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1,800 Companies Exit CA in One Year – Many Head for TX

1,800 Companies Exit CA in One Year – Many Head for TX

January 11, 2019

It is shocking when one begins to realize the magnitude of the steady stream of companies that continue to leave California in order to not just survive, but thrive.  

A 2016 study conducted by Joseph Vranich – a corporate relocation expert from Pennsylvania-based Spectrum Location Solutions LLC – revealed that 1,800 companies left The Golden State during that year for more business-friendly states. The most popular destination was – you guessed it – Texas, which embraced 299 of the 1,800 relocated companies.  

The year 2016 set a record for companies leaving California compared to years going back to 2008.During that 9-year period, around 13,000 companies left the state which meant the loss of 275,000 jobs and $76.7 billion in capital funds!  According to Vranich, California has been found to be the worst state in which to do business.  

Fleeing high taxes is not the main reason for the mass exodus from this West Coast region but, rather, the legal climate in California has become so burdensome and difficult that companies are looking for jurisdictions where being treated fairly has become the top priority.  That priority was underscored by nationwide CEOs who were surveyed by Chief Executive Magazine, year after year.

Texas Reigns Supreme

The 1,800 California business that relocated chose a total of ten states, in which, to relocate.Texas was chosen as the #1 option and received most of those businesses compared to the other nine states.  That would have been enough for Texas to be proud of, but Texas managed to hold that first-place position, previously, for more than a decade.  The other relocation states included 2nd-place Nevada, followed by Arizona, Colorado, Oregon, Washington, North Carolina, Florida, Georgia and, finally, 10th-place Virginia.

Vranich, for the first time in his career, is openly encouraging California businesses to relocate out of state.  He went on to say:  “For Texas to do as well as it does with attracting California companies is really remarkable, in and of, itself.”  In fact, Vranich's own company, Spectrum Location Solutions LLC, had been previously based in Irvine, California.

During the 4th quarter of 2018, California company-headquarter relocations have embedded themselves in the Dallas-Fort Worth area, including McKesson (health-care giant), Core-Mark (convenience store distributor) and DJO (medical technologies company).  Also, during the past three years, a number of California companies announced corporate moves or regional hub launches in North Texas.  

Those include:  Toyota Motor North America, Kubota Tractor Corporation, Charles Schwab Corp., Jamba Juice and others.  Of the 123 corporate headquarters that have relocated to DFW since 2010, 43 of them originated from California – this, according to the Dallas Regional Chamber.Vranich tells us that Texas, consistently, ranks as one of the best states, in which, to do business.

California Regulations Strangle Businesses

Vranich frankly states that California promotes a 'hostile work environment' for businesses in addition to businesses having to face high utility and labor costs, topped off by very worrisome regulations that, if not followed precisely, can result in severe punitive consequences.  

Heavy fines can ensue if a business allows an immigration enforcement officer to review or obtain employee records – it would mean a California law is being violated.This type of lose-lose situation leaves business owners worried, angry and frustrated.     

Perhaps, one could say that those who conduct business in California might like the weather, there, but definitely not the business climate – Texas awaits, with open arms!

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