The honeymoon is clearly over between the state of California and business. A recent survey conducted by Chief Executive magazine rated Texas as the friendliest US state for business. California ranked 50th.
I'll admit that was kind of shocking. Silicon Valley is still the gold standard for technology development. Though the magazine's survey was not technology-specific, some of the state's shortcomings hit technology in the heart.
Each year, the evidence that businesses are leaving California or avoid locating there because of the high cost of doing business due to excessive state taxes and stringent regulations grows... According to Spectrum Locations Consultants, 254 California companies moved some or all of their work and jobs out of state in 2011, an increase of 26 percent over the previous year and five times as many as in 2009.
Ouch.
California does love its regulations, and its intentions are always good. The California Transparency in Supply Chains Act and the proposed regulation changes by the California Department of Toxic Substance Control (DTSC) are aimed at making working conditions and the environment better. But Michael Kirschner, principal at Design Chain Associates, has urged us to take a look at what it takes to comply with the DTSC proposal. (See: Tracking Calif. Consumer Products Proposal.)
What is Texas doing right?
"Texas, by contrast, has been welcoming companies and entrepreneurs, particularly in the high-tech arena," J.P. Donlon, editor-in-chief of Chief Executive magazine and ChiefExecutive.net, said in a press release. "Local economic development corporations, as well as the state Texas Enterprise Fund, are providing attractive incentives. This, along with the relaxed regulatory environment and supportive State Department of Commerce, adds up to a favorable climate for business."
Florida, North Carolina, Tennessee, and Indiana rounded out the top five. New York, Illinois, Massachusetts, and Michigan joined California at the bottom of the list.
Well, thats the most efficient way but local governments have (earned?) their right to choose. That's why there are so many differences between states.
Well, at the end, I am for a regulator mechanism in charge of FedGov or Gov, instead of each single State for the local territory; in theory, it could allow to provide all with a fair methodology on top individual or regional interests.
Texas can be as unregulated as they want as long as the wind, the rivers, and the ocean don't carry their pollution to other states and the Texas taxpayers are required to pay for the cleanup and not the rest of us taxpayers, including me.
I remember the savings and loan debacle of the 80s. My state had strong S&L regulations and no S&L's failed. The S&L's of Texas, however, were part of the $500 billion bailout (paid from federal taxpayer dollars including mine) because of Texas' lax S&L regulations.
Conservatives are always advocating personal responsibility but apparently that doesn't apply to their states because those states are always coming to the rest of us to bail them out of the consequences of their lax regulations, e.g. Federal Superfund cleanups.
To paraphrase Dumbledore (in the Harry Potter movies), "Harry, you have the choice to do what is right or to do what is easy." Apparently, corporations prefer 'easy' over 'right'.
@Ashish: Those two anecdotes are alarming, but I'm not entirely surprised, either. Any bureaucracy that has as many holes in it as the US tax code no doubt has these sneaky little clauses for out-of-state income as well.
On a different note: California: The Europe of America. I like it. :-)
California is not Known as the Europe of America without reason.
It has a Severely Bloated Bueracracy,Heavily Unionized labor which are Professionals at blackmailing/Bank-rolling Politicians to keep Govt Wages insanely High which Causes taxpayers to suffer(until they revolt by leaving the State).
This is the primary reason why Taxes are so insanely High in California.
We are just one step away from a Debt Default in California(as we have been for the last decade or so).[New York,Michigan and Illinois are in the same Boat]
We have now got super-invasive Bueracracies in all these states;I was reminded about two of my friends and their experiences recently.
One friend,has not stayed or had any Business in California for over a Decade now;he is now getting Income Tax claims (for 2010 and 2011) from California!!!
Not just that,the State has ordered his Bank to hand over the cash first(a request with which his Bank gladly complied...) including a Fine for Late Payment!!!
Another friend,spent two Days(yes Two Days) in New York State for some Official Business;for that he was sent an Income Tax claim and asked to pay Taxes!!!
Can't you see how desperate for Revenue these States are today?
Mike Shedlock writes a very good Blog on this issue HERE
@Ashish: I do know about the energy costs, which has always amazed me because CA has oil refineries right offshore. So does Texas. As for the taxes, yes, CA is in the same boat as Mass. The business tax structure is not appealing, especially to start-ups.
Mr.Roques, hard to say who is right and who is wrong. I agree with you, regulations are absolutely a need, but maybe, respect to CA, TX is at early stage for this specific sector, we will see in the future.
You fail to mention two more issues in this space(which are extremely relevant to the decision of where to locate your New/Existing Business).
The First is Taxes-No Executive likes to see more than 50% of Income go in Taxes every year;and this is where California and New York lose out to Texas(after all Texas has no Income Taxes).
It becomes so much easier to convince senior execs to move their when they are said that you will save more of your Income from the Taxman.
The other reason is The High Cost of Energy in California.
Utilities as well as Gasoline cost much-much more in Calfornia(& New York too);than they do in Texas.
At the end of the day,these costs also have to be factored in the cost of Doing Business anywhere & especially today when the world is so hyper-competitive today .
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Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
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Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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