Businesses Leaving California In Droves

Posted by: : Paul EbelingPosted on: February 22, 2015 Businesses Leaving California In Droves
 

Businesses Leaving California In Droves

Maybe Oklahoma was just loaning the residents who fled to California during the 1930’s Dust Bowl.

The ‘Dust Bowl’ was a genuine weather crisis that went away without expensive government regulation regarding the size of dust motes, how far one could travel each day over dry ground and airborne water interdiction.

One could say the climate changed and for the better.

Another California company has announced it’s pulling up stakes. After 103 yrs in the Los Angeles area, Farmer Brothers (NASDAQ:FARM) coffee is heading East for either Oklahoma City or Dallas–Fort Worth.

Farmer Brothers has a different business model from that of Starbucks. Farmer Brothers doesn’t hire recent gender studies graduates to serve as caffeine bartenders in an environment of leftist ambiance. Instead the company sells coffee without ideology to other beverage resellers.

Farmer Brothers, which began selling coffee door–to–door and grew into a nationwide presence, joins Toyota (NYSE:TM) and Nissan (OTCMKT:NSANY) as another high–profile company driven out by storms of rules, regulations, and costs whipped up by gale–force political demagoguery.

Along with the company and its prestige, California will lose 350 jobs, with paychecks ranging between $40,000 and $80,000, it cannot spare.

In the short run, the move will be expensive.

According to the Los Angeles Business Journal, “Farmer Bros. expects to incur roughly $35- to $40-M in new facility costs with an additional $20 to $25-M in anticipated capital expenditures for machinery, equipment, furniture and other necessities.”

Some of that cost theoretically will be covered by the sale of the company’s Torrance headquarters. But I have my doubts. Not many firms are moving into California and finding a local company ready to endure the Golden State’s punishing gauntlet of regulations, regulators and assorted Red Tape could be tough.

Still, once the move is complete and the company is up and running in the Sooner State or the Lone Star State it expects to save $12 to $15-M  annually over what it would cost to operate in California. Now that is a Sunny business climate.

Farmer Brothers was unhappy about being taxed and micromanaged by politicians and bureaucrats with no business experience.

The company voted with its feet, just as residents have been doing for decades.

California has had a net outward population migration that is bleeding the middle class dry. Now it appears business is moving to greener pastures, too.

By Michael Reagan

Michael Reagan is the son of President Ronald Reagan. Michael is president of The Reagan Legacy Foundation and Chairman of the League of American Voters.

Paul Ebeling, Editor

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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