An announcement in the March 25 edition of the Phoenix Business Journal (PBJ) of a company moving its operations from Santa Fe Springs, CA, to Phoenix reminded me of just how many businesses have made that move over the past few years. Belgium-based Latexco US, a manufacturer of polyurethane and latex foam mattress products, will relocate to an 88,000-square-foot facility in southwest Phoenix.
The company plans to hire 40 people to work in the new plant, according to the PBJ. Chris Comacho, President and CEO of the Greater Phoenix Economic Council, said in a statement to the PBJ, “The expansion of business out of California continues to create wins for greater Phoenix and enhances our reputation as a place where businesses can scale and succeed.”
In 2016, the latest year for which I could find statistics, 1800 companies either relocated or disinvested in California. An editorial in MarketSmith by Investors Business Daily (Dec. 17, 2018) noted that business relocation expert Joe Vranich is telling clients to leave the business-hostile state because its climate continues to worsen.
In December a new law passed—the Immigrant Worker Protection Act—making it a crime under certain circumstances for businesses to follow federal immigration law that requires companies to use E-Verify to ensure that potential employees are legally entitled to obtain jobs in the United States. Failing to follow federal law is also a crime, so businesses find themselves in a Catch-22. That’s on top of Prop 65, which classifies nearly every chemical used to make anything as toxic and subject to fines, putting the plastics industry in the cross-hairs of the legislature of the People’s Republic of California.
Vranich did a study and found that in 2016, “$76.7 billion in investment capital was diverted from California, killing an estimated 275,000 jobs.”
Most of the companies leaving California are choosing Texas as their relocation site because of the state’s low business tax rate. Arizona has also been the recipient of businesses from California, as has Nevada. I remember writing several years ago about an injection molding company that moved from California to the Las Vegas area. Not only did the company move but most of the employees moved with it. For many, it was the first time they were able to afford to buy a home.
Arizona welcomes these new businesses, several of which have been plastics manufacturers over the years, to call Arizona home.