    We’ve been “on the shnide”? I did not know that.

  9. BobA says:

    jimmydeeoc:

    I read SeeSaw’s comment and was amazed by its naivete, vacuousness and utter ignorance and indifference to the government’s culpability in the matter.

    Her views are typical of people who form their opinions based on what they see and hear on TV. Perhaps if she bothered to do her due diligence and research the facts underlying the issues she raised she would be compelled to come to a different conclusion.

    That’s not likely to happen though. People like that feel safe inside their political pigeon holes and mindlessly parrot the political dogma fed to them. They dare not learn the truth or even know the truth least it conflicts with their preconceived notions of what is truth & facts.

  10. Rex the Wonder Dog! says:

    SeeSaw says:

    I blame the lax rules in our country that allow corporations to set up shop in other countries and use slave/child labor to manufacture their goods, while at the same time, denying workers in this country the opportunity to make a living.
    ==
    The stars have aligned, seesaw made a valid argument.

    We cannot compete against countries that do not have the same high environmental and human rights standard that the US has. Pretty simple.

    The second thing is we ALLOW countries, like Japan and the steel industry, to come into this country-OUR COUNTRY- and use unfair trade practices to take over-completely take – American industries.

    WE built the USA AND the world with Carnegie/US Steel, then Japan in the 1970′s manipulated the US steel market and just took it over. Same with Televisions, radios, shoes, you name it we have allowed other countries to wreck our industries.

    Ross Perot really covered this issue in his 92 Presidential bid, worth going back and reviewing.

  11. Rex the Wonder Dog! says:

    jimmydeeoc says:

    Seesaw…….

    a serious question: Which planet DO you live on?
    “Planet Trough Feeder”
    Seesaw cannot help it, she worked in gov her entire life and has no idea what goes on in th real world, in real life………

  12. The Modified Ted Steele Methodologies (tm) says:

    Seesaw– You have these clowns rattled—lol, again!— it’s fun to watch!

    0 for 14 ™!

  13. SeeSaw says:

    Oh you, Jimmy and Rex and Bob, are really sad sacs. Rex, I am much older than you and I live in the real world. I was raised in WY and have spent my entire adult life in CA. If living in CA is not being in the real world, and living real life, I don’t know what is! My spouse is from the private sector as are my children and grandchildren. I simply had a job, which simply happened to be in the municipality where I reside. Let’s hear how you made it–in your own real world.

    That said, I find it kind of apalling, that in view of the grave pain that some citizens had been put through the past week, you have continued your constant gripe and whine toward our state and our country. Can’t you find a portion of your time for a little concern about the circumstances of others! Smell the coffee, for god’s sake! Life is short–you are only guaranteed this moment!

  14. Rex the Wonder Dog! says:

    Hehehhe….so easy to get seesaw all spun up :)

  15. Bill - SanJose says:

    Hondo is right.
    Rex is right.
    US Citizen is right.

    We are exploring moving as much as we can out of state so if we have to bail, we can hit the ground running.

  16. The Modified Ted Steele Methodologies (tm) says:

    Poodle— LOL— YOU have never spun up ANYone out here! YOU are simply dull. Sorry little buddy.

  17. Rex the Wonder Dog! says:

    Teddy= SPUN up by the Rotti ;)

  18. The Modified Ted Steele Methodologies (tm) says:

    Poodle— Should we let the grown up normal people have their blog back yet? mmmm go ahead….like a small child…..have the last word! Happy Winter!

  19. Hondo says:

    Seesaw:
    What I was looking for is why CALIFORNIA is doing worse than any other state. By your reasoning, all 57 states( Obama’s number, not mine) would have an unemployment rate above 10%. Why is Kalifornia different? Why is Kali worse? Why is North Dakota below 5% (they just elected a democrat senator).
    Hondo…..

  20. Rex the Wonder Dog! says:

    Teddy, the ONLY child here is YOU!!!!!!!! (and seesaw) ;)

  21. SeeSaw says:

    The “57 states” comment was slip of Obama’s tongue–you and everyone else who likes to refer to it, know that. Why is CA doing worse, than any other state? You don’t have to look too hard to understand the answer to that question. The biggest employers in So CA were of the defense industry. Everyone was an engineer, a draftsman, a clerical worker, etc. in the defense industry. (My first job as a CA newcomer was in the defense industry.) Also, we had the manufacturers of our domestic goods, Kaiser Steel, General Electric, Fruehof, Skyline, et al. Those industries are all gone now, because the defense industry is gone and the consumers of those products have moved out of CA, as a result of their jobs being gone.

    When the interest rates went down in early 2000, and the housing bubble arrived, everybody in CA could afford a home (or so they were told by the mortgage brokers) and the construction industry thrived; the prices of the new homes and used homes went through the roof. Everybody thought they had to get in before they got left out in the cold. Then the bottom fell out in September, 2008–instant recession. Those poor unsophistacated homeowners were losing their jobs; their mortgages were resetting, and there was no way they could ever make the payments. (I see at least one car a day, being repossessed and loaded on the truck–never saw a sight like that prior to 2008.)

    CA has 37 million inhabitants. Nevada has a higher unemployment rate than CA, because all its casino customers are gone.

    I have never been to ND, but I think it is a one-employer state –oil and there a lot of job openings there. Other small states like ID, MT, UT, WY, NM, that were big players in the copper, silver, and coal mining industries have survived the recession by becoming boutique/bedroom states (vacation destinations). States that never had to participate in this recession, are my home state of WY, the other Dakota, Oklahoma, and Texas.

    I don’t know how long it is going to take Cali to pull out of this morass. CA is too big–the natives can’t all open antique stores and art galleries. Too many people want to live here. I don’t blame them–I love Cali and will be in Cali until my dying day.

  22. The Modified Ted Steele Methodologies (tm) says:

    Well said SEESAW— and Merry Christmas! I too LOVE California! I think alot of these guys out here have GEED, (Gov. Employee Envy Effective Disorder). Sadly, there is no cure. I hope they have a less frustrating 2013. I would advise them to blog post less and maybe get outside more, exercise, cut down on the diet cokes ™ and the donuts a bit etc.
    God Bless and happy Kwanza !

  23. BobA says:

    SeeSaw:

    2 things you should familiarize yourself with before:

    1- The Community Redevelopment Act
    2- Fed monetary policy.

    Once you’re understand the ramifications and nuances of these 2 issues, then you can offer a cogent argument based on relevant and tangible facts and not your feelings.

  24. BobA says:

    Ted:

    Why would I envy a government employee? I did infinitely better in the private sector. Stock options, annual bonuses and a six figure salary over the last 16+ years beats a government paycheck anytime or anywhere.

    Come again about Government Employee Envy? You need to work on that joke to give it a little more umph.

  25. Rex the Wonder Dog! says:

    Why would I envy a government employee? I did infinitely better in the private sector. Stock options, annual bonuses and a six figure salary over the last 16+ years beats a government paycheck anytime or anywhere.
    ==
    I suspect you did this with more than a GED. The fact is the public safety jobs are unskilled, semi skilled, blue collar jobs that pay $100K+ in BASE salaries and up to $150K in OT (managers in the real world do not get OT, and managers are the only ones with $100K+ base salaries in the real world). Pensions in the $100K+ range indexed for inflation for life starting at age 50 are easily worth another $100K+ in compensation, no where in the real world does any job that has just a GED education requirement receive a potential $350K compensation package. Even mid/upper level managers with Ivy league MBAs in Fortune 500 companies don’t get that level of compensation. The median salary for a HS grad in CA is probably around $15K per year, in gov that GED job is 20 times that amount.

  26. Rex the Wonder Dog! says:

    The Modified Ted Steele Methodologies ™ says:
    Well said SEESAW— and Merry Christmas! I too LOVE California! I think alot of these guys out here have GEED, (Gov. Employee Envy Effective Disorder). Sadly, there is no cure. I hope they have a less frustrating 2013. I would advise them to blog post less and maybe get outside more, exercise, cut down on the diet cokes ™ and the donuts a bit etc.
    God Bless and happy Kwanza !

    ==
    OMG, this is the funniest comment Teddy has ever made. Teddy, you are indeed loved her!! Did you ever think about stand up if your CalTURDS pension is cut ;)

  27. SeeSaw says:

    If you are as well off as you claim, Bob, go away and leave the rest of us alone! You need no help and you are of no concern.

  28. dltravers says:

    North or South Dakota is not a fair comparison. The shale oil boom is driving huge profits. California has much to offer despite its problems. I don’t like the direction of our state but I am not moving until they tax me out of my house like they did to people in the ‘70’s.

    I am sure I will be dislocated as a worker again, retraining and moving to another field trying to keep up with the way immigration, regulations, and taxation changes our economy. Things move quickly when it comes to job security as private sector companies have to make changes. Even the highly respected public sector workers are taking cuts…who would have thunk it?

  29. BobA says:

    Rex:

    It took an EE from a Cal State University,changing jobs several times and landing at a small start up company founded by one of my old college engineering professors that is now a fortune 500 company.

  30. BobA says:

    SeeSaw:

    I case you haven’t heard or aren’t aware, in America freedom speech applies to all citizens of the United States of America regardless of race, creed, color or income.

  31. TomR says:

    Not surprised at CalWatchDog’s story and presumed reason for Chevron’s memo. The parent company for CalWatchDog is Pacific Research Institute a pretty well known conservative, free market, think tank in San Francisco. Pretty sore at the Democratic control of California’s legislative branch, I would think. Oh well, the beat goes on!

  32. Rex the Wonder Dog! says:

    Not surprised at CalWatchDog story and presumed reason for Chevron’s memo. The parent company for CalWatchDog is Pacific Research Institute a pretty well known conservative, free market, think tank in San Francisco. Pretty sore at the Democratic control of California’s legislative branch, I would think. Oh well, the beat goes on!
    ==
    Tom, here is an idea, how about telling us why the story in your eyes is wrong or misleading, instead of the usual psycho blabber political rant.

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