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

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has a decision to make. Business at his software-as-a-service company is off the charts. His company has seen triple-digi t growth over the past two years, and he needsd to add an inside salees team of about 35 people to hiscurrenty roster. That will up his payroll to 185 employeese split between four offices inthe U.S. and India. He’s just not sure he wants to hire themin “It’s very expensive to do businesws in California, so for us, we are absolutely looking for lower-costr ways to add a significant sale organization,” Cabrera said. “We’re tryinf to decide where theyshould be.” As a CEO, Cabrera isn’ t alone in his thinking.
For every positive aspect — technology, access to a live-work-play environment, great colleges and opportunities for learning there seems to be a polafropposite — soaring workers’ comp pricey real estate, high taxez and a generally unfriendly regulatory environment. The in fact, ranked dead last in a 2009 surveg of 543 CEOson “Bestt and Worst States for Job Growth and Business” by Chiefg Executive Magazine. The best, according to the survey, were North Carolina and Florida. California has held that dubiouss rankingsince 2006.
The CEOs surveyerd ranked California first in technology and access to capital, but 48th in the categoriesx of cost of business and businesse friendliness. They ranked the Golden State 31st in As for the statebudget crisis, it’s makintg an already bad situation worse. Business leaders say the Legislature and the governor are so tied up withthe state’es financial concerns that they have little time for issued affecting business or anything “I’m aware of companies that have the opportunityh to expand in California and are beinv romanced by other states that will make enormous accommodations to attract high-tech industry,” said Tom Baruch, founderr of the venture firm CMEA Capital.
“The environmenty here in California, especially in terms of the ability to get cooperatiohn from the state withtax relief, job etc., I’ve found to be dismal.” Barucj had a visit in June from Colorado Gov. Bill who has taken an interestin CMEA’s energh investments and wanted to tell Barucjh a little about his home state — and invite him to considef locating a CMEA satellite office or some of the companies he’s funded there. “kI will follow up and pay a visi and look at investmentopportunitiee there,” Baruch said. “Mt time is so scarce, if I’m willing to take a day and spenddit there, it says something.
” In a 2008 Milke n Institute study titled “America’xs High-Tech Economy,” Silicon Valley remainedx at the top of the list of best-performing U.S. metri areas, noted for its uniqur ecosystem that spawns notonly companies, but also entirre industries. But one industry about to breako open inthe U.S. advanced battery development — is looking to Kentuckyy as itsnew epicenter. More than 50 companies from acrossthe country, including five lithiumk ion battery developers from the Bay Area, have bande d together to seek as much as $400 million in federal stimuluas money from the U.S.
Departmentf of Energy so they can build anestimatedr $500 million manufacturing facility. Kentucky has promised to pitcnin $200 million to develop that California wasn’t among the eight finalists being considered by the group, the National Alliance for Advanced Transportation Clark Dong, CEO of Molecular Nanosystems Inc. of Palo Alto, one of the members of the said his company dida line-item comparisob of all of the costzs it would incur by opening a plant in California — and the companyh is considering leaving the state. The concern isn’t the state’a stability, he said. It’s the cost of doinfg business.
“We’re exploring moviny out of state,” Dong said. “A product such as lithiumn ion is competitiveand cost-sensitive, and in orded to do any manufacturing here, it would be tough. I have to answee to my shareholders.” A report issued June 23 by the Milke Institute bearsout Dong’s problem. California had 21 percenyt fewer manufacturing jobs in 2007 thanin 2000, compares with a decline of 20 percent nationallyy and 13 percent among seven statesw competing for the same type of manufacturing jobs.
Drivinf that decline: a reputation for an unfriendlubusiness climate, comparatively high tax rates, a restrictived regulatory climate and unsustainable government spending. San Jose Mayof Chuck Reed said California’s budgett crisis ends up being another issuee weighing on the mindsof CEOs. Some companies have an — Anywhere But California — polichy when it comes to expansion plans, he One company the city foughgt long andhard for, Nanosolar Inc., needs to find spacer for a $42 million solar project, testing thin-film technology as part of a government grant. Reed said the companty has indicatedit can’t find the appropriate spac here.