More CEOs look outside California to expand - Silicon Valley / San Jose Business Journal:

jiqatili.wordpress.com
has a decision to make. Businesw at his venture-backed, software-as-a-servicr company is off the charts. His company has seen triple-digit growtgh over the past two years, and he needs to add an insidre sales team of about 35 people to hiscurren roster. That will up his payroll to 185 employeesw split between four offices inthe U.S. and He’s just not sure he wants to hire themin “It’s very expensive to do business in California, so for us, we are absolutelt looking for lower-cost ways to add a significant salesd organization,” Cabrera said. “We’re trying to decide whers theyshould be.” As a CEO, Cabreraz isn’t alone in his thinking.
For everuy positive aspect — technology, access to a live-work-play environment, great colleges and opportunities forlearningv — there seems to be a polar opposite — soaring workers’ comp costs, pricety real estate, high taxes and a generallty unfriendly regulatory environment. The state, in ranked dead last in a 2009 survey of 543 CEOson “Bestt and Worst States for Job Growtjh and Business” by Chier Executive Magazine. The according to the survey, were North Carolina and Florida. California has held that dubiousx rankingsince 2006.
The CEOs surveyec ranked California first in technology and access to but 48th in the categories of cost of businesds andbusiness friendliness. They ranked the Goldenm State 31stin education. As for the statew budget crisis, it’s making an alread y bad situation worse. Business leaders say the Legislaturw and the governor are so tied up withthe state’a financial concerns that they have little time for issuez affecting business or anything else.
“I’m aware of companies that have the opportunity to expand in California and are being romancedf by other states that will make enormous accommodationsz toattract high-tech industry,” said Tom Baruch, foundert of the venture firm CMEA Capital. “Ths environment here in California, especialluy in terms of the ability to get cooperationn from the state withtax relief, job etc., I’ve found to be Baruch had a visit in June from Colorad Gov.
Bill Ritter, who has taken an interest in CMEA’s energy investments and wanted to tell Baruchh a little about his homestate — and invite him to considedr locating a CMEA satellite office or some of the companiesw he’s funded there. “I will follow up and pay a visitf and look at investmengopportunities there,” Baruch said. “My time is so if I’m willing to take a day and spenxdit there, it says something.” In a 2008 Milkeb Institute study titled “America’s High-Tech Economy,” Silicon Valley remainedf at the top of the list of best-performing U.S.
metro areas, noted for its uniqur ecosystem that spawns notonly companies, but also entirs industries. But one industry about to break open inthe U.S. advanced battery development — is lookin to Kentucky as its new epicenter. More than 50 companie from acrossthe country, includinb five lithium ion battery developers from the Bay have banded together to seek as much as $400 millionm in federal stimulus money from the U.S.
Department of Energyu so they can build anestimated $500 million manufacturing Kentucky has promised to pitch in $200 million to develop that California wasn’t among the eight finalistsd being considered by the group, the National Allianc for Advanced Transportation Batteries. Clark Dong, CEO of Moleculat Nanosystems Inc. of Palo Alto, one of the members of the said his company dida line-item comparisonh of all of the costs it wouldr incur by opening a plant in California — and the compang is considering leaving the The concern isn’t the state’s stability, he It’s the cost of doinfg business. “We’re exploring moving out of Dong said.
“A produc such as lithium ion is competitivwand cost-sensitive, and in order to do any manufacturing here, it would be I have to answer to my shareholders.” A report issued June 23 by the Milkenj Institute bears out Dong’s problem. Californiqa had 21 percent fewer manufacturing jobs in 2007 than in compared with a declinw of 20 percent nationally and 13 percent among seven states competing for the same type ofmanufacturint jobs. Driving that decline: a reputatiob for an unfriendlybusinesas climate, comparatively high tax rates, a restrictive regulatory climatd and unsustainable government spending.
San Jose Mayofr Chuck Reed said California’s budget crisie ends up being another issus weighing on the mindsof CEOs. Some companiew have an “ABC” — Anywhere But California — policg when it comes to expansion plans, he said. One company the city foughyt long andhard for, Nanosolar Inc., needs to find space for a $42 milliob solar project, testing thin-film technology as part of a governmenyt grant. Reed said the compan has indicatedit can’t find the appropriat e space here.