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.”

I call it: California’s U-Haul Economy.

This is from Nevada News & Views:

(Warner Todd Huston/The Union Label) – Computer software giant Adobe, computer game monster EA Games, and Internet auction king ebay are abandoning California to set up shop in Utah. Why? California’s horrid business climate and high taxes.

Adobe Systems, maker of a suite of graphics programs such as Adobe PDF, Illustrator, Photoshop, and InDesign, have announced that they are building a $100 million facility in either Salt Lake City or in nearby Utah County, Utah. The facility will bring thousands of jobs to Utah over the next few decades.

In May the Internet auction company ebay also announced a major new facility to be built in Salt Lake City. The $287 million data center will also bring hundreds of new jobs to the Bee Hive State.

Not to be forgotten, games maker Electronic Arts opened its new facility in July in Salt Lake City where around 100 employees are already at work.

These companies fleeing California’s horrid business climate are not alone. There has been a steady flow of businesses out of California for the better part of a decade. As California’s political morass worsens, as its budget woes increase, and as her politicians are proven incapable of making the hard budgetary decisions to take power from unions and chop unnecessarily lavish social programs, the state’s jobs are bleeding out. California is an a freefall the end of which is still unseen.

Here is a partial list of the large and medium-sized companies that have either moved parts of their business or have left the “land of milk and honey” for brighter prospects altogether:

Abraxis Health, Adobr Systems, Inc. Alza Corp., American AVK, American Racing, Apple Computer Audix Corporation, Apria Healthcare Group, Assurant Inc., Barefoot Motors Bazz Houston Co., Beckman Coulter, Bild Industries Inc., Bill Miller Engineering, Ltd. BMC Select , BPI Labs, Buck Knives, CalPortland Cement California Casualty Group, CalStar Products Inc., Checks To-Go, Chivaroli & Associates CoreSite, A Carlyle Company, Creel Printing , Dassault Falcon DaVita Inc. , Denny’s Corp., Digital Domain, Ditech DuPont Fabros Technology, ebay, Inc., EDMO Distributors, Inc. Edwards Lifesciences, Electronic Arts, Inc., EMRISE Corp., Facebook FallLine Corporation, Fidelity National Financial, First American Corp., Fluor Corp. Foxconn Electronics, Fuel System Solutions, Gregg Industries, Hewlett-Packard Hilton Hotels Corp., Hino Motor Manufacturing USA, Intel Corporation, Intuit of Mountain View J.C. Penney , Kimmie Candy Co., Klaussner Home Furnishings, Knight Protective Industries Kulicke & Soffa Industries Inc., LCF Enterprises, Lennox Hearth Products Inc., Lyn-Tron, Inc. Mariah Power, Maxwell America, Miasolé, MotorVac Technologies Nissan North America, Northrop Grumman, One2Believe, Patmont Motor Werks, Inc. Paragon Relocation Resources, Pixel Magic, Plastic Model Engineering, Inc. Precor, Premier Inc., Pro Cal of South Gate, Race Track Chaplaincy of Amer., Red Truck Fire & Safety Co. SAIC, Scale Computing, Schott Solar Inc., SimpleTech Smiley Industries, Solaicx, SolarWorld, Special Devices Inc. StarKist , Stasis Engineering, Stata Corp., Tapmatic Teledesic.

It should be noted that Utah is a right-to-work state.

And this is just the beginning. California’s economy has two basic features: anti-business and anti-jobs. Anyone starting or expanding a business here needs to see Dr. Leo Marvin.

Nov. 7, 2010