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.

By Katy Grimes

When a business closes it’s doors forever, the impacts are far-reaching.

The announcement of the upcoming closure of the Campbell’s Soup plant in Sacramento will have regional and statewide impact.

Econ. 101

I may have been a political science student, but my husband is a longtime Sacramento manufacturer. For many years I lived and worked Econ. 101 lessons alongside 250 employees.

My businessman husband was an economics major in college and frequently reminds me that economics education in college has seen a dramatic shift. There weren’t many Keynesian economists in universities back then. Unfortunately, today, Keynesian economics seems to be the only economic theory coming out of universities.

Keynesian economics is an economic theory stating that aggressive government interventions in the marketplace and monetary policy are the best way to ensure economic growth and stability.

Economist Walter Williams has explained for many years the reality of the free market economy in which businesses must make a profit in order to survive: “In the market, when a firm fails to please its customers and fails to earn a profit, it goes bankrupt, making those resources available to another that might do better. That’s unless government steps in to bail it out.”

Williams has long argued against Keynesian economics, “The ruthlessness of the market discipline, which forces firms to please customers and thereby earn profits, goes a long way toward explaining hostility toward free market capitalism.”

Campbell’s Soup

Campbell’s Soup has five large plants in the United States. But the Sacramento processing plant with 700 employees is the only large one closing. Campbell’s Soup also will close a tiny New Jersey spice plant with 27 employees and consolidate spice production at its Milwaukee plant.

What hasn’t been reported are the many suppliers and vendors associated with a large manufacturing plant like the Campbell’s Soup Sacramento location.

Corrugated and boxes

A Sacramento box manufacturing plant owner recently told me the story of Western Corrugated. In 1963, Sacramento company Western Corrugated was a major supplier to Campbell’s Soup in Sacramento. The box maker had to store so much for Campbell’s Soup that stacks of the box materials stood 25-30 feet high within the building. The Sacramento company shipped truckloads out every day to Campbell’s Soup.

During the very busy summer tomato season, when Campbell’s Soup ramped up efforts to can tomatoes, Western Corrugated’s 65 employees grew to 110.

Western Corrugated is gone. But whatever box maker supplies Campbell’s today will lose it’s largest client.

Campbell’s Soup also has an on-site can manufacturer. This business will also lose out, and be forced to lay off many employees.

Campbell’s Soup has its own cogeneration plant on site, which many speculate is one of the biggest reasons the soup company decided to close the Sacramento plant. Cogeneration is the use of a heat engine or a power station to simultaneously generate both electricity and useful heat. All thermal power plants emit a certain amount of heat during electricity generation, subjecting Campbell’s Soup to California’s stringent cap and trade emission laws and carbon emission credit auctions because of AB 32, the Global Warming Solutions Act of 2006.

The carbon emission credits are nothing more than a tax on business, and the caps on emissions are fabricated by the California Air Resources Board.

The Campbell’s Soup Sacramento plant is so large and significant the railroad runs right to it.

Campbell’s Soup closure

With the closure of Campbell’s Soup, the Sacramento region and all of California will lose. The label manufacturers, can manufacturers, the energy produced for SMUD through the cogeneration plant, property taxes, employment taxes, corporate taxes, and the flow of revenue from employees living in the region — all will be lost.

The real impact of a business closure is the city the business supports. The payroll alone for Campbell’s Soup is between $35 and $40 million a year.

Campbell’s Soup announced that they will ship all of the Sacramento plant equipment out of state to their other U.S. plants.

California government

With the new Democrat supermajority in the Assembly and Senate, and with a Democratic governor, California could see even greater taxes in the near future, particularly on the wealthiest Californians and corporation.  Perhaps taxing not just income, but assets. There has been talk about a wealth tax for many years in California, with some politicians insisting that this helps to equal out the “wealth inequality” in the state.

A real stimulus to the economy is a business, and the fiscal effect it has when contracting with other businesses, as well its employees and their spending ability. California politicians ought to be careful not to kill off the only real stimulus left in the state.

By John Seiler

The progressive California utopia foisted on us by ex-Gov. Arnold Schwarzenegger and current Gov. Jerry Brown is killing jobs by the thousand. The latest:

“In an abrupt announcement that caught state and local business officials off guard, cable giant Comcast announced Tuesday that it’s closing all of its California call centers, including one in Natomas that employs about 300 workers….