Many Reasons Why Businesses Close Down or Leave California

Near the top of the website of California’s Senate Republican caucus are five boxes labeled “Pension Reform,” “AB32 Global Warming Tax,” “California Jobs First, “The Red Line” and “Budget 2010.”

The brief description of “The Red Line” says:

“Weekly report of companies already escaping California’s anti-business climate and the jobs being lost.”

Anti-business, like reform, is in the eye of the beholder. One political party’s reform is ruination to the other. However, looking at some of the listings is instructive.

For the week of June 21, the list includes TASQ Technology, whose website says its one of the nation’s largest supplier of terminals and equipment that swipe credit and debit cards at checkout stands.

Founded in 1994 in Placer County, the company is closing its headquarters in Rocklin and nearby warehouse, resulting in a loss of at least 350 jobs, according to the Senate Republicans.

TASQ is “consolidating its operations in Marietta, Georgia, where the cost of living is cheaper and the state is offering millions of dollars in job tax credits,” the Republicans say.

According to the Sacramento Business Journal, the tax credits the company qualifies for in Georgia total $6.1 million.

However, the article notes another reason for the consolidation is that most of TASQ’s customers are on the East Coast.

This relocation will occur over the next 15 months. Some California employees will receive offers to move to Georgia, most will get severance.

In January, Northrop Grumman, the giant defense contractor announced it would moves its corporate headquarters from Los Angeles to the Washington D.C. area, in part to be closer to its biggest client, the U.S. government. Its decision leaves the birthplace of aerospace without any major military contractors.

After the announcement, the company – whose headquarters has some 300 jobs with average salaries of $200,000 — became the subject of a bidding war by Maryland, Washington D.C. and Virginia. Each offered various cash or tax credits as inducements.

In April, Northrop went with Virginia which offered an incentive package of some $14 million, nearly triple the $4.6 million the state gave Hilton Hotels Worldwide in 2009 to move its 300-employee headquarters from Beverly Hills to Fairfax.

Marriott International, one of Hilton’s chief competitors, is headquartered in Bethesda, Maryland.

Elsewhere on the Senate Republicans list is a May announcement by Fulton Valley Farms that it will close its Sonoma slaughterhouse and lay off 123 employees.

In this instance factors other than California’s alleged “anti-business climate” appear to be at play.

The Santa Rose Press Democrat says the company cites several factors for the closure, including the more than 100-year age of the facility and its distance from the Central Valley ranches that raise the company’s organic and free-range chickens.

Fueling the closure was reduced demand for their higher priced chickens because of the recession.

Regardless of the reasons, every closure or departure is one less Californian working.


Filed under: Budget and Economy


  1. be still my heart. someone who cares about facts and reason instead of one liner slogans. Lakoff would be proud of you. See you tomorrow at 11:30

    Comment by barbara o'connor — 7.08.2010 @ 4:09 pm

  2. Thanks for the facts. Perhaps ASSEMBLYMAN DAN LOGUE will stop his, what The Bee’s Dan Walters and others, called Dan’s Dog and pony show.
    Nope, will go on and on. Facts be damned.

    Comment by CLWALKER — 7.08.2010 @ 5:17 pm

  3. I don’t see how these facts and reason really point to anything other than — while there may be a variety of reasons — a lousy business climate still remains as at least one reason why companies leave California.

    A lousy business climate isn’t just one thing or a soundbite. The fact we can’t pull together enticements like other regions is part of it. The ever-changing regulatory and tax requirements is another. The list goes on…

    We’re quickly getting to the point that the virtues of living and working in this state are being outweighed by its – primarily – government-driven vices.

    Comment by NoOneInParticular — 7.09.2010 @ 10:17 am

  4. Greg:

    You are right that there are many reasons companies leave California. The problem is we keep adding to them.

    Many suggest, that when faced with a tough decision, we should sit down and make two columns of reasons. One with reasons to stay and one with reasons to go. The cost of living, regulations, traffic and many more issues populate the “go” side.

    In the case of Proposition 24, the state would be piling on three more reasons to leave: taxing new jobs, making it more difficult to survive tough times and making it difficult, if not impossible, for firms to fully utilize earned research and development tax credits.

    When the “stay” side has “the weather” and “I like it here” and little else, it’s easy to understand why businesses move.

    Scott Maccdonald
    Communications Director
    No on Proposition 24, The Jobs Tax Initiative

    Comment by Scott Macdonald — 7.09.2010 @ 2:35 pm

  5. No matter what you say the truth is the companies once found California fruitful and now they don’t. Back then it didn’t matter where their customers lay they stayed here. There is always more than one reason a company makes a choice to close or relocate but the main reason is usually to make a bigger buck by cutting cost. The fact that many companies find leaving California a better way to cut cost is nothing but the truth. What ever the reasons they are leaving many families are suffering beyond what many of us can understand and something needs to be done as quickly as possible!

    Comment by Knowing the truth — 7.12.2010 @ 2:05 pm

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