California has been afflicted by the curse of the runaway
corporation for sometime now. With the announcement on Monday that aerospace
giant, Northrop Grumman Corp., will be moving its headquarters from Los Angeles
to Washington D.C., we lose the last major aerospace firm in the state.
Northrop, California’s 3rd largest Fortune 500
Company, is the most recent departure in a long list of top companies to leave
the state. As reported in the Los
Angeles Times, Northrop’s relocation means only 19 Fortune 500’s remain in
California, when in 2006 there were 23.
Though the company will still be one of the state’s largest private
employers, the loss is a blow to California, the birthplace of the aerospace
industry.
Northrop’s CEO, Wes Bush, says the company is moving its
headquarters to be closer to its biggest client: the U.S. Government. But the move makes a bigger impact when
we look at other industries that have been fleeing California. Hilton
Hotels Corp. recently relocated to Fairfax, Virginia, to lower its cost of
doing business. EBay,
the online auction website with deep roots in San Jose, recently announced it
will be creating 450 new jobs at a $334 million complex in Utah, in return for
$30 million in tax breaks from the state.
And there’s much more….
CalPortland Cement, a 118 year old company that once gave us
the cement to build our first freeways, announced recently that it’s closing
down its Riverside County plant because of new environmental regulations from
AB 32. CalPortland’s CEO, Jim
Repman, recently told
the State Senate Labor and Industrial Relations Committee "A cement plant
cannot be picked up and moved, but the next new plant probably won’t be built
in California – meaning better, high paying manufacturing jobs will be lost to
Nevada or China or somewhere."
Just yesterday, the Los Angeles City Council took its first
step toward creating a new Film Commission,
to prevent television and movie production from leaving the city. Production of feature films in Los
Angeles – the home of the film industry – last year was about half of its 1996
peak. Production companies, like other businesses get tax breaks in other
states that aren’t available in California.
But, we can’t blame runaway production, or runaway
corporations, on the treats being offered by other states: we have to look at
what our own business environment has become. Capitol Weekly is reporting
that Governor Schwarzenegger plans to extend last February’s tax increases, and
to stall corporate tax credits in his new budget; he will call for an emergency
session to see that it is done quickly. All the while, over 3,000 Californians
leave the state every week.
This may be a wild assumption, but if everyone is running
away from California, then maybe California is the problem.