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
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