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Funny Business
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I’m in Reno, Nevada today, where a group of Republican California legislators has come on a fact-finding mission to discover why businesses are fleeing the Golden State for the Silver State. Actually, they already know the answer. Taxes. Red tape. Regulatory agencies. The weather can only make up for so much.
Something called The Small Business Survival Index ranks California 49th in business friendliness. But Nevada, which has no state income tax, ranks 2nd.
Nevada politicians will also be at the fact-finding event to make sure the Californians don’t lure anyone back. That’s what it’s come to in the West, a political shootout over the few remaining jobs-generating businesses.
It’s too late to keep Bob Ostendorf in California.
Ostendorf is President and CEO of Neenah Enterprises. For the last 60 years, Gregg Industries, a Neenah subsidiary, has run a foundry in the Los Angeles suburb of El Monte, churning out engine housings and turbine casings for companies like Honeywell and Caterpillar. Wednesday, the place closed down putting more than 200 people out of work. Why? Local air quality regulators say the foundry violates standards on odor, and after spending $3 million to fix it to no avail, Neenah has decided it’s cheaper to move than to keep paying. “I think there are so many special interests in California, there is no common interest,” Ostendorf says. He shook hands with employees on the last day of work, including one who wore a t-shirt saying “Poverty Pollutes”. Gregg Industries will probably relocate to one of Neenah’s other facilities in Wisconsin or Pennsylvania. “It’s just a lot easier to do business on the electrical costs, lot easier to do business on the environmental costs, lot easier to do business on the quality of work-life costs (OSHA),” outside of California he says. “I love the state, I love the people…but you sure as heck can’t do business here.”
That’s something David Semas figured out a few years ago.
This Silicon Valley native founded Metalast in 1993, a metal finishing company that has moved into “green” chemical solutions for companies like Lockheed Martin, Northrop Grumman, and Boeing. These are exactly the kinds of jobs Governor Schwarzenegger has been touting as being California’s future. But when Metalast wanted to expand and build, Semas decided to move to Nevada. “Between taxes and traffic and just the bureaucratic red tape required to build a business or build a technology center, in California it would add three years to the process, as opposed to building the same kind of technical center here in Nevada.” Streamlining the bureaucracy has been one of Meg Whitman’s promises as she runs for Governor. But as Semas watches from outside Reno, near the California border, he has little interest in going back. “I return to California all the time,” he says. “(I) certainly have all the beauty of California, but, quite frankly, I don’t have the tax burden.”
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