A record number of companies are leaving California for states with a better business climate, and a new report shows that Texas remains their No. 1 destination.
The study estimates that 1,800 relocation or “disinvestment events” occurred in 2016, the most recent year available, setting a record yearly high going back to 2008. About 13,000 companies left the state during that nine-year period.
Of the 1,800 events, 299 of those departures landed in Texas.
What’s more, the study’s author – for the first time in his career – is openly urging California businesses to relocate out of state.
Texas’ rank as the top destination for California companies is especially significant considering that the large majority of corporate relocations cross only one state line, said Joseph Vranich, president of Pennsylvania-based Spectrum Location Solutions LLC.
“A lot of people don’t want to be more than one hour from other members of their family they might be leaving behind, or their good friends or their favorite country club — whatever it is,” Vranich said in an interview with the Dallas Business Journal. “For Texas to do as well as it does attracting California companies is really remarkable in and of itself.”
North Texas has surfed a wave of California company headquarters relocations in the past few years, with health care giant McKesson (NYSE: MCK), convenience store distributor Core-Mark (Nasdaq: CORE), and medical technologies company DJO announcing moves from the Golden State to Dallas-Fort Worth in the past three months.
In the past three years, California companies — like Toyota Motor North America (NYSE: TM), Kubota Tractor Corporation, Charles Schwab Corp. (NYSE: SCHW) and Jamba Juice, among others — have announced corporate moves or regional hub launches in North Texas.
Forty-three of the 123 corporate headquarters that have relocated to DFW since 2010 came from California, according to the Dallas Regional Chamber.
“Departures are understandable when year after year CEOs nationwide surveyed by Chief Executive Magazine have declared California the worst state in which to do business,” said Vranich, a corporate relocation expert who jokes that he loves California’s weather, but not its business climate. Until recently, Spectrum and Vranich were based in Irvine, Calif.
Texas, on the other hand, consistently ranks as one of the best states to do business in, he said.