Case Study: How Politicians Like Sen. Connie Leyva Motivate Companies to Leave California

Dec. 21, 2018 UPDATE TO THIS ENTRY: When Ashley Furniture announced that it would stop manufacturing in Colton (as reported below), it said the work will move to Wisconsin, Mississippi and North Carolina, all of which have reasonable labor rates, lower workers’ compensation costs, a thoughtful regulatory environment, lower energy costs and a merciful litigation environment. It didn’t mention Texas. However, the company has began manufacturing in Mesquite, which is near Dallas, where it will recruit 350 new employees in the second quarter of 2019. Meanwhile, Senator Connie Leyva who represents Colton, continues her business-bashing ways.

Manufacturing is the number one industry in California to pack up and move to states considered to be friendly to business. Since such losses are happening more frequently, let’s take a look at the record of a politician from a district that will soon lose a major employer. In this case, it’s Senator Connie Leyva who represents Colton.

seal_of_san_bernardino_county_california-svgBut, first things first. Ashley Furniture has announced it will stop manufacturing in Colton and furlough 840 employees.

The company didn’t say that California’s difficult tax and regulatory environment figured into its decision, but I can’t see how any business leader could ignore such factors when deciding whether to stay in or leave the state.

A company statement said that closing the facility will strengthen its production capability and cost structure so as to compete effectively.

The work will be transferred to Wisconsin, Mississippi and North Carolina, all of which have reasonable labor rates, lower workers’ compensation costs, a thoughtful regulatory environment, lower energy costs and a merciful litigation environment.

I have no connection with Ashley Furniture. But in my experience I’m confident that the company could reduce costs by 20-35 percent for each job moved, helping it to remain competitive in the dog-eat-dog retail world.

The difficulty of operating in California keeps increasing as our politicians (virtually always Democrats) repeatedly pass costly measures. More tax hikes. More regulations. More fees. More penalties. Much of that translates into bureaucratic harassment.

Ashley Furniture gave employees 60 days notice and met regulations governing layoffs. I’m sympathetic and understand why workers organized a protest in front of an Ashley retail store.

But by protesting at the company’s door, the workers drew attention to the effects of Sacramento’s actions.

It would be nice to see protests at the doors of the politicians who support business-killing, economy-killing, job-killing policies. In other words, speak out against the causes of California’s job losses.

Since Colton has lost jobs before, I decided to examine the work done by the state Senator who represents that community, Connie Leyva. Her website focuses on social issues relating to homeless students; the rights of housekeepers, nannies, and caregivers; and safeguarding children from predators.

All are noble causes, but I didn’t see efforts to boost a business’s prospects for success. In fact, Leyva voted for California’s absurd one-size-fits-all minimum wage, requiring employers in her lower-cost district to pay San Francisco-like high wages, especially when veteran employees demand to be paid more than unskilled workers. Why haven’t the employees protested outside of her office?

According to the California Manufacturers & Technology Association’s legislative scorecard for last year, Leyva has a feeble record of supporting job-creating bills. Another report, one by the California Chamber of Commerce, shows that every time she voted for a business-friendly bill, she voted three times for business-hostile legislation.

As President John F. Kennedy proved years ago, lower taxes boost economic vitality. Thus, it was logical for me to scan the scorecard from the Howard Jarvis Taxpayers Association, which gave Leyva an “F.”

Politicians failed to learn from the event seven years ago when CalPortland Cement closed its plant – also in Colton – because of high state-related costs.

Then, company President James Repman testified that staying in business “is becoming increasingly more difficult due to the myriad of regulations and agencies that oversee every aspect of our business…. The next new plant probably won’t be built in California meaning more good, high paying manufacturing jobs will be lost to Nevada or China or somewhere.”

The biographies for Gov. Brown, Sen. Leyva and most Democrats show that they’ve never run a company. Until voters who want good jobs become wiser about who they elect to office, and where to hold their protests, we will see more businesses leave the state.

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Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow.