holiday weekend news - Businesses Exit California and Illinois
it seems to be a growing trend that 'unpopular' news items wind up being released during holiday weekends when most Americans aren't paying attention to the news !
from Mish Shedlock at
(snip)"Businesses have had it with poor business conditions in two of the most dysfunctional states in the union, California and Illinois.
In an editorial, the Orange County Register reports Even profitable firms fleeing California
Democratic reaction to the news that Waste Connections, a $3.6-billion company and major Sacramento-area employer, is headed to Houston to seek a friendlier business climate tells other businesses all they need to know about the attitudes of those who run California's government.
State Senate President Pro Tem Darrell Steinberg, D-Sacramento, gave these clueless and snarky remarks in response to the news: "In this instance you have a company that is, in fact, profitable, making significant revenue gains in 2011 and 2010. That doesn't speak to a bad business climate here in California when a good company is able to thrive in that way. So whatever Mr. Middelstaedt's (company CEO) reasons are to leave the great state of California, I know I'm pushing back."
Is it really the Senate president's role to determine the proper profit margin for a privately owned company? Talk about arrogance.
"The decision by Waste Connections to relocate, despite the 17 percent revenue increase and the $18 million cost to move to Texas, illustrates that businesses will endure short-term costs to ensure long-term prosperity," wrote state Sen. Mimi Walters, R-Laguna Niguel, in response to Steinberg's message. Walters quotes business-relocation expert Joe Vranich of Irvine, who notes that businesses typically save 40 percent in costs by leaving California because of lower taxes and more manageable regulations found elsewhere.
If California wants to improve its business climate and reduce its double-digit unemployment rate, its officials need to understand what companies such as Waste Connections are saying, rather than simply dismiss their concerns
Businesses Bargain for Better Deals in Illinois
The Chicago Tribune lists 10 companies with an eye in exiting the state in Illinois companies eyeing an exit
Chicago's huge futures exchange owner CME Group has joined a growing list of companies threatening to leave Illinois as a result of the state's corporate tax increase earlier this year. Illinois pushed through the 45 percent corporate tax increase in January, trying to address one of the biggest budget shortfalls of any state in the U.S. But the move proved to be a risky step -- since then, both small and large companies have complained about the increase, and some have received incentives to stay put.
Also on the list: Sears, Motorola Mobility, Caterpillar, Navistar, Mitsubishi, US Cellular, Jimmy John's, and continental Tire.
Small Businesses, Taxpayers Screwed
On December 12, Illinois House approved CME-CBOE, Sears tax deal. Indeed, most of the above companies negotiated huge tax breaks and will stay in Illinois at least for a while.
Small companies with no clout and no leverage as well as taxpayers in general are the ones paying the price for the seriously misguided policies of Democratic Governors Pat Quinn, and Jerry Brown.(snip)
[ article shows table of various state unemployment rates, with IL = 10.0% and CA = 11.3% - sic ]
(snip)"California and Illinois have many things in common:
•Harsh business environments
•High tax rates
•Both states are among the most pro-union states
•Both states lack right-to-work laws
That California and Illinois suffer from business flight and high unemployment should not be surprising. (snip)
One potentially nasty take-away is that Illinois is already entering into 'special tax deals' with particular gov't approved major businesses located in that state ... which is an arguable dis-service to competing businesses who were not granted similar financial 'perks', as well as to small businesses and individual taxpayers who must now shoulder a greater share of the state's tax burden. Arguably, this isn't much different than the federal gov'ts preferential treatment ( using taxpayer dollars ) for GM, Chrysler, Firestone, etc.
~
Re: holiday weekend news - Businesses Exit California and Illinois
Crony capitalism at work. Businesses live in a regulated environment, but that doesn't mean they have to like it, or don't shop around for less costly environments. But, when some businesses get preferential treatment just because of their "connections" to the Governor, President, Prime Minister, whomever, that poisons the environment for the rest of us.
Z
Re: holiday weekend news - Businesses Exit California and Illinois
That's how it is in Illinois. Cronyism is the only way a company gets tax breaks. Meanwhile the governor got this bright idea to raise taxes on everyone while the economy is failing. I wish I could elaborate but then it becomes political. I used to work for a certain taxpayer subsidized railroad in Chicago and let's just say pay for play is the only way to get tax deals in Illinois. Then again all I need to say is our last governor is going to prison and the one before that is in prison and that's proof of how dirty things are in Illinois.
Re: holiday weekend news - Businesses Exit California and Illinois
We told you so. We told you so. Melonie and I have been predicting this for about two years now. At least.
Re: holiday weekend news - Businesses Exit California and Illinois
Oh I've known this would happen in Illinois for years. The corrupt politicians (and it's both parties)are out of control. When I worked at corrupt railroad I would sometimes handle the bills and the spending was out of control while they claimed poverty.
I live about a half hour or less from Indiana and that is where I am concentrating on job searching. The companies are going just over the border and are still close enough to Chicago but far enough away. I don't blame them, if I could I would buy a house in Indiana instead of Illinois.
Re: holiday weekend news - Businesses Exit California and Illinois
Quote:
Originally Posted by
Eric Stoner
We told you so. We told you so. Melonie and I have been predicting this for about two years now. At least.
Even a broken clock is correct twice a day.
Re: holiday weekend news - Businesses Exit California and Illinois
Quote:
Originally Posted by
jimboe7373
Even a broken clock is correct twice a day.
Ouch ! You cut me to the quick with that one. So original too. I'm just too impressed for words.
Btw, just on the off chance, you wouldn't have anything relevant or germane to contribute , would you ?
Re: holiday weekend news - Businesses Exit California and Illinois
Quote:
Originally Posted by
Eric Stoner
Ouch ! You cut me to the quick with that one. So original too. I'm just too impressed for words.
Btw, just on the off chance, you wouldn't have anything relevant or germane to contribute , would you ?
Mock the statement all you want Eric it happens to be true and also it is a very good example of how some of the negative ideological predictions made will of course come true if given enough time.
As to something relevant to contribute, I'll just use my standard tagline that there is progress or decline depending on where or how you choose to look, there are no absolutes, there is only change. Those not fearful of change and who look for opportunity will likely find it, those with locked in or frozen mentalities who seek to lament how things have declined and seek evidence supporting their position will find that too.
Some cases in point for California:
"We've been investing in this area since 1999, and we've never seen a level of activity higher than it is today," said venture capitalist Nate Redmond of Rustic Canyon Partners in Santa Monica. "Anecdotally, almost all things tech are doing well."
http://articles.latimes.com/2011/dec...-tech-20111211
"There is much talk about the poor business climate in California, but we're finding that the data tells a different story," said Doug Henton of Collaborative Economics, a Silicon Valley-based firm that prepared the Index for Next 10. "Californians actually pay less overall for electricity due to our state's energy efficiency standards. We also find that despite the talk of businesses fleeing California, the state is in fact gaining substantially more businesses every year than are closing and leaving."
http://www.prnewswire.com/news-relea...104499074.html
Re: holiday weekend news - Businesses Exit California and Illinois
Quote:
Originally Posted by
jimboe7373
Mock the statement all you want Eric it happens to be true and also it is a very good example of how some of the negative ideological predictions made will of course come true if given enough time.
As to something relevant to contribute, I'll just use my standard tagline that there is progress or decline depending on where or how you choose to look, there are no absolutes, there is only change. Those not fearful of change and who look for opportunity will likely find it, those with locked in or frozen mentalities who seek to lament how things have declined and seek evidence supporting their position will find that too.
Some cases in point for California:
"We've been investing in this area since 1999, and we've never seen a level of activity higher than it is today," said venture capitalist Nate Redmond of Rustic Canyon Partners in Santa Monica. "Anecdotally, almost all things tech are doing well."
http://articles.latimes.com/2011/dec...-tech-20111211
"There is much talk about the poor business climate in California, but we're finding that the data tells a different story," said Doug Henton of Collaborative Economics, a Silicon Valley-based firm that prepared the Index for Next 10. "Californians actually pay less overall for electricity due to our state's energy efficiency standards. We also find that despite the talk of businesses fleeing California, the state is in fact gaining substantially more businesses every year than are closing and leaving."
http://www.prnewswire.com/news-relea...104499074.html
I know I am not, but if I were the Moderator of this forum I would mandate that posters READ their own links ! Did you ? Did you really ?
Your first link supports little more than the possible creation of another "dot.com " bubble. Let's see how many of those terrific start ups are still around five years from now. Or better yet, how many are showing a PROFIT three years from now. It's curious that the quoted speaker talks of increased "activity" while the article itself just talks about start ups. On person "start ups" that end up going nowhere do NOT employ very many people. Or generate profits. Or pay much in taxes. Even worse, the "Silicon Beach" touted by the author cannot get 10% of the financing enjoyed by the more established "Silicon Valley" to the north. Said "Valley" is a shell of its former self btw. You do recall the bursting of the "Dot.com" bubble in 1999 ?
Your second link is even worse. The business and employment stats are from 2007 and 2008 ! Aren't we about to start 2012 ? Just a wee bit behind the times, wouldn't you say ?
BOTH articles cherry pick a few positives and try to substitute "happy talk" for cold, hard economic facts. Like California's current unemployment rate ; rating as one of the worst states to do business ; its DECLINING tax base etc.
As for "accepting change" and profiting therefrom, I've done both. The two North Miami condos I bought for a song three years ago have both been sold to Brazilians. They are now the new "Euro-Trash" and are buying up everything that is not nailed down in South Florida. Wouldn't be a bad idea to learn Portugese ladies.
Re: holiday weekend news - Businesses Exit California and Illinois
^^^I'm not going to engage in any more of the senseless banter on this thread beyond this post as I have largely stayed away from posting in Dollar Den because it's just a huge waste of time trying to engage in dialogue with people who seem to just want to argue endlessly about minutia.
That said, my links were simply to refudiate the ever present, ideology based and one-sided statements that everything is horrible and only getting worse.
My examples were only concerning business start-ups or relocation in California- it had nothing to do with profit, employment or anything else. Further, there were stats from 2010 in the 2nd article, showing Venture Capital growth of 246%.
In the first article, it mentions all the companies that are starting up there, this directly relates to the OP. Your demeaning of the article and the news of people opening up businesses and trying to improve the overall economy by asking "how many of them will be around in 5 years" is a clear example of how some people will go out of their way to be negative even while positive actions and signs are staring them in the face.
Re: holiday weekend news - Businesses Exit California and Illinois
Quote:
My examples were only concerning business start-ups or relocation in California- it had nothing to do with profit, employment or anything else. Further, there were stats from 2010 in the 2nd article, showing Venture Capital growth of 246%.
I feel obliged to make further comments about the inherent 'difficulties' with the so-called California start-up business model you keep advocating.
With a conventional business model, some bright entrepreneur comes up with an idea for a new product for which a WILLING free market exists. Based on the promise of future PROFITS, private sector venture capital is invested. Based on actual future PROFITS, self sustaining JOBS and ongoing TAX REVENUES are generated.
With the recent California start-up business model, some connected entrepreneur comes up with an idea for a new product which is politically correct but for which a willing free market does not exist. Based on the political correctness, the gov't uses REGULATIONS and taxpayer funded INCENTIVES to create a market. Based on the same gov't created market, gov't venture capital ( i.e. taxpayer 'stimulus' money ) was 'spent' to get the start-up business off the ground. Private sector venture capital may also be attracted based on TAX CREDITS. Lacking a self-sustaining market, the start-up business continues to employ people and stay in business as long as taxpayer funded grants and loans keep providing more cash for the start-up company to burn through. And any profits generated never equal the amount of taxpayer dollars being sunk into the start-up business. Nor are any net tax revenues ever generated. And as soon as the taxpayer funded grants and loans stop coming, or the gov't created captive market disappears, the start-up company goes bust.
As to your negativity comment, you bet your a$$ that I'm negative about the latter business model ... since my US taxpayer dollars ( and yes I still pay US taxes even though I'm no longer residing in the USA ) are involuntarily being funneled into 'crony capitalism' start-up business ventures where the business model doesn't ever involve terms like 'net profits' or 'self-sustaining' or 'tax revenue positive' ... but instead involves terms like 'production tax credits for rich California investors' which can then be applied toward reducing their otherwise very high federal and state income tax liability. Arguably, California's nice weather isn't the reason that the California start-up business model gravitated to California, while the private sector financed, self sustaining, profitable, net positive tax revenue generating business model is gravitating to Texas etc.
.
Re: holiday weekend news - Businesses Exit California and Illinois
Quote:
Originally Posted by
jimboe7373
^^^I'm not going to engage in any more of the senseless banter on this thread beyond this post as I have largely stayed away from posting in Dollar Den because it's just a huge waste of time trying to engage in dialogue with people who seem to just want to argue endlessly about minutia.
That said, my links were simply to refudiate the ever present, ideology based and one-sided statements that everything is horrible and only getting worse.
My examples were only concerning business start-ups or relocation in California- it had nothing to do with profit, employment or anything else. Further, there were stats from 2010 in the 2nd article, showing Venture Capital growth of 246%.
In the first article, it mentions all the companies that are starting up there, this directly relates to the OP. Your demeaning of the article and the news of people opening up businesses and trying to improve the overall economy by asking "how many of them will be around in 5 years" is a clear example of how some people will go out of their way to be negative even while positive actions and signs are staring them in the face.
I know. I was being picky. Who cares about profits , employment numbers or the tax base ? Why bother about such "minutiae" ? Silly me.
I note that you refer to "relocation IN California ". What about relocation TO California ? How many firms are doing THAT ?
The failure to ask such questions as: "Where will this company be in five years ? " ; "Is it profitable ? " ; " What are the three year profit projections ?" etc. led directly to the Dot.com bubble and the market crash caused when it burst. Under the old underwritiing rules, before a firm like Goldman Sucks underwrote an IPO the company had to show three straight years of profits. That was tossed aside by Goldman , Merrill Lynch , Morgan Stanley et. al., not to mention Clinton's SEC and led directly to the Dot.com bubble.
Re: holiday weekend news - Businesses Exit California and Illinois
In regard to your question about relocation TO California, the OC Register just posted some additional info in regard to Waste Connections' relocation, which was the specific example cited in the OP.
from
(snip)"Democratic reaction to the news that Waste Connections, a $3.6-billion company and major Sacramento-area employer, is headed to Houston to seek a friendlier business climate tells other businesses all they need to know about the attitudes of those who run California's government.
State Senate President Pro Tem Darrell Steinberg, D-Sacramento, gave these clueless and snarky remarks in response to the news: "In this instance you have a company that is, in fact, profitable, making significant revenue gains in 2011 and 2010. That doesn't speak to a bad business climate here in California when a good company is able to thrive in that way. So whatever Mr. Middelstaedt's (company CEO) reasons are to leave the great state of California, I know I'm pushing back."
Steinberg claims to have worked on improving the state's business climate, but from what we see in Sacramento, Steinberg and the party he helps lead have been pushing hard mainly for additional regulations and much higher taxes. The California Democratic Party's attitude long has been that businesses are basically trying to rip off the public, and the source of all wealth and advancement can be found in the public sector, When businesses leave. Steinberg and Co. show little sympathy.
Is it really the Senate president's role to determine the proper profit margin for a privately owned company? Talk about arrogance.
"The decision by Waste Connections to relocate, despite the 17 percent revenue increase and the $18 million cost to move to Texas, illustrates that businesses will endure short-term costs to ensure long-term prosperity," wrote state Sen. Mimi Walters, R-Laguna Niguel, in response to Steinberg's message. Walters quotes business-relocation expert Joe Vranich of Irvine, who notes that businesses typically save 40 percent in costs by leaving California because of lower taxes and more manageable regulations found elsewhere.
State Democratic leaders ignore the obvious. Liberal-leaning think tanks have produced studies alleging that few businesses actually leave the state. That is true on its surface, although Fox News reported that more than 2,500 employers, accounting for 109,000 jobs, have left California in the past four years.
While a limited number of businesses go through the trouble of pulling up stakes and high-tailing it to Texas, Nevada or Arizona, many others just quietly go out of business. Others keep their headquarters here, but expand their operations elsewhere. Many jobs are never created or opportunities pursued because of the punitive regulatory and tax climate in California, where Steinberg's true constituency – the public-sector unions that enforce the myriad regulations and laws – does its work.(snip)
While this report includes comments from state political officials ( from both sides of the aisle ), the pertinent economic facts remain valid. 2500 former California employers and 109,000 former California jobs have officially left the state for greener pastures in the past 4 years. Beyond that number, an unknown number of other California businesses and jobs have simply 'disappeared' by quietly going out of business. And beyond those numbers, an unknown number of California businesses retain a presence in California, but invest in expansion at facilities in different states.
~
Re: holiday weekend news - Businesses Exit California and Illinois
California is a less than stellar business case for my company. However, when I was with the VC, we did a couple of deals in California. What they do really, really well there is R&D type companies. No real problem with those and California has a great university system to produce lots of smart young people to work in those types of companies. Having said that, NC, Texas and Massachusetts also have great university systems that churn out top quality grads. My VC did deals in those states too as well as Indiana and Michigan. (Good universities, but lots of people choose to leave. I did.)
What you have in California is a really fouled up state budget and tax system, really high costs of living and some really great places to live and work. To make a go in Cali, your business has to generate lots of revenue per employee. That means that for a state with a big population, there are going to be lots of people who cannot find work in the businesses that can prosper there. That is a problem.
What is happening now is people are leaving California. Middle class and lower middle class with less than great/in demand degrees. The people who are departing will find work elsewhere and hopefully make a life for themselves. The people who are coming in are either very poor and don't speak/read English well and don't have a top quality education or those with a really top quality education who do read/speak English well. That makes the income gap worse. That increases the burden on schools, public and private. That increases the burden on the welfare system to the point where tax revenues don't come close to equaling expenses. (Where California is now.)
How to fix the problem? Within the terms of economic discussion, California has a job creating system that emphasizes high revenue producers. They have to build on that. They will have to make a decision though about industry that is not so high in revenue per employee. Right now, it's all but impossible to get a permit to build a factory that employees a lot of people at middle wages. California has not built an oil refinery in decades. Yet, Californians consume massive quantities of refined petroleum products in their cars sitting in endless traffic jams. This is a disconnect that cannot continue for long.
Bottom line, California has its work cut out for it. Illinois is, I think, in better shape. They have a corruption problem. That can be solved by a dedication to cleaning up politics. Put lots more politicians, bureaucrats, judges and cops in jail and Illinois gets better in a hurry. The rest of the farm belt has done relatively well through this deep - dark recession. Illinois should do likewise.
My $.02 anyway.
Z