Tuesday, February 19, 2013

Californians: Stop Whining and Do Something

By now you've probably heard the commercials, or read the editorials, or know someone who has heard or read either or both.

I'm talking about Texas Gov. Rick Perry soliciting California businesses to check out Texas for either relocation or expansion. Perry toured California last week to pitch businesses about relocating or expanding in Texas as opposed to California.

The Sacramento Bee took offense to Gov. Perry's statements, particularly pointing out that Texas' workers' compensation system covers only 78.6% of all employees in the state, while California mandates coverage for 100% of employees.

And Texans haven't missed the opportunity to point out that California's workers' compensation system is the third most expensive in the nation.

But let's talk brass tacks here.

Does anyone REALLY care?

California's workers' compensation system has borrowed from Texas' system, and Texas' system has borrowed from California's. These are two completely different cultures, two completely different climates, two completely different economies.

There are some aspects of life in Texas that Californians admire, and there are aspects of living in California that have Texans going West. I have friends who have moved from California to Texas and love it. I have friends who have moved from Texas to California and love it.

And I have friends regretting those moves...

But the real issue is not workers' compensation, and not business incentives, but competition.

And in this regard, Gov. Perry has to be given kudos for taking the show on the road, while Gov. Brown decides to sit on his haunches in Sacramento and call this a non-event.

Maybe it's an age difference; Gov. Brown is 74 years old, 12 years the senior of 62 year old Perry.

Maybe Brown is just too busy, maybe it's arrogance, maybe it's just plain ignorance.

I don't know what the reason is, but the real problem is that California, and this governor is illustrative, fails to engage in any business related marketing efforts at all. THAT's what has people in California wrangled.

The competition gauntlet has been thrown down and the only response is "It’s not a burp. It’s barely a fart.”

Sorry to say it People of California, but Gov. Perry and Texas leaders are doing what Californians don't - getting out and about to tell people what a great business environment their state is.

Plain, basic, marketing.

Oh - maybe Brown and associates can't get out and market like Perry does. Maybe California's business environment isn't all that great. What's to boast about?

California has some of the highest taxes in the nation (especially when considering all of the various "fees" and other assessments that are tacked on to various purchases, e.g. just look at your workers' compensation premium statement). Education, health, transit, infrastructure - the California I grew up in doesn't exist any more.

Sure, some of the most stringent environmental regulations in the world help protect Californian's air, water and food - but now my surfboard is made in Taiwan, my clothes are made in Sri Lanka, my car is made from parts outsourced from everywhere... Even agricultural products are imported, and I live in an agricultural community that has an unheard of, unduplicated-anywhere, three strawberry growing seasons a year!

California used to lead the world in aircraft design, development and manufacturing. Local names like Northrop, McDonnell Douglas, Raytheon, Bendix - all manufactured aircraft and aircraft systems in Southern California but not any more.

And don't talk to me about education. I am fortunate enough to be able to afford the tens of thousands of dollars every year to put my two children through the California State University system ... a system that, when I graduated San Diego State tuition, cost only $100 for 15 units or more.

Near my home town, Perry paid a visit to Haas Automation. Haas Automation is a big employer in Ventura County with about 1500 local jobs. According to a local news report, Haas isn't planning on relocating to Texas ... yet, but is planning an expansion and is looking at its options which include Arizona, Texas and North Carolina.

Peter Zierhut, vice president of European operations for Haas said, “We have to say we’re very impressed that a governor from another state would come to visit us.”

Did you year that Jerry? Us Californians are so smug with our sunshine and computers that our arrogance impedes good marketing, good relations, with the people that make critical purchasing decisions.

Zierhut also said that “The state of California has become a very expensive place to do business as a manufacturing company, so we are exploring other options for expansion.”

I used to shrug off those kind of comments, like most of us conceited Californians. My perspective used to be that California has one resource that no other state has: weather. Smart people will go to where the weather is good, and will figure out the rest.

That's not such a good perspective any longer.

If I were sitting in the board room making decisions, being wooed by a governor, Texas, and other competing states, end up looking very attractive for lots of reasons: cost of labor, cost of land, cost of regulatory compliance, and yes, cost of workers' compensation insurance.

The Oregon Department of Consumer and Business Services survey released in October 2012 ranked the average premium rate in Texas at $1.60 per $100.

Compare that to California's third place ranking with average premiums of $2.92 per $100 of payroll.

I just don't get why the Sacramento Bee and others are offended by Gov. Perry's tactic of coming to California to attract businesses to that state. The Bee, and other critics, should be calling out Gov. Brown for his lack of leadership, lack of motivation, lack of action.

Why isn't Brown going to Austin, Houston, Dallas and other big Texas cities to pitch California? Has he no argument? Are there no redeeming values to doing business in California?

What about the state's massive coast line with no less than 7 deep water ports that import and export more cargo than any other state?

What about California's vast Central Valley that has more productive agricultural acres than any other region in the world?

What about the high tech corridor that spawns more computing wealth than anywhere else in the world?

Kudos to Perry. He's doing what a good governor should be doing - getting out and pitching his state.

Brown can take a lesson from Perry.

I'm a life long, born here, Californian. We whine like the sniveling little brats that befit the stereotype.

It's shameful.


  1. Postscript: TX exports and imports more than CA: http://www.census.gov/foreign-trade/statistics/state/data/index.html

    But CA has 9 deep water (aka Panamax) ports to TX 4: http://en.wikipedia.org/wiki/List_of_Panamax_ports

  2. California Government has become the most hostile entity (second only to the Feds) when it comes to encouraging business to come to our State. We want the tax revenue that businesses generate, but then do everything possible to punish and demonize the very businesses that invest here through taxation and over-regulation.

    Why would anyone want to do business in a State with a semi-Marxist government,that believes business is the root of all evil, but says "please leave your money on the table on your way out"?

    Perhaps we get the government we deserve....

  3. David,

    I tried, but I just couldn't let this California/Texas thing pass.

    I "grew up" in the Texas system more years ago than I like to think about. I worked the last 15 or so years doing multiple jurisdictions for a major aircraft manufacturer. I ended up spending a good bit of time in California even though I was based in Texas. I was privileged to work with some outstanding folks there. They were competent professionals who knew the system. Even so, California was my most difficult and expensive jurisdiction. The problem was the system. I was around for the reform in 2004 and found it useful in helping the Texas reform of 2005. The primary issue I had with the California system was the dispute resolution process. The primary issue I had with that was the Judges. I don't believe in simplistic solutions, but California would solve many of its problems if the Judges would hold the Applicant's Attorneys to the same standards as the Defense Attorneys. If businesses are happy where they are no Governer's sales pitch is going to make a difference. If they see their business environment as toxic, and they see no real chance to clean it up, they will look for a better deal. California has a lot going for it, but from an outsider's point of view it seems that California thinks businesses should be willing to put up with anything just to be there. I agree with you that Governor Perry is just doing what Governers should do, promote their state. I think Governor Brown gave the whole thing a lot more air play than Governor Perry ever could have. I wonder if Governor Perry thought that might happen?