Answer: Each runs a state whose hostility to business is entrenched, so much so that they continue to lose companies that move to friendly states. Not one of those Governors has the common sense to end their state’s short-sighted policies, nor will any take the blame for companies leaving their states.
Think of it. When have you ever heard of one of those Governors argue to ease business burdens such as excessive taxation and punitive regulations? All of their states – California, New York, Illinois and New Jersey– continue to lose companies that move their headquarters, back offices, factories and distribution centers to other states.
Lately, I’ve sensed that company headquarters exits from those states appear to be accelerating so I did a little test to get a snapshot of current developments. I searched news databases to determine how many departed in just the last month and I found 15 instances.
That is about double the number of HQ moves that I would expect to see in a typical month. Why the acceleration? I’m not certain but it may be motivated by threats of higher taxes or additional regulations under consideration in those very states.
Moreover, the 15 events are only the ones that became public knowledge. Actual moves are certainly higher as many smaller companies exit states quietly and stay out of the news.
Admittedly, the uptick may also reflect company decisions to move ahead with plans that were on hold when COVID was in its most devastating stages. But if that were the case, why aren’t headquarters migrating out of friendly states places like Texas, Tennessee and Florida?
Of the headquarters relocations, nine left California – which every year for the last decade has been the biggest loser of all – and two each left New York, New Jersey and Illinois.
Business-friendly states continue to gain as nine companies moved to Texas, three to Tennessee, and one each settled in Florida, Arizona and Indiana.
Relocations by company name and location are listed below:
No signs exist that Gov. Gavin Newsom or his colleagues in the legislature and bureaucracies will contribute to making the state friendlier to business. Look for more companies to leave California.
Nissei America sold its Anaheim headquarters in Orange County as it exits California for San Antonio, Texas where it is building a huge, “state-of-the-art” facility. The manufacturer of injection molding machinery is the U.S. division of Nagano, Japan-based Nissei Plastic Industrial Co. See the Orange County Register story Real estate news: Nissei America sells Anaheim HQ, leaving OC for Texas.
SmartAction, an artificial intelligence software company based in Los Angeles, California, is relocating its corporate headquarters to Fort Worth, Texas, where it will shift 81 jobs in the move. See the Dallas Morning News story California tech firm is moving its headquarters to Fort Worth.
TaskUs Inc., a customer service outsourcing company has moved its headquarters from Santa Monica in Los Angeles County, California to New Braunfels, Texas. Jeannette E. Garcia of the San Antonio Business Journal and Will Anderson with the Austin Business Journal reported that “The company lists its address on a registration statement filed with the U.S. Securities and Exchange Commission as being in New Braunfels. It’s not clear, however, when that change occurred, and the company declined to comment on it.” See (subscription required) After moving HQ to Texas from California, TaskUs files for IPO.
Green Dot, a fintech firm, is moving its headquarters from Pasadena, Los Angeles County, California to Austin, Texas. The relocation is coming about as the company embraces a permanent remote-working model forced by the coronavirus pandemic, according to CNBC Reporter Hugh Son. While employees who leave California stand to save on personal income taxes in states like Texas and Florida, the corporation itself won’t be saving much from a tax perspective, said CEO Dan Henry. Instead, he called Texas a very “business-friendly state” relative to California, where local rules could dictate how the company chooses board members, for instance. See more at CNBC: Green Dot joins corporate exodus from California as fintech firm moves to Austin.
Educational Media Foundation (EMF), the parent company of K-LOVE and Air1, will relocate its headquarters from Rocklin in Placer County, California to Nashville, Tennessee. Nick Pecoraro, writing in the Auburn Journal, quoted EMF CEO Bill Reeves as saying, “This move will enable us to better serve our audiences and deepen our relationships with faith-focused artists, content creators and the recording industry as we continue to broaden our media offerings through radio, online, film, streaming, books and more.” See Rocklin-based EMF headquarters relocating to Nashville.
HST Pathways has decided to move its headquarters from Lafayette, California, in Contra Costa County to Nashville, Tennessee. Joel Stinnett with the Nashville Business Journal wrote that CEO Tom Hui said he expects a “fairly significant migration of employees” to Nashville and that most of HST’s executive team is already there. HST creates software for ambulatory surgery centers. See (subscription required) HST Pathways moving headquarters from East Bay to Nashville.
Bonelli Doors + Windows will relocate its headquarters and operations from San Francisco to Mesa, Arizona, where it will design, manufacture and ship finished products. Company President Cameron Wyatt said Mesa is a great fit. “With its low cost of living, educated workforce, freeway connections to major markets and international airport, it is an ideal location for our headquarters and operations to be in one building,” he said. See the story Door and window company relocates manufacturing headquarters to Mesa.
Flannery Trim, a manufacturer, says real estate costs and taxes were reasons for moving its headquarters and distribution center out of California – namely the city of San Fernando in Los Angeles County – to Fort Worth, Texas. Ryan Salchert of the Dallas Business Journal wrote that General Manager Gary Jane II said the company “has outgrown our current California facility. We are doubling our warehouse space while only increasing our rent by about 50 percent, which was extremely appealing. In addition, none of our employees are going to miss the 13 percent state income tax or $4.00 a gallon gas prices.” See the story (subscription required) Behind the deal: Fort Worth company explains why it left California.
Wiley X, the protective eyewear brand, will relocate its global headquarters, manufacturing and distribution from Livermore in Alameda County, California to Frisco, Texas, by early 2022. Wiley X joins a growing list of California-based companies moving out of California, with many finding their new base in the Dallas and North Texas region. See story Wiley X Announces Move To Frisco, Texas.
Leaving New York
Gov. Andrew Cuomo is showing no inclination that he will implement policies that treat business interests with greater kindness or fairness. Look for more companies to leave New York.
Drive Shack shifted its executive hub/headquarters to Dallas, Texas from New York City earlier this year, CFO Michael Nichols said during a call with analysts this month, a move that only belatedly has become public knowledge. Brian Womack, wrote in the Dallas Business Journal, that Drive Shack is an owner and operator of golf-related leisure and entertainment venues. The company’s change of address was noted in a regulatory filing. The story is here (subscription required): See Another publicly traded East Coast company relocates HQ to Dallas.
Katapult, which provides eCommerce point-of-sale lease-purchase options, shifted its corporate headquarters to Plano, Texas from New York City. as of the first quarter of this year, CEO Orlando Zayas said, although the announcement wasn’t made until April 23. See Katapult Shifts HQ to Plano from New York.
Leaving New Jersey
Gov. Phil Murphy, in an apparent genuflection to labor unions, just vetoed a bill that could have led to an easing of harsh regulations on business. Look for more companies to leave New Jersey.
Tangoe, a technology expense management company, has relocated its global headquarters from Parsippany-Troy Hills in Morris County, New Jersey to Indianapolis, Indiana. Alex Brown, writing in INSIDE iNDIANA BUSINESS quotes Chief Strategy Officer Josh Garrett as saying, “The access to talent, support from the local and state government, and the cost of doing business in central Indiana boosted our decision to relocate; it just makes a lot of business sense.” He also cited Indiana’s business climate and tech ecosystem as additional reasons for the move. See Tangoe Moves Global HQ to Indy.
NRG Energy will no longer split its headquarters operations between Princeton, New Jersey, and Texas and has designated Houston as its sole corporate headquarters. NRG will maintain regional offices in the markets that it serves as it continues to grow. See their announcement NRG Energy, Inc. Reports First Quarter 2021 Results.
Gov. J.B. Pritzker has a basket of ideas that are unfriendly to business interests. Look for more companies to leave Illinois.
Signode, a division of Crown Holdings Inc., will relocate its corporate headquarters from the Chicago suburb of Glenview, Illinois, to Tampa, Florida by 2022. Veronica Brezina-Smith wrote in the Tampa Bay Business Journal that the company also evaluated sites in Illinois. The move is a significant win for Florida as the manufacturing company has more than $2B in revenue, 80+ manufacturing facilities across 6 continents and 7,000+ employees worldwide. See (subscription required) Here’s why Signode wants to put down roots in Tampa Bay.
Advanced Correctional Healthcare Inc. announced its HQ move that brings 58 jobs from Peoria, Illinois to Franklin, Tennessee. Adam Sichko writes in the Nashville Business Journal: “‘Advanced Correctional Healthcare is growing — and so are Illinois’ taxes, some of the highest in the nation!'” CEO Jessica Young said. “‘Our team looks forward to lower taxes, lower cost of living and top-rated schools.'” See the story (subscription required) Advanced Correctional Healthcare Inc. relocates headquarters from Illinois to Franklin.
Companies undertake the expense of moving to help bolster their bottom lines, improve their competitiveness, and in doing so select communities with attractive living conditions to more easily attract new employees.
Expect more companies to leave dysfunctional states in full or in part and relocate to others with more reasonable taxes and a friendlier business environment.
About Spectrum Location Solutions
To explore whether a location-related move, expansion or consolidation makes sense for your company, contact Joe Vranich at 800-508-5138. The no-fee, no-obligation consultation will be completely confidential.
Spectrum Location Solutions provides site-selection consulting services to help companies of all sizes find optimal places to call their new home. Spectrum’s network includes help for business owners through a private equity firm that will finance relocation costs and a realtor network to assist company employees with housing searches. By working with Economic Development Agencies nationwide to identify appealing sites and economic incentives, Spectrum has found optimum settings for headquarters, back offices and manufacturing facilities. Joe established the firm more than a decade ago as The Business Relocation Coach with the motto: “Helping Businesses Grow in Great Locations!”