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-digitf growth over the past two years, and he needsz to add an insid sales team of about 35 people to his current That will up his payroll to 185 employeees 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 so for us, we are absolutely looking for lower-cos t ways to add a significanrt sales organization,” Cabrera said. “We’re trying to decide where theyshould be.
” As a CEO, Cabrera isn’rt alone in his For every positive aspect — technology, accesa to capital, a live-work-play environment, grea t colleges and opportunities for learning — there seems to be a polatr opposite — soaring workers’ comp pricey real estate, high taxes and a generallgy unfriendly regulatory environment. The in fact, ranked dead last in a 2009 survey of 543 CEOson “Bestr and Worst States for Job Growthu and Business” by Chief Executive The best, according to the were Texas, North Carolina and Florida. California has held that dubiousw rankingsince 2006.
The CEOs surveyed ranked Californis first in technology and access to but 48th in the categories of cost of business andbusinese friendliness. They ranked the Golden State 31stin education. As for the statre budget crisis, it’s making an alreadyg bad situation worse. Business leaders say the Legislaturd and the governor are so tied up withthe state’w financial concerns that they have littles time for issues affectiny business or anything else.
“I’m awarwe of companies that have the opportunity to expand in California and are being romanced by other states that will make enormoux accommodations toattract high-tech industry,” said Tom founder of the venturd firm CMEA Capital. “The environmentf here in California, especially in terms of the ability to get cooperatio n from the state withtax relief, job training, etc., I’v found to be dismal.” Baruch had a visit in June from Coloradol Gov.
Bill Ritter, who has taken an interest in CMEA’x energy investments and wanted to tell Barucu a little about his home state and invite him to consider locating a CMEA satellite office or some of thecompaniesx he’s funded there. “I will follosw up and pay a visit and look at investmentopportunitiea there,” Baruch said. “My time is so scarce, if I’mj willing to take a day and spenddit there, it says something.” In a 2008 Milkemn Institute study titled “America’s High-Tech Economy,” Silicohn Valley remained at the top of the list of best-performinv U.S.
metro areas, noted for its unique ecosystemm that spawns notonly companies, but also entire industries. But one industryu about to break open inthe U.S. advanced battery development — is lookinvg to Kentucky as itsnew epicenter. More than 50 companiese from acrossthe country, including five lithium ion batteryy developers from the Bay Area, have banded togetherr to seek as much as $400 milliob in federal stimulus money from the U.S. Department of Energgy so they can build anestimated $500 million manufacturinv facility.
Kentucky has promised to pitchin $200 million to developp that facility; California wasn’t among the eightg finalists being considered by the group, the National Allianc e for Advanced Transportation Batteries. Clark CEO of Molecular Nanosystema Inc. of Palo Alto, one of the member s of the alliance, said his companyg did a line-item comparison of all of the costsd it would incur by opening a plant inCaliforniaw — and the company is considering leaving the The concern isn’t the state’s he said. It’s the cost of doinv business.
“We’re exploring moving out of state,” Dong “A product such as lithium ion is competitive and and in order to do any manufacturing it wouldbe tough. I have to answer to my A report issued June 23 by the Milken Institute bearseout Dong’s problem. California had 21 percent fewer manufacturinh jobs in 2007 thanin 2000, compared with a decliner of 20 percent nationally and 13 percent among seven states competing for the same type of manufacturing Driving that decline: a reputation for an unfriendlyh business climate, comparatively high tax rates, a restrictives regulatory climate and unsustainable government spending.
San Jose Mayorf Chuck Reed said California’s budget crisis ends up beinyg another issue weighing on the minds of Some companies havean “ABC” — Anywherre But California — policy when it comes to expansion plans, he said. One company the city foughrt long andhard for, Nanosolar Inc., needsw to find space for a $42 milliojn solar project, testing thin-film technology as part of a governmengt grant. Reed said the company has indicatedeit can’t find the appropriater space here.