Companies Bid Farewell to California

Hot on the heels of other tech giants leaving for Utah, Intel announces its plan to build a factory in Oregon. This brings the count up to 158 companies that have left California so far this year. Joseph Vranich, a business relocation coach, joined Varney & Co. this morning to explain why companies are running for the hills.

“California is losing businesses at a 3:1 ratio and we’re not even through with the year yet,” said Vranich. “It’s high-tech, it’s low-tech, it’s all-tech. We have a small company in California, in Los Angeles, leaving with 25 people but it’s Intel that creates 1,000 jobs elsewhere that makes the headlines.”

Intel announced that it will be investing billions to upgrade factories in Arizona, in addition to building a new factory in Oregon. The plan is projected to create between 6,000 and 8,000 construction jobs and 800 to 1,000 high-tech factory jobs, a huge loss for California. “The Intel investment in Oregon, when you add it to Arizona, is $8 billion, with a “B,” so the exodus of capital from California is running at an alarming rate,” said Vranich.

The number of companies has dramatically increased since 2009, when only 51 companies left California. Are the costs of running a business that high in the state? “Companies like Intel and McAfee, when they locate a new employee outside of the state’s borders, they could do so at a cost of 30% to 40% less than in California,” said Vranich. “Right now, Intel will probably save about 60% on their electric bill, but when the new environmental regulations and rates increase next year, their electric bill in Oregon could well be an astonishing 80% to 90% less than in California.”

The number of companies leaving California is a backlash of the state’s financial woes. To companies, it makes sense to leave the state if they have alternate locations at lower-costs, and Vranich agrees. “[Intel] has publicly stated that costs are so high in California that they will not build a new plant in California,” said Vranich. “And I’ve publicly commended the CEO for being candid about California.”