Calif. business leakage is a bummer

Sept. 28, 2012

Katy Grimes: The word ‘leakage’ is the new politically correct term used by legislators, the Governor, bureaucrats and the California Air Resources Board to describe what happens when California businesses leave the state because of tax increases and stupendous regulations… as if any of them know what it means for a business to make the difficult decision to close a location, terminate hundreds of employees, and move a business.

As The Dude in the Big Lebowski said, “That’s a bummer man.”

Apparently California is ‘leaking’ businesses… as if businesses and middle class families are dribbling away, or just accidentally seeping into other states.

Tell that to the 700 employees of Campbell’s Soup here in Sacramento who are soon going to find themselves unemployed. They may have to leak, drain, seep or dribble their way to new jobs in neighboring states.

“The world’s largest soup maker said Thursday that it will close a plant in Sacramento, Calif., that has about 700 full-time workers,” the Washington Post reported. “The plant, which makes soups, sauces and beverages, was built in 1947 and is the company’s oldest in the country.”

The Sacramento plant is also the most expensive plant to operate of the remaining Campbell’s Soup plants. This is a business decision.

I happened to catch a radio interview Thursday about the Sacramento plant closure, done by a KFBK radio reporter with Senate President  pro Tem Darrell Steinberg, D-Sacramento. When the reporter asked Steinberg about the closure, the lawmaker replied that people just aren’t eating as much soup as they used to. Steinberg then suggested that the 700 employees would go out and get better union jobs in the Sacramento area.

Campbell’s Soup reports that it costs the company far more money to produce a case of soup in Sacramento, than in any of their other plants.

“The company expects the closings to result in about $115 million in pre-tax costs,” the Post reported. “Its actions will also require about $27 million in capital spending. Annual savings are predicted to be about $30 million starting in fiscal 2016.”

Now that’s a bummer.

Ironically, Campbell’s Soup is located in the City Council district Steinberg used to represent as a member of the Sacramento City Council.

More businesses leaking from California

Earlier this week, Comcast announced that it was closing four call centers in the Sacramento area, leaving 1,000 Sacramento area employees out of work.

Vision Service Plan is threatening to leave the state because thus far, the Legislature has refused to include vision plans in the state’s new Obamacare health exchange. That’s another 2,100 employees who will lose jobs.

Waste Connections, which has 5,000 total employees, announced earlier in the year that the large company will leave California for Texas, because of the unfriendly business climate, high taxes, and the hefty regulatory burden on the private sector.

The company had 200 local employees.

California lawmakers are “shoving businesses out,” Waste Connections CEO Ron Mittelstaedt said, and that California is “the worst state in the country to do business in,” the Sacramento Bee reported. “There doesn’t seem be any improvement on the horizon.”

New jobs

“Steinberg points to the 16,100 jobs created in the Sacramento region over the past year,” CBS Channel 13 in Sacramento reported.

The information about the 16,100 jobs was provided by the Center for Strategic Economic Research.

The CSER, a Sacramento firm, explains on it’s website, “Originally, the organization was structured as a research institute affiliated with California State University, Sacramento, known as the Real Estate and Land Use Institute (RELUI), and later as the Sacramento Regional Research Institute (SRRI) in conjunction with the Sacramento Area Commerce and Trade Organization (SACTO). CSER is currently structured as an independent nationally-scoped research center affiliated SACTO, one of only 29 Accredited Economic Development Organizations by the International Economic Development Council (IEDC).

The graph CSER provided explains jobs growth:

Major Sector Annual Job Gains and Losses

Major Sector Annual Job Gains and Losses (Image by: CSER)

The breakdowns are interesting – I’m not sure how education is classified as ‘private sector.” And upon closer scrutiny, much of the job growth is union jobs. And notice the California manufacturing job losses… not good.

Steinberg’s comments about soup being less popular, and Campbell’s Soup employees getting better union jobs elsewhere is telling… and smarmy, and condescending.

“Campbell’s and Comcast are two examples that have nothing to do with the so-called regulatory environment or how California and its government interacts with business,”Steinberg said, Capitol Public Radio reported. “I think these were independent decisions. They’ve said that.  The evidence is very clear the call centers are happily locating and expanding in California.”

“But, when asked if California is a more difficult place to do business than in the rest of the United States, Comcast’s Anthony Sanzio said, ‘What I can tell you is that our cost to produce products in California at a plant here in California are more than at a plant in Paris, Texas. So, you know, I think we’ll leave it at that,'” according to CPR.

But Campbells Soup and Comcast are highly regulated. Campbell’s Soup not only has its own energy plant on site, it is a food processor and considered a ‘polluter’ by the California Air Resources Board.

Comcast is regulated by the Public Utilities Commission. Take a look at the regulatory surcharges Comcast charges back to the customer: A regulatory recovery fee, universal connectivity charge, Federal excise and state and local taxes, and state and local communications taxes.

There’s a great deal of smoke blowing up Sacramento taxpayers’ skirts.

I was involved in closing my husband’s large manufacturing business two years ago, precisely because of the excessively high cost of doing business in California and Sacramento County, the excessively high taxes, putative regulations on businesses, high energy costs, and shakedowns by government agencies, all creating an inability to compete across state lines.

The only leakage from that closure were the 250 employees who had to find work elsewhere. Manufacturing employees are traditionally well-paid, skilled, and have good benefits.

Steinberg, never having spent time in the private sector, nor ever signing the front of a paycheck, does not have a clue, and truly does not know what he is talking about. And that’s a bummer man.

With the unfriendly attitude Steinberg is showing to area businesses, is it any wonder that the Democratically-controlled California Legislature has such low approval ratings?

Editor’s note: This article was edited to clarify the mission of the Center for Strategic Economic Research.


Write a comment
  1. Mntngoat
    Mntngoat 28 September, 2012, 08:13

    and all the while Sacramento claims it has nothing to do with viotile business climate in CA.

    Reply this comment
  2. Hank
    Hank 28 September, 2012, 08:16

    People may be choosing to not currently eat soup, that could change in California. We do know for sure they are not eating Foi Gras, very important.
    Campbells is subject to Cap & Trade. Want to bet that Campbells looked at the Cap & Trade rules, carbon footprint, diesel rules which affect all operations and even if they wanted to upgrade the plant all the EIR requirements and years of legal procedures and made a simple decision. No soup for California, who is the Nazi?

    Reply this comment
  3. Mike
    Mike 28 September, 2012, 08:24

    Steinberg. His true colors shine through. The accelerating downfall of California is readily apparent to all but the ones who portend to faithfully run the asylum in Sacramento, for they must be certifiable. Punishment for makers…Padding for takers.

    Reply this comment
  4. dan
    dan 28 September, 2012, 09:03

    Typical mindset in Sacramento

    Reply this comment
  5. Dyspeptic
    Dyspeptic 28 September, 2012, 11:05

    With left/liberal weasels like Steinberg, it’s hard to tell if they are just spouting self serving propaganda intended to deceive dopey reporters and the public or do they really believe this stuff? Either way it’s business as usual from the liberty and prosperity destroying Demagoguecrats who run the state. They are either disgustingly deceptive or dangerously delusional. Maybe it’s both.

    Reply this comment
  6. Hondo
    Hondo 28 September, 2012, 17:06

    I noticed there is no liberal commenting on this piece, standing up for Steinberg. How can you support such an idiotic statement. He is like Bahgdad Bob, the press guy for Saddam who went on and on on how Saddam was winning the war.
    Cap and trade will trash the food industry, anyone who runs a stove or an oven or has a walk in refridgerater ( i can’t spell. blame Kali public schools). This a drop kick in the crotch of so many immigrants (Mexicans)to this country who’s first business is a restaurant. Or mowing a lawn. Workin people whom I have worked with. If we are gonna bring them into this country, at least make sure there are jobs for them, not welfare.

    Reply this comment
  7. Ulysses Uhaul
    Ulysses Uhaul 28 September, 2012, 19:15

    Businsss is brisk, but no need to bring on more employees. Learned real good from Republicans on being ultra frugal.

    Reply this comment
  8. Tax Target
    Tax Target 29 September, 2012, 07:52

    Oh Uhaul the only thing compelling about your posts is the word Uhaul, which will a brisk business in Kalifornsky… perhaps I’ll buy their stock….

    Reply this comment
  9. Queeg
    Queeg 29 September, 2012, 10:48

    Tax. Our posts are purposeful to draw the bizarre, illogical whines of CWD loons who hide in doomsday bunkers greedily counting their money and fondling all their other lavish possessions.

    Also, they need to be encouraged to vent their bottled up manic frustrations in written word….they feel much much better.

    Reply this comment
  10. Ulysses Uhaul
    Ulysses Uhaul 29 September, 2012, 10:51

    Tax Target


    Reply this comment
  11. Romeo Yere
    Romeo Yere 29 September, 2012, 11:44

    What’s fascinating is that the [email protected] of California keep re-electing these buffoons for another term. Darrell Steinberg, Mark Leno,……………, they never get voted out despite the abysmally low approval ratings of the State Legislature. I’m pretty certain none of the incumbents will get voted out this coming November.

    Reply this comment
  12. Romeo Yere
    Romeo Yere 29 September, 2012, 11:50

    Hondo says:
    September 28, 2012 at 5:06 pm
    I noticed there is no liberal commenting on this piece, standing up for Steinberg.


    Yes I know.

    But if they do, they’ll distract and change to the offensive. Liberal mantra.

    Reply this comment
  13. Bob
    Bob 29 September, 2012, 16:21


    This is the new DemoNcrat euphemism for ruined lives.

    It sounds like something coming out of old Brown’s diaper.

    And old Stinkbug said the people losing their jobs can just get better union jobs?

    Can he really be this clueless or is he doing what he always does – lie?

    One thing we all know is Darrell doesn’t give a rat’s behind about those 700 people.

    Reply this comment
  14. Queeg
    Queeg 29 September, 2012, 17:32

    There are no plans, no goals……it’s about controlling your lives on every level.

    Don’t fight it. It’s to late to be a party plopper!

    Reply this comment
  15. Fred Mangels
    Fred Mangels 30 September, 2012, 07:58

    Private lake owners in California are the latest target of the gunsights of California regulators:

    Reply this comment
  16. Queeg
    Queeg 30 September, 2012, 13:48

    You’re all targets. You yap and whine and moan in your Hanes briefs in underground bunkers!

    Do you ever get enough of silly gloom and doom?

    Reply this comment

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