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New Study Forecast: More Companies Will Leave California
Joseph Vranich, Site Selection and Location Analysis Consultant Joseph Vranich, Site Selection and Location Analysis Consultant
Irvine , CA
Thursday, January 07, 2016


According to a new study of companies leaving California during the last eight years, the state's business climate will worsen because of a multitude of proposed tax hikes and new regulations – measures sufficient to motivate more company departures.

The study by Spectrum Location Solutions is critical of extending the "temporary" taxes in Proposition 30, escalating fuel and motor vehicle taxes, imposing a service tax on routine transactions, raising carbon-related cap-and-trade fees, and threatening to weaken Proposition 13's protections for business property owners.

"California's public officials come across as being uncaring about the damage they inflict on businesses, investors, employees and their families, and to the towns that lose jobs," said Joseph Vranich, the study's author. "With a growing number of California activists demanding higher taxes and more regulations, look for an increase in the number of companies seeking to leave the state."

The conclusions are contained in a report that shows Fortune 500 companies down to small family-owned companies relocating and expanding in out-of-California locations that offer more satisfying business and lifestyle outcomes.

Information culled from California disinvestment events in the 2008 through 2015 period found that capital diverted out of state totaled $70.5 billion. However, the financial cost is much higher because only 16 percent of information sources outlined such data for departing companies.

"The report was designed to rely only on information easily accessible to the public as a safeguard against misleading comments that Sacramento politicians are prone to make," said Vranich. "It's easy to confirm every event that I documented."

The report provides details regarding California's disinvestment events by company name, the new domestic and international locations that are benefitting from the out-migration, and insights from company leaders about why they relocate their facilities.

"California companies consider moving when they realize they can benefit from operating cost savings of 20 to 35 percent in another state," said Vranich.

"California has great weather, but certain lifestyle factors outweigh how many times someone can go to the beach," Vranich said. "When it comes to things like quality of schools, housing costs, commuting delays, and crime rates, many places around the United States beat California communities. That's especially true of Los Angeles and San Francisco, where quality of life continues to deteriorate for the lower and middle classes."

It's estimated that 10,000 companies left the state during the eight-year period. 

When companies look for alternatives to California's bleak tax and regulatory climate, there are clear losers among California counties and clear winners elsewhere.

The report ranks the Top 15 California Counties in the order starting with the worst losses, which are: (1) Los Angeles, (2) Orange, (3) Santa Clara, (4) San Francisco, (5) San Diego, (6) Alameda, (7) San Mateo, (8) Ventura, (9) Sacramento tied with San Bernardino, (10) Riverside, (11) Contra Costa tied with Santa Barbara, (12) San Joaquin, (13) Stanislaus, (14) Sonoma and (15) Santa Cruz. 

The Top 10 States in the order starting with those that gained the most are: (1) Texas, (2) Nevada, (3) Arizona, (4) Colorado, (5) Washington, (6) Oregon, (7) North Carolina, (8) Georgia, (9) Florida and (10) Utah tied with Virginia. Texas was the top destination each year during the eight-year study period

The Top 10 Nations in the order starting with those that gained the most are (1) Mexico, (2) India, (3) China, (4) Canada, (5) Costa Rica, (6) Malaysia, (7) Philippines, (8) Singapore, (9) Japan and (10) Great Britain.

Joseph Vranich is a Site Selection consultant whose theme is "We help companies grow in great places!" He helps relocating and expanding businesses find optimal communities by focusing on costs, taxes, regulations, workforce, logistics, incentives and lifestyle. He includes Executive Coaching in project work, which helps bring about a smoother move to the location that meets business and lifestyle goals.

Joseph Vranich
Spectrum Location Solutions
Irvine, CA