Culture + Place / Cities  / More companies are exiting California. Here’s top industries to recruit to your city

More companies are exiting California. Here’s top industries to recruit to your city

Fact: 1,800 relocation or “disinvestment events” occurred in California in 2016 – that’s about 13,000 companies over a nine-year period.

Fact: $76.7 billion in capital funds were diverted out of California along with 275,000 jobs during this same time.

 

So you wonder which states were the biggest winners that gained the most from California business relocations?

 

Texas topped out at #1 driven largely by Austin, Dallas, and San Antonio. Reno and Las Vegas helped put Nevada at second place, and Scottsdale and Phoenix rounded out Arizona for third place. Along the East, North Carolina, Florida, Georgia, and Virginia closed out the top ten. Pittsburgh, Indianapolis, and Nashville also attracted a large number of California companies. This is according to an 8-year study conducted by Spectrum Location Solutions.

While California’s weather, educated workforce, university centers, and proximity to Asian markets continue to make it an attractive market, the reality is that the high cost of doing business is worsening and the mass exodus continues with no end in sight. For economic developers, this creates an open market to court California companies that could be looking for their next move given the right mix of relocation assistance, a ready labor pool, and proximity to customers.

 

So where are the opportunities?

 

While manufacturing, with more than 560 relocations, ranks as the top industry leaving the state, companies in aerospace, pharmaceuticals, biotech, and electronics are also top sectors that could be attractive to other markets.

Here’s a snapshot of where a few California companies have taken their talents to:

Kaiser Permanente: left the Oakland area for a $20 million IT campus in Atlanta, creating about 900 jobs even though more than three times of Kaiser’s total members are located in California.

Embraer Aero Seating Technologies: left Los Angeles for Titusville, FL to build a $3.5 million facility and create 150 jobs at an annual average wage of $48,000

CW Bearings: left Orange County for 25miles west of Downtown Detroit to house its engineering and technical center. The capital investment is estimated at $25.9 million and 125 jobs.

Raytheon Co: left Chula Vista (San Diego) for Indianapolis in order to improve their efficiency and competitiveness. The relocation adds 250 additional jobs to its existing work force of 912 to develop national security technology.

Emarsys: left San Francisco for Indianapolis to house its North American headquarters. The Austria-based company sells digital technology and will spend $3.2 million on renovations, creating up to 167 new jobs by 2020.

Lyft: left San Francisco for Nashville for its new customer service headquarters. The investment is at a $5.1 million price tag and expected to create 380 jobs.

Square: left San Francisco for a new office in St. Louis and is expected to grow to more than 200 over the next five years.

ZenPayroll: left San Francisco for a new office in Denver with plans to hire more than 100 full-time employees and 1,000 people in the next few years.

 

What does all of this mean for your community?

 

While Amazon received the spotlight for the past year, there are big gains being made in both shadow markets and tier one markets who have set their business attraction targets on relocating California companies.

Does your economic development marketing strategy include a marketing campaign targeting California companies? Is your city’s business brand attractive to these key industry sectors – aerospace, pharmaceuticals, biotech, and electronics?

Regardless of your response to these two questions, chances are there’s a company in California that could be a good fit in your city, and that goes for other markets where a large faction of local companies are relocating to be closer to customers, improve logistics, or expand their workforce in order to meet demands. Part of your approach to promoting inward investment should focus on a plan that elevates your business proposition.

What we believe to be a comprehensive approach is a strategic messaging campaign combined with national publicity that raises your city’s profile for business investment and promotes the strength of your workforce. This should be industry-specific and with a more aggressive presence in the California market. Additionally, we would suggest a lead generation and representation program to hone in on targeted companies with the ultimate goal of bringing them in-market and winning their business.

 

 

We’d love to share more about the insights received during our site selector survey, or if you’d like to learn more about our 100+ benchmarking analysis with your city measured against your top competing markets, email us at hello@cultureandplace.com.

Culture + Place creates location envy and develops place equity and is the economic development and destination marketing practice of Blueprint Creative Group, a strategic communications consultancy. For more information, visit BlueprintCreativeGroup.com

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