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Spectrum Location Solutions
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Joseph Vranich, Site Selection and Location Analysis Consultant Joseph Vranich, Site Selection and Location Analysis Consultant
For Immediate Release:
Dateline: Pittsburgh , PA
Monday, April 01, 2019

 
Spectrum Location Solutions https://spectrumlocationsolutions.com Helping Business Grow in Great Locations Mon, 25 Mar 2019 00:28:27 +0000 en-US hourly 1 https://wordpress.org/?v=5.1 156247439 Confucius Would Urge Chinese Companies to Avoid Californiahttps://spectrumlocationsolutions.com/2019/03/25/confucius-would-urge-chinese-companies-to-avoid-california/ https://spectrumlocationsolutions.com/2019/03/25/confucius-would-urge-chinese-companies-to-avoid-california/#respond Mon, 25 Mar 2019 00:28:27 +0000 https://spectrumlocationsolutions.com/?p=2466 Sometimes one phone call can make a person think. Really think.

That’s what happened when Cathy Zhang, host of “Engage America,” a Chinese radio show, called and asked if I would agree to an interview about my new report, “Why Companies Leave California.” She wanted to know whether its findings might be useful to China’s business interests.

I replied: “Yes, they sure are.”

Frankly, I also figured I’d have an audience of millions of people. The program is part of the Sound of Hope Radio, the most listened-to network among Chinese expatriates throughout the United States and around the world. The network operates independently of the Chinese government, whose policies it has criticized, but can be heard via shortwave in China.

Part of my new out-of-California report addresses disinvestment events when companies relocate California facilities to China and Chinese-owned companies avoid California when locating new facilities in this country. It also examines California-related events in other nations.

Confucius

I should point out that years ago I had studied the life of Confucius (551 – 479 BC), China’s most famous philosopher. I learned, thanks to the Encyclopaedia Britannica, that at one point, when he realized that his superiors were uninterested in his policies, Confucius left the country to find another state to which he could render his service.

I think that if Confucius lived in California today, he might do the same. California’s government is so unstable, and its policies among the most incomprehensible in the nation, that many companies and individuals are motivated to relocate to friendlier places.

Moreover, Confucius experienced life under an unstable government and perceived that the political institutions of his day had completely broken down. . (Many Californians can identify with that observation.) The Stanford Encyclopedia of Philosophy noted that Confucius “believed that a ruler should learn self-discipline, should govern his subjects by his own example, and should treat them with love and concern.

Well, maybe “love” is too much, but how about some concern? I don’t know of a single California business owner or executive who can say with a straight face that politicians are concerned about their enterprise.

The Facts About Leaving California

The out-of-California report outlines the who, what, when, where and why more than 13,000 companies over a nine-year period moved facilities to other states and nations. The study discusses the leading countries, states and metropolitan areas that were selected to be the new homes for migrating Californians.

It also summarizes how California’s insensitivity to businesses motivates departures. Reasons include punitive laws and regulations, high taxes and an absurd legal environment that is excessively unfair to companies – even those who work conscientiously to respect all laws.

Conceiving a Better Future

“Aiming high brings good fortune,” said Confucius.

Indeed, some California companies improved their fortunes by migrating offshore. In the 2008-2016 period, the nations gaining the most from California events were Mexico in the number one spot, followed by India, and in third place was China. Here are a few examples of work that went to China:

  • Mellanox Technologies Silicon Photonics, Inc. (formerly Kolura, Inc.) moved silicon photonics work out of Monterey Park, in Los Angeles County.
  • Fluke Corp. shifted manufacturing of laser tools from San Rafael, in Marin County.
  • Lumileds LLC, subsidiary of Royal Philips, moved LED lighting manufacturing out of San Jose, in Santa Clara County.

A number of years ago, China Zhongwang Holdings Ltd. cancelled plans to build a $1.5 billion aluminum manufacturing facility even though Southern California Edison offered “substantial savings” for the project. A consultant noted that electricity costs were 50 percent higher than the second-most expensive state west of the Mississippi River.

Reshoring

A category receiving recent attention is reshoring – bringing back to the United States jobs that had previously been offshored.

According to the Reshoring Institute, California has a difficult time competing against other states when it comes to labor laws, property costs, wage rates, taxes and energy costs. California’s hostility to business is so well known that in many cases the state is completely bypassed during location searches. California’s reshoring ranking, at number 20, is far below the leading states of South Carolina, Tennessee and Michigan – all of which are smaller in size and population.

An example of a California company moving work back from China – but putting it in another state – is Elemental LED, a manufacturer of LED lighting. They moved their manufacturing from China, along with their headquarters from Emeryville, in Alameda County, to Reno, Nevada, where they consolidated everything.

Adverse Conduct

California politicians ought to give thought to other advice from Confucius, namely, “When you are in public life, any lapse in conduct can bring disfavor.”

The laws and regulations that emerge from California’s political system show indecent conduct, which is why more companies and people will flee. If Confucius were still alive, he, too, might be packing his bags for a more wholesome environment – one where businesses and citizens are given the respect they deserve.

Computious, unlike Confucius, is a young girl!

(Side note: Why I studied the life of Confucius. Some time ago I participated in the creation of a website that sells greeting cards and apparel that revolve around a cartoon character with a similar name – Computious. That website is here: Computious – The Everyday Sage of the Digital Age!)

Link for a summary of “Why Companies Leave California.”

Joseph Vranich is a site selection consultant providing location advisory services to corporations and small businesses. His motto is “Helping Businesses Grow in Great Locations.” In recent years, he has discussed California’s difficult business environment with more than 100 economic development agencies located in North America and Europe. The name of his company is Spectrum Location Solutions LLC, but he also has been known as the Business Relocation Coach. If you found this posting useful, please forward it to a friend and subscribe to Joe’s blog here (see the top right-hand side of page; your email will not used for any marketing purposes whatsoever).

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High Housing Prices Motivating Companies & Employees to Leave Californiahttps://spectrumlocationsolutions.com/2019/03/19/high-housing-prices-motivating-companies-employees-to-leave-california/ https://spectrumlocationsolutions.com/2019/03/19/high-housing-prices-motivating-companies-employees-to-leave-california/#respond Tue, 19 Mar 2019 21:01:34 +0000 https://spectrumlocationsolutions.com/?p=2451 Today’s Wall Street Journal carried an excellent story about California’s affordable housing crisis, noting that some employers must leave the state as they expand because home prices and rents are “higher on average than anywhere else in the country [and] have surged to the top of concerns for businesses and workers.”

I can verify the accuracy of those observations because my report “Why Companies Leave California” covers that topic extensively (the report served as one of many sources for the Journal’s story).

Following are examples of what is in the Unaffordable Housing section of the report – themes that are similar to the WSJ story:

California Tops the ‘Severely Unaffordable’ Housing Purchase Prices

Of the 175 metropolitan markets in the United States studied for housing prices, not one California housing market was in the Affordable or Moderately Unaffordable range. Most conspicuous is that in the Severely Unaffordable category, 17 out of the 30 markets are located in California. In other words, 56.6 percent of all such listings nationwide are in California. They are Fresno, Merced, Modesto, Sacramento, Vallejo, Riverside-San Bernardino, Stockton, Oxnard, San Luis Obispo, Santa Rosa, San Diego, Salinas-Monterey, San Francisco, Los Angeles, Santa Barbara and San Jose, with Santa Cruz ranking as the worse of all in unaffordability. The source is a 2018 study by Demographia.

Rents Sky High, Too

When it comes to rents, a report from the National Low Income Housing Coalition determined using averages that the most expensive at No. 50 is Hawaii, with California holding the No. 49 spot. Also, seven of the ten most costly counties in the United States for renters are California counties, as follows (starting with the most expensive): Marin, San Francisco, San Mateo, Santa Clara, Alameda, Contra Costa and Santa Cruz.

People Live in Campers & Vans on City Streets

Housing costs in the region ranging from Oakland through Silicon Valley and San Jose is so severe that even fully employed people have priced out of Bay Area homes and apartments and have resorted to living in vehicles on city streets. East Palo Alto Nayor Ruben Abrica said, “They’re workers. Every day they get up and go to work.” The vehicles have sparked safety and sanitary concerns there as well as in San Jose, Mountain View and Union City along with the counties of Santa Clara, San Mateo, Alameda and Contra Costa.

Housing Prices to Worsen

Don’t expect the situation to improve. The California Energy Commission has decreed that beginning in 2020 all new single-family homes and low-rise multi-family residential projects must be built with rooftop solar panels, which would add perhaps $10,000 to a new home’s cost.

Cost of Living

Housing is a major component of the cost of living. A reliable way of measuring the relative cost of living between locations is to compare their Regional Price Parities (RPP) issued by the U.S. Bureau of Economic Analysis. It found that California ranked No. 48, meaning that the cost of living is lower in 47 states and higher only in New York and Hawaii.

Quality of Life

One reason for California having a low quality-of-life ranking is unaffordable housing, which led to a publication’s headline in 2018 that said, “One symptom of California’s housing crisis? State agency says someone making $200K deserves house-buying help.”

Companies Look Elsewhere to Expand

In San Francisco, Santa Clara County, San Mateo County – Silicon Valley in general –  high housing costs have resulted in high-tech companies selecting non-California locations in which to expand. In 2018, a Facebook executive told investors that “Bay Area housing costs need to be addressed if tech firms, such as Facebook, want to remain in Silicon Valley,” Realty Biz News reports. “If we can’t solve the housing and transportation issues, Silicon Valley won’t be Silicon Valley. These companies, like ours, will expand elsewhere.”

Yes, More People Will Leave California

A poll by the University of California at Berkeley Institute of Governmental Studies found that about 56 percent of individuals surveyed said that they have considered moving out of state because of rising housing costs and of those about 25 percent specified that the would likely relocate to another state.

Who Leaves for Greener Pastures?

California continues to hemorrhage people at a high rate, with particular losses among the family-formation age demographic critical to California’s future. Again, housing costs are a major factor.

Quick Summary of a Comprehensive Out-of-California Study

The sampling of information about housing is but one part of the wide-ranging report about how California’s business climate continues to deteriorate and why a record number of companies are leaving the state. The study is brimming with information about companies that left, why they did so, where they moved to, and what CEOs and business owners said to support their decisions. One finding is that many companies relocate even though they have not been offered economic incentives in their new state or community. Topics examined include the types of facilities and industries moved out of state, high utility and labor costs, punitive laws and regulations, and how California lags behind other states in acquiring facilities that are being reshored from overseas.

How You Can Use the Report

Corporate CEOs may relay findings in this study to their Board of Directors to help justify shifting facilities, capital and jobs to business-friendly states. Small Business Owners will find helpful information to explore with their families and partners about relocating to a location that offers an attractive business climate and excellent quality of life. New Entrepreneurs can share the report with their financial supporters to consider options for building an ROI at a healthier rate outside of California. And Economic Development Agencies can find an information treasure trove useful in facilitating discussions with California-based companies; in short, when you can convey to them what their peers have done regarding expansions and relocations, they will listen.

Purchase Information

To purchase the study, see “Why Companies Leave California.”

Joseph Vranich is a site selection consultant providing location advisory services to corporations and small businesses. His motto is “Helping Businesses Grow in Great Locations.” In recent years, he has discussed California’s difficult business environment with more than 100 economic development agencies located in North America and Europe. The official name of his company is Spectrum Location Solutions LLC, but he also has been known as the Business Relocation Coach. If you found this posting useful, please forward it to a friend and subscribe to Joe’s blog here (see the top right-hand side of page; your email will not used for any marketing purposes whatsoever).

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Amazon: New York Caused the Divorce – Don’t Go Backhttps://spectrumlocationsolutions.com/2019/03/01/amazon-new-york-caused-the-divorce-dont-go-back/ https://spectrumlocationsolutions.com/2019/03/01/amazon-new-york-caused-the-divorce-dont-go-back/#respond Fri, 01 Mar 2019 19:47:30 +0000 https://spectrumlocationsolutions.com/?p=2425

Joseph Vranich is a site selection consultant providing location advisory services to corporations and small businesses. In recent years he has discussed California’s business environment with more than 100 economic development agencies located in North America and Europe. The official name of his company is Spectrum Location Solutions LLC, but he also has been known as the Business Relocation Coach.

 
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