Co-author of the Reason Foundation’s 2008 study, “The California High Speed Rail Project: A Due Diligence Report”, whose warnings about the project have over time proven to be accurate. Rarely has one promotional blurb on a book jacket hooked me into immediately opening the pages and reading late into the night. However, this one line […]

Since the beginning of this year, California has experienced 129 disinvestment events, an average of 5.4 per week. Comparing this year thus far with 2009, when the total was 51 events, essentially averaging 1 per week, our rate today is more than 5 times what it was then.

Hence, California is experiencing the fastest rate of disinvestment events based on public domain information, closure notices to the state, and information from affected employees in the three years since a specialized tracking system was put into place.
No one knows the real level of activity because smaller companies are not required to file layoff notices with the state. A conservative estimate is that only 1 out of 5 company departures becomes public knowledge, which means California may suffer more than 1,000 disinvestment events this year. The capital directed to out-of-state or out-of-country, while difficult to calculate, is nonetheless in the billions of dollars.

If I hadn’t heard it from clients I wouldn’t have believed
it – Californians are asking their companies to leave the state.

Some time ago a decision-maker told me he had evaluated the
benefits of moving his department out of Los Angeles. He said: "When I
discovered how substantial the savings would be, I quipped in front of my
staff, ‘We should move to Texas.’ I was surprised by what happened next –
people approached me one by one, came in my office, closed the door, and asked
that we move to Texas. Once I saw the employee reactions, I’d like for the
relocation to occur."

Businesses relocate generally for cost factors (taxes, the
burdens of excessive regulations, high rents) but people move for life-style
reasons. Here is a sampling of employee motivations:

In the seven weeks since the last report, another 11 companies have left California completely or re-directed substantial capital to build facilities out of state that in an earlier era would have been built here. The number in today’s list is lower than the usual four-per-week average and I believe it’s because companies shy away from making such announcements during the end-of-year holiday season.

The names of the companies and justifications for listing them appear in the list below, which builds upon the Dec. 6, 2010 entry regarding 193 companies here (which in turn builds on previous lists).

In brief:
Company total for 12 months of 2010: 204
Company total for all of 2009: 51

Yesterday, while attending the delightful little musical "Daddy Long Legs" at the Laguna Beach Playhouse, none other than Arnold Schwarzenegger popped into my mind. Why? Well, the song, "I Couldn’t Know Someone Less" reminded me of him. When he became governor he showed promise that he would reform our dysfunctional state government. But he turned out to be an abject failure.

Someone has to say it, so I will: Arnold Schwarzenegger is the worst governor in California’s recent history. If we were doing articles of impeachment, then "injuring virtually every industry" would be one of many charges.

He deserves that distinction for many reasons, but the tipping point for me came last week during the appearance by Aaron McLear, Schwarzenegger’s press secretary, on Fox Business News. While speaking on "Varney & Co," he misrepresented California’s economic condition by saying that when it comes to companies leaving the state, well, he "doesn’t see evidence of that"; and by gosh the state’s "private sector is doing great"; and that our tax rate is about the same as in other states. When asked about unemployment, he said, "Well, unemployment is bad everywhere." Does the governor know that last week so many jobless people called the Employment Development Department that their phones crashed?

In the three weeks since my last tally, I’ve learned about another 14 companies that have left California completely or re-directed capital to build facilities out of state. The names of the 14 and justifications for listing them appear below. Today’s entry builds upon the Sept. 21 entry 144 Companies Shrink from Calif. This Year – Three Times the Total for All of 2009.

In short:
Total for 9-1/2 months of 2010: 158
Total for all of 2009: 51

Five enterprises represent the type of operations coveted by many California politicians — "green" companies — namely DayStar Technologies, Vetrazzo, SMA America LLC, Enfinity Corp., and Power-One. Those companies have opted for Georgia, Arizona, Colorado and an apparently as-yet-undetermined "overseas location."

What a gap we have in the thinking of California’s academic types and business leaders about whether companies are fleeing the state because of high taxes, over-regulation and general hostility to commercial enterprises.

The Public Policy Institute of California (PPIC) has updated a report about companies leaving California that concludes the exodus is exaggerated. The San Francisco-based think tank says that between 1992 and 2006, jobs leaving the state never accounted for more than 2.3 percent of job losses in any given year. So, folks, don’t worry.

However, for two years in a row Chief Executive magazine found California to be the worst state in the nation in which to do business. Said one CEO, "California is terrible. Even when we’ve paid their high taxes in full, they still treat every conversation as adversarial. It’s the most difficult state in the nation." The magazine called California the "Venezuela of North America."

In executive coaching, there is a saying: "The problem you define is
the one you solve." Based on what I’ve seen, California is in serious
trouble because many people refuse to admit to one of our big problems
– the flight of businesses, capital and jobs to other states and
nations.

Good information about the phenomena is hard to come by. Hence, out of
frustration, a year ago I began compiling a list of what I call
"California Disinvestment Events."

The new compilation shows that 144 companies have fully or partially
engaged in such events during the first three quarters of 2010, nearly
triple the 51 companies discovered for all last year. You can see the
list of companies that disinvest along with explanatory context here.