The Los Angeles Times has an important Op-Ed that summarizes a host of studies, polls and articles on California’s business climate.

There are those who will argue that, anecdotes aside, there is no empirical evidence that shows that businesses are systematically fleeing California. It is important to consider, however, that even if that fact is statistically debatable, there is no question that California has a terrible reputation among job creating decision makers. The perception CEOs and entrepreneurs have about California’s business friendliness has very real influence on their decisions to locate, build, or expand here.

The Sacramento ABC affiliate, News 10, has released a scathing item featuring Assemblyman Dan Logue on the difficulty of doing business in California. The story focuses on the failure of “green” jobs to materialize and even how the state has driven green companies away. During the entire five-minute report, a list of businesses leaving California or expanding outside the state scrolls on the screen.

Apparently as a result of high costs and legislative uncertainty, a manufacturer of solar panels has left the San Diego Enterprise Zone to Tijuana. As reported in the San Diego Union-Tribune:

A Spanish firm which once employed 130 people assembling solar panels in Otay Mesa has moved manufacturing to Tijuana.

Siliken Solar’s move to Tijuana was prompted by lower labor costs there and a lack of interest in American-made products, said Jorge Molina, director of plant operations for Siliken Solar.

“We’ve decided at this time to turn the Otay facility into a distribution point versus a manufacturing plant,” Molina said.
…
The loss of the factory is a hit to the local economy, said Cindy Gompper-Graves, chief executive of the South County Economic Development Council.

“California, in particular, needs to position our companies to compete with the rest of the world,” she said. “In some cases, that means incentivizing our companies to create jobs in California.”

Instead, state government is moving to reduce support for programs like enterprise zones and redevelopment areas.

“We need those manufacturing jobs,” she said.”Without those middle-income jobs, we don’t have the bridge for people to go from low-paying jobs to middle-income jobs to higher-paying jobs.”

A story in the Inland Valley Daily Bulletin tells the story of a business that is trying to escape California:

CHINO – A high-tech company that originated in this city expects to employ hundreds of people in a bid to create a new kind of energy.
Unfortunately, Bing Energy has opted to do business in Florida rather than the Inland Valley.

“I just can’t imagine any corporation in their right mind would decide to set up in California today,” said Dean Minardi, the chief financial officer for Bing Energy.

Read the whole, tragic story.

Levelland, TX is one of many locals actively recruiting California businesses to relocate their jobs. An article on their Economic Development Corp. website says:

Levelland also offers opportunities to California businesses considering relocation or expansion by helping reduce the normal stress related with such capital intensive projects. Our exceptional economic environment, warm weather, famous hospitality and affordable cost of living make Levelland an ideal choice for businesses looking to make a move. Texas Governor Rick Perry says, “Texas Wide Open for Business” and Levelland is a great place to enter the Lone Star State.

This trend may become a serious challenge for California. Along those lines, the Flashreport blog reprinted the following Wall Street Journal Political Diary email by Stephen Moore:

Just when you thought things couldn’t get worse on the left coast, along comes more bad news for the Golden State. Across the country, Republican state legislatures and governors are adopting a new economic development strategy: Raid California for its jobs and businesses.

At least three Republican governors have said as much in interviews. The idea is to offer lower taxes, a more business-friendly atmosphere and the right to be left alone from overzealous regulators. “We just keep inviting California businesses to look at the economic climate in Texas, where we treat businesses like assets not villains,” said Texas Governor Rick Perry.

California has some of the highest tax rates in the country, the worst bond rating and a multitude of nettlesome regulations. Chief Executive magazine just ranked California as the most antibusiness state in the nation. A new study by Joseph Vranich, a California-based business consultant, found that 144 major companies relocated plants, research facilities, headquarters or their entire operations out of California in 2010. That was more than triple the pace of job-creating firms leaving in 2009. Mr. Vranich said that the outmigration could become “a stampede” in 2011. “Business owners tell me every day that this is just not a hospitable place to do business anymore,” he said.

Other Republican governors with their sights on California include John Kasich of Ohio and Rick Scott of Florida. Mr. Scott told me in an interview that “we are going to create hundreds of thousands of jobs in Florida over the next eight years, and we will advertise our pro-growth policies to businesses in places like California that don’t share our pro-business policy orientation.” He added: “Not having an income tax is a huge advantage over a high-cost state like California.”

Mr. Kasich told Reuters earlier this month that he will try to persuade California venture capitalists to relocate high-tech firms to his state. “More of the same is not acceptable to the business community in California,” he said.

Unemployment in California is currently 12.4%, and over the past two years the state’s jobless rate has ranked among the five-highest in the country. Businesses complain that the extraordinary power of unions, regulators and environmentalists has been an incentive to leave or not come in the first place.

We will see if Democrat Jerry Brown, the new governor, will do anything about that. If not, California’s loss may be a boon for Florida, Ohio, Texas and other states.

The Milwaukee BizTimes reports on how Wisconsin is using its Enterprise Zone benefits to lure a California based green tech company to its state:

Wisconsin Gov. Jim Doyle today announced that W Solar Group Inc. will receive up to $28 million in Enterprise Zone tax credits from the Department of Commerce) to establish a manufacturing facility in Wisconsin and locate its corporate headquarters and research and development facilities in Dane County.

The company expects to create about 620 jobs between its headquarters, R&D and manufacturing facilities. The project represents a capital investment of more than $300 million.

The U.S. and international solar markets are expected to grow rapidly in the years ahead. Wisconsin is a national leader in solar installations. Among the companies the Department of Commerce has assisted are Cardinal Glass, 5NPlus, PDM Solar, ZBB Technologies and Helios.

“W Solar Group was attracted to Wisconsin early in our search for a project location,” Chris Hamrin, president and chief executive officer W Solar Group Inc., which will move to Wisconsin from Chatsworth, Calif. “We are impressed with the high quality workforce, extensive supply chain, and the commitment to producing world-class products. Making Wisconsin our home is the right decision, and W Solar’s goal is to be a great addition to the Wisconsin economy. Wisconsin’s role as a leading manufacturing state with hard-working people also contributed to our decision to make the Badger State the place to grow our company.”

The company has made a commitment to purchase materials and services from Wisconsin suppliers in an effort to create or retain additional jobs.

W Solar Group has a highly efficient technology for producing thin film solar panels on a large scale and at a lower cost than its competitors. The projected global market for solar panels will increase more than tenfold over the next decade, and the company anticipates about half of its production will be exported to overseas markets.

“I am really happy to announce the state will provide $28 million in Enterprise Zone tax credits to help W Solar establish a manufacturing facility in Wisconsin and create more than 600 jobs,” Doyle said. “W Solar choosing to locate its manufacturing facility in Wisconsin is a testament to the hard work we’ve done over the past eight years to build a strong sector of our economy around clean energy and high end manufacturing. This investment will create new business opportunities and jobs at suppliers throughout the region.”

Doyle has used the Enterprise Zones credits to help retain and create jobs at Quad/Graphics, Bucyrus International Inc., Mercury Marine, Republic Airways, U-line, Marinette Marine Inc. and Oshkosh Corp.

The Business Location Coach reports on three new corporate headquarters leaving California and that his tally so far for 2010 is already double what happened in 2009:

In the last two days California has lost three company headquarters – Globalstar, Inc. will depart Milpitas for Louisiana, eEye of Irvine will move to Arizona, and TriZetto Group will leave Newport Beach for Colorado – which means this year we are seeing a stunning increase in company disinvestments in California.

In just the first half of the year, there have been 84 such events, nearly double what occurred through all of 2009. An “event” includes instances where companies have closed factories down, moved their headquarters or facilities to another state or country, or targeted locations elsewhere as better places to grow and therefore sent billions of dollars in capital out of state or out of the country.

Using research methods that involve public domain information only, the 84 known events for the year’s first half compare with 44 for all of last year and 35 events combined for the three-year 2006 – 2008 period.

Follow the link to see the entire list.

Here is a selection of links about the closure of the last automobile manufacturer in California. Efforts to make Fremont an Enterprise Zone were not enough to save the plant.

San Francisco Chronicle: “Nummi’s last words — and pictures from the inside”

USA Today: “Final car rolls off line at landmark Calif. plant”

NPR: “End Of The (assembly) Line For Calif. Car Plant”

Oakland Tribune: “NUMMI no more”

ABC KGO-San Francisco: “NUMMI closure marks end of era”

CNNMoney.com: “GM and Toyota’s failed marriage”

A colleague brought to my attention “The Business Relocation Coach” blog which claims as its mission, “to help businesses relocate and expand facilities in highly beneficial ways. This blog is maintained by JV Executive Consulting, inc., which helps design the smoothest relocation to the most desirable location that meets business goals. An experienced team serves a diverse set of clients through executive coaching for transition, relocation studies, site selection, incentives negotiation and government affairs.”

On Monday, Business Relocation Coach posted an article called, “California’s Hostile Business Climate: 100 ‘Moving-Out-of-State’ Events” in which he explains

Apparently, No state agency keeps track of enterprises that move out of California or which companies elect to expand in other states even though they are headquartered here. That lack of knowledge is quite convenient for elected officials who deny that state’s anti-business attitudes and policies hurt commercial enterprises. Hence, without a central repository, it’s difficult to determine how many jobs are lost specifically because of California’s unfriendly business environment.

In this blog, I’ve attempted to note facility moves and disinvestments in California on a catch-as-catch can basis based on incomplete media reports. Below is a roundup of activity that I’ve been able to find since I started this blog in July, 2009. This imperfect and incomplete list of 100 moving-out-of-state events is the “tip of the iceberg” about the loss of commercial enterprises in California.

Just some random examples:

Alza Corp. in 2007 eliminated about 600 jobs in drug R&D while also exiting its Mountain View, Calif., HQ. At the time the company said that its 1,200-person Vacaville facility will continue to operate. But the Vacaville Reporter on Oct. 23, 2009 revealed that the plant is being offered for sale by J&J, its parent company. It’s unclear if more layoffs are in the facility’s future.

Audix Corporation relocated from Redwood City, Calif., and to accommodate growth moved to a 78,000-square-foot facility in Wilson, Oregon.

Buck Knives after 62 years in San Diego moved to Post Falls, Idaho.

EMRISE Corp. completed its HQ move from Rancho Cucamonga to Eatontown, NJ, in May 2009. The company said the move “will result in additional annualized cost savings of approximately $1 million and facilitate improvements in operating efficiency. . . . The cost savings associated with relocating our corporate headquarters will start immediately. . . The aggregate total of these expense reductions will increase our profitability and cash flow in this and succeeding years and, over time, substantially improve our ability to further reduce our long term debt.”

Facebook, based in Palo Alto, will expand in a major way in Oregon by locating a custom data center in Prineville. It will be a 147,000-square-foot facility costing $180 million and will employ 200 workers during construction and another 35 full-time once operating in 2011.

He has 100 of these examples. The list was also featured in the Orange County Register.

As an aside, regarding the point about no government agency keeping track of businesses that leave the State, take a look at the campaign website for Damon Dunn, running for California Secretary of State. Under “Solutions,” Dunn wants to address this problem:

The Secretary of State is responsible for all the business filings in California. As Secretary of State, I will use my business experience to evaluate which companies are leaving the state and why. I will then report my findings to the Legislature as part of a package of reforms that will lead to job growth in California.

California, like every other state government, has been looking for solutions to problems that have developed as a result of the economic recession.

The Secretary of State’s office needs to be using the information it holds to be an advocate for jobs in the state. I will use my office to focus attention on the businesses that are being stolen from California by Texas, Utah, and other western states. When the Governors of other states are personally calling business leaders in California asking them to expand outside of California we are not competitive in economic development as a state.

From The Wall Street Journal:

Northrop Grumman Corp. said Monday it plans to move its headquarters to the Washington, D.C., area from Los Angeles, marking the departure of the last major aerospace firm from the industry’s birthplace in Southern California.

The shift will put Northrop’s top executives near its biggest U.S. military and intelligence customers and the congressional holders of the military’s purse strings.

“We are a global security company and when you look at where our largest customer base is located, it’s in the Washington, D.C., region,” said Wesley Bush, Northrop’s chief executive and president. Mr. Bush took over as CEO on Jan. 1.

The company will relocate about 300 jobs, though it will still have more than 20,000 employees in the Los Angeles area, according to local officials.

Still, Northrop’s move underscores a broader struggle for Los Angeles: It is the nation’s second-largest city with 13 million people in its metropolitan area, but has suffered a growing exodus of corporations. In addition to defense and aerospace industries, there has been a steady erosion of its other iconic trade, the movie business, as states lure away film productions with rich tax incentives.

This past Friday, radio host Hugh Hewitt did his broadcast from Fresno and spent his entire show highlighting the man-made water crisis in the Central Valley.  Some parts of the Valley have unemployment rates of 40%.  Of course, the Central Valley is home to 11 of California’s 42 Enterprise Zones.  Since the federal government shut off the water supply to the Valley’s farmland, tens of thousands have lost their jobs.  It’s hard to imagine the additional devastation that could be caused if Sacramento decides to chase additional employers out of the state by severely limiting or eliminating the Enterprise Zone program.

In his column for the Washington Examiner, Hewitt argues that all the government needs to do to create thousands of jobs and drive down the unemployment rate is to turn on the water:

For Fresno and California’s entire Central Valley, it should be the best of times.

With the dollar weak and the world hungry, the exceptionally fertile fields along the Golden State highway should be producing record yields of grains, fruits, vegetables and nuts.
Instead framers are struggling to keep even a third of their potential acreage in use. Mile after mile of parched land greets the approach to the city of 500,000. And angry signs along the roadside condemn the federal government that has cut off the valley’s water.

The delta smelt, a small fish that makes its home in the vast Sacramento Delta, has been declared endangered. Since late last year the water lifeline from the north to the south has been reduced to a trickle.

The pumps that power the water to the farms have been stilled for months at a time so as to avoid sucking in smelt. The smelt’s numbers have been reduced by many causes, but the one the federal government has decided to target is the pumps.

When Washington, D.C., ordered the water shut off, jobs went down the drain. Tens of thousands of farm jobs have been lost, and unemployment in some farming towns has hit 40 percent.

Secretary of the Interior Ken Salazar and Sen. Dianne Feinstein, D-Calif., posture about their concern (Sen. Barbara Boxer, D-Calif., can’t even be bothered to meet with local officials), and the region’s Democratic congressmen like Reps. Dennis Cardoza and Jim Costa pledge action, but the president, his senior officials and congressional allies have done nothing. A new, man-made dust bowl is taking shape, and the devastation is palpable.

Former Fresno Mayor Alan Autry was a guest on my broadcast from the city’s downtown last week and told the audience about a food distribution day that drew 15,000 people. Pastor Jim Franklin of Cornerstone Church spoke about the growing desperation among many in his flock.

Third-generation farmers admitted on air that they couldn’t imagine how they could hold on to their farms if the water wasn’t turned back and with the assurance of stability so the annual cycle of preparation and planting that must begin now can proceed backed by financing that wouldn’t be forthcoming unless the banks see the near certainty that the water will flow throughout 2010.

President Obama doesn’t need a jobs summit or a second stimulus to create thousands of jobs overnight. All he has to do is order — order — his staff to insist that the Congress include relief in the appropriations bills headed his way.

Or President Obama could order — order — Secretary Salazar to conduct a rapid review by serious science of the deeply politicized findings that led to the water cutoff. There is much suspicion about the agency’s deliberations here that a National Academy of Sciences review of the data has been promised by Salazar and Commerce Secretary Gary Locke, but it will take months and months to complete. The president could demand his team work like their jobs were in as much jeopardy as those in the valley.

Alternatively, U.S. District Judge Oliver Wanger could order that the restrictions on water delivery imposed by the U.S. Fish and Wildlife Service on Dec. 15, 2008, be lifted until an environmental impact statement is prepared by the Department of the Interior’s Bureau of Reclamation that wholly and fairly assesses the consequences of the service’s job-destroying diktat. The judge ruled just last week that farmers and water agencies were entitled to summary judgment on their claim that the feds had acted contrary to the National Environmental Policy Act.

The court has scheduled a hearing on potential remedies for Nov. 24, two days before Thanksgiving. If he orders the suspension of the draconian “biological opinion” that imposed the water cutoff and mandated the drought, it will be a festive Thanksgiving in the valley.

Christmas will be brighter for tens of thousands of workers and farmers and their families who have seen their livelihoods imperiled by radical environmentalists and bogus “science.” (Details on the hearing are available at pacificlegal.org.)

But if the judge doesn’t act and President Obama continues to give speeches and hold “summits” instead of ordering relief, a grim 2009 will turn into a catastrophic 2010.
Examiner Columnist Hugh Hewitt is a law professor at Chapman University Law School and a nationally syndicated radio talk show host who blogs daily at HughHewitt.com.

According to the San Jose Mercury News, Toyota has made a decision to close NUMMI:

Toyota Motor Corp. plans to end production in March 2010 at a California joint venture where it has built vehicles with General Motors, the company said Thursday.
The decision would mean the shutdown of the sole auto assembly plant on the West Coast if no other carmaker emerges to keep it going.

Toyota’s board voted early Thursday to end the company’s production contract at the Fremont.-based New United Motor Manufacturing Inc., spokeswoman Cindy Knight confirmed.

Update: Here is a video of a news report on the decision from ABC-7 in San Francisco:

I like the ad, but will they buy it?

Here’s the back story from Capitol Alert.

And here’s one of Nevada’s ads for comparison:

Senator Corbet’s bill SB 483 has been amended to simply direct HCD to create a new Enterprise Zone, in addition to the existing 42, if the City of Fremont applies.

The San Francisco Chronicle reports on a rally held with the intention of keeping the plant open:

Several hundred auto workers rallied near New United Motor Manufacturing Inc. in Fremont Thursday afternoon in support of an incentive plan, backed by Gov. Arnold Schwarzenegger, designed to persuade Toyota to keep building cars at the plant.

“We have a package of bills to let Toyota know that we love them and we want them to stay in Fremont,” said state Sen. Ellen Corbett, D-San Leandro, who drove from Sacramento to catch the tail end of the rally organized by the United Auto Workers, which represents about 4,500 factory employees.

Nummi’s fate has been in doubt since June, when General Motors pulled out of a 25-year-old partnership with Toyota to build cars for both companies at what is the only auto plant on the West Coast.

Unofficial press reports out of Japan have suggested Toyota is likely to quit the plant in March. But Toyota, which has never before shut a factory, has not yet announced a decision and is still negotiating with the old GM over how to dissolve their joint interest in Nummi.

The rally drew local business leaders and elected officials who are working with the governor’s office and state legislators, as well as with the Port of Oakland and PG&E, on a plan that includes tax breaks, improved transportation facilities, and lower electricity costs to make it economical for Toyota to stay in Nummi.

“We’re not ready to throw in the towel,” said Joe Joly, chairman of the Fremont Chamber of Commerce, which fears that a shutdown will affect thousands of jobs at supplier firms as well as local merchants who depend on the factory.

“There are tremendous costs involved in shutting down a factory and starting up production elsewhere,” Joly said, adding that Toyota officials are “business people, and they’re looking for something that really makes sense for them.”

Assembly Majority Leader Alberto Torrico, D-Fremont, was in session in Sacramento and could not attend the rally but said in a phone interview that the Legislature would pass three bills vital to the incentive plan by the end of August and that he expected they would be signed into law.

“The governor is on board to do everything we can as a state to keep this factory open,” Torrico said.

But even if California puts together the incentive plan, it would be an uphill battle to persuade Toyota to remain in the state at a time when the slump in auto sales has idled about 40 percent of its factory production worldwide.

Nummi is also the only factory in North America where Toyota would have to deal with the UAW, and industry observers have suggested that union concessions would have to be part of any deal to keep the plant open.

Freddy Martin, a 35-year-old forklift driver who has worked at Nummi for nine years, reflected on the situation as he joined the throng at the rally.

“I’m definitely worried about my future,” said Martin, who said he could understand why Toyota might pull out of Fremont given the state of the economy.

“I’m only hoping that all the tax incentives and business breaks the state is offering will make it possible for Toyota to stay,” said Martin, who said he is personally willing to make wage concessions part of the package but isn’t sure a majority of the union membership feels the same.

There is a video of the rally at KTVU.

Things are not looking too good for NUMMI at the moment.  Efforts are continuing to create a new Enterprise Zone as part of a package to save the plant.  The Lt. Governor was quoted as saying:

Lt. Gov. John Garamendi said today that, “The fight to keep the New United Motor Manufacturing Inc. plant in Fremont is far, far from over” despite news reports that Toyota Motors Inc. will end all production at the facility by next March.

Elsewhere, the movement to expand the new Oakland EZ is moving forward. From The Berkeley Daily Planet:

Berkeley officials confirmed Friday that plans are in the works to try to provide tax incentives to Bayer, the city’s largest private-sector employer, to keep the company from leaving the city.

According to East Bay officials, Bayer Healthcare could decide within two weeks whether to relocate or commence manufacturing the next generation of Kogenate, a drug for the treatment of hemophilia, at their 43-acre campus next to the Berkeley Aquatic Park.

Senior company officials plan to make the case to the Bayer AG Governing Board that the company should stay in Berkeley.

In an effort to retain the company, the mayors of Berkeley, Oakland and Emeryville are collaborating to expand Oakland’s enterprise zone to include West Berkeley. An enterprise zone is a state-mandated area that gives companies tax credits to hire and train workers.

On July 28 the Oakland City Council unanimously approved a motion to ask the state to include West Berkeley businesses within Oakland’s enterprise zone. If the cities succeed in getting Bayer included within the zone, the company could receive as much as $19 million in benefits over a 10-year period, including $13 million in tax incentives, $1.5 million in worker-training reimbursements, and $4.5 million in reduced electric rates from PG&E.

The East Bay Development Alliance, an organization that lobbies to increase jobs and improve economic activity in the East Bay, assembled the package of economic incentives for Bayer that includes the reduced PG&E rates.

Officials from the East Bay Development Alliance could not be reached for comment by press time.

Berkeley Mayor Tom Bates, Oakland Mayor Ron Dellums, and Emeryville Mayor Richard Kassis sent a joint letter to Bayer board member Hartmut Klusik last month urging the company to remain in Berkeley.

“We recognize that Bayer, as a publicly traded corporation, must make location decisions based in part on cost considerations,” the letter said. “Therefore, the cities are working with the state to create a powerful set of economic incentives.”

Although the cities may all agree to expand the enterprise zone, the final decision is up to state officials.

Bayer officials are reluctant to speak about the issue before scheduled meetings among top company officials in Germany.

Company spokeswoman Trina Ostrander issued a statement late Friday.

“Bayer is proud of its long-standing commitment to the Bay Area, and especially our 30-year Development Agreement with the City of Berkeley,” said Bayer spokeswoman Trina Ostrander. “We value our local ties and have continuously worked to enrich the communities in which we operate and live.”

Ostrander said that expenses would be a major factor in their considerations.

“We cannot forget that by various indicators doing business in California is very expensive,” said Ostrander. “To strengthen the economic diversity of the East Bay and encourage the growth of the biotech sector and green corridor requires forward-looking economic development strategies such as Enterprise Zones. We are currently exploring various options, however at this point it is premature to provide any speculation on future plans.”

Berkeley city officials are anxiously waiting for Bayer’s decision.

“We are fearful that any step to move production of Kogenate could mean a move out of Berkeley,” said Michael Caplan, the city’s economic development manager. “We are doing everything within our power to get them to stay here.”

Caplan explained that expanding the enterprise zone is a regional issue, citing his office’s statistics, which show that most Bayer workers live outside of Berkeley and 3,000 Oakland residents work in West Berkeley.

Founded in 1863, Bayer, based in Barmen, Germany, is the third-largest pharmaceutical company in the world.

Bayer’s Berkeley campus is the company’s global center for hemophilia and cardiology pharmaceuticals, including Kogenate. CNN reported that in January 2001, the FDA halted shipments of Kogenate FS after it was found that harmful bacteria were present in the drug’s manufacturing process.