In the last 10 years, Texas has added 732,800 private sector jobs, the most in the US, while California showed the biggest loss of such jobs with a decline of 623,700. The Wall Street Journal reported that Fujitsu Frontech, which recently announced it would leave California, became the 70th business to leave the state since January. An average of 4.7 businesses are moving out each week. What’s driving the business exodus from California? Business owners and analysts boil it down to one word: government. Many claim that California’s red tape and regulations are killing business. California has the fourth largest government of all U.S. states, with spending equal to 18.3% of the state’s GDP. California’s highest state corporate income tax rate is 8.84% and its highest personal income tax rate is 10.55%, compared with other states like Texas which don’t have such taxes. The San Francisco Examiner also reports that California’s capital gain tax and energy taxes are the highest in the country. Job growth in the Silicon Valley has flat-lined. Firms keep their headquarters there, but pursue growth in friendlier states. Google, Intel, Cisco, and other companies locate new plants in states such as Arizona, Utah, Texas, Virginia or North Dakota. California has the second highest unemployment rate in the U.S.
With that in mind, let’s look at the specific example of a new business locating to Visalia’s industrial park, VWR. That company has purchased a 33-acre site, upon which it will build a 500,000 square foot facility (larger than 8½ football fields), with room for expansion. VWR is a global scientific and laboratory supply distribution company. It outgrew its Brisbane and San Dimas, California facilities years ago (where it rents), and will be closing those operations to relocate to its own property in Visalia. Over 100 jobs will be created here and posted on vwrjobs.com for Visalia residents to apply. The new Visalia location will double VWR’s footprint on the west coast and allow the company to reach more customers with next-day deliveries. They looked at other options outside of California, but chose the Central Valley, and settled on Visalia simply because it was the best geographic location and had the available infrastructure. The construction project is due to be finished by mid 2012.
In the free market system, some businesses come to Tulare County, and some businesses leave, that is their prerogative. It is the city’s job to make our community attractive to both businesses that are already here, and to those that are seeking to relocate here. The realities are that the San Joaquin Valley has an available work force, and the cost of doing business here is less than in other areas of the state.
Now, let’s look at how "business friendly" California has responded to VWR’s move to Visalia. San Francisco Congresswoman Jackie Speier told a crowded room full of anxious Teamsters recently that she would do everything in her power to keep VWR from leaving her district. "I’m going to make it a living hell for them moving forward," Speier said of VWR. State Treasurer Bill Lockyer also was at that meeting, and said that he was reviewing whether the state’s employee retirement system, CalPERS, should continue to invest in the parent company of VWR. Speier chimed in "This is a moral issue," comparing it to divestment campaigns against apartheid South Africa in the 1980's. While VWR’s current facility in the Bay area is a union shop, in Visalia the company will operate, at least initially, with non-union workers. Accordingly, the Teamsters union filed a lawsuit against VWR and the Visalia City Council, claiming that the city did not follow appropriate CEQA (California Environmental Quality Act) procedures, and trumping up claims that an additional 10,000 daily truck trips would be made in and out of Visalia. That lawsuit was successfully defensed, and construction goes forward. Now, the Teamsters and others have sent letters to the California Dept. of Industrial Relations, claiming that the VWR distribution facility and the improvement of adjoining Riggin and Kelsey roads are covered by the prevailing wage law, which could increase the cost to the city of widening those roads by $250,000.00! The city’s response is that the VWR private development project is separate from the road project, and that this is a municipal road project not involving any state, county or regional funds such that the provisions of the city charter, not the prevailing wage law, apply.
VWR recently wrote that it feels like it has been attacked and discredited by state officials and the unions, who have made statements that are untrue, unfounded and without merit. VWR stated that it has been committed to the State of California for over 50 years by providing employment, tax dollars and community support. They made it clear that if they had not found Visalia, they would have relocated out of state under these circumstances.
While it appears that California is adopting policies that drive businesses away, I for one, welcome VWR and other businesses to our community, and pledge that Visalia will do what we can to make them feel welcome here. P.S. When VWR, Super Walmart and others come on line, watch how the local tax revenues will blossom, and budgets will balance.
If you have questions or topics regarding the city which you would like to have addressed in future articles, please email Warren at wgubler@ci.visalia.ca.us, or call (559) 713-4400 x 3313. For past articles, visit directfromwarren.blogspot.com.
Warren Gubler
Visalia City Council Member
