A pre-Valentine’s Day visit by Texas Gov. Rick Perry to Haas Automation has set off a duel between the leader of the Lone Star State and California politicians.
Haas Automation is one of the largest employers in Ventura County and the third-largest private company in the Tri-Counties, with annual revenue approaching $1 billion. The Oxnard-based company, which employs about 1,500 people in highly skilled manufacturing jobs, reached capacity at its 1 million-square-foot plant last year.
But the company has said it may choose to expand out-of-state, and that in turn has piqued Perry’s interest.
Haas spokesman Peter Zierhut told the Business Times that the Texas governor reached out to the Oxnard-based machine-tool maker. “It’s not something that we went out and arranged,” he said. “In fact, Gov. Perry contacted us without our asking to arrange a meeting. It was really unsolicited. As it’s been explained, this is a visit for Gov. Perry to talk to us about the possibilities of Texas as a Haas site.”
Perry will visit Haas on Feb. 12, Zierhut said. The governor’s office did not return a request for comment.
In response to business recruitment raids by Texas and other states, California Lt. Gov. Gavin Newsom launched a bi-partisan initiative designed to retain and grow businesses in the Golden State. Newsom announced the Gold Team effort at biotech giant Amgen’s headquarters in Thousand Oaks in July 2012, saying economic development is not a Republican issue or a Democratic issue, but one that all political leaders in the state should be focused on. Newsom has also visited with Haas, and Zierhut said the conversation with the lieutenant governor’s office is ongoing.
Assemblyman Jeff Gorell, R-Camarillo, is part of the Gold Team initiative. “While I am frustrated that Gov. Perry and governors from other states continue to see California as fertile ground to steal businesses, the fact is they are doing their job,” he said in an email to the Business Times. “It’s what I would do if the tables were turned. But today it’s our job to stop them. We must do so by creating a better business climate in California.”
“Like the governors of other states, California Gov. Jerry Brown needs to be the ‘marketer-in-chief’ and make a case for California inside our state and across the nation,” Gorrell said.
He said Brown needs to make a personal and public effort to keep major employers in the state. “This is a role he has largely ignored,” Gorell said. “Large employers, like Haas, need to hear directly from Gov. Brown as to why they should stay. He needs to articulate a vision and strategy to make California competitive and a great place to do business once again.”
Zierhut said Haas is still in ongoing talks with Newsom and the Gold Team members. “Our hope is that we can stay in the state of California,” he said. “This is home for us and nobody wants us to leave. But that doesn’t stop us from considering all of the possibilities.”
$1 billion company
Haas is the nation’s largest maker of computer-controlled machine tools. The company notched $868 million in sales in 2011, making it the third-largest private company in the Tri-Counties. Revenue last year is expected to top $1 billion, company officials have said.
The firm is spread out over a four-building campus in Oxnard, where it employs about 1,500 people in skilled manufacturing jobs. The company hit capacity on the 1 million square feet of space last year but said in early 2012 that it had shelved plans to expand into 1.2 million square feet with a new facility in Ventura County. Haas said it was instead weighing opportunities in states with more stable regulatory environments.
The news came in a letter from Oxnard Mayor Tom Holden to Newsom’s office. In his letter, Holden expressed concern that Haas doesn’t see the Golden State as a place for growth.
Haas owner Gene Haas’ “general sentiment is that the tax and regulatory environment in California has grown incrementally and increasingly difficult through the years, to the point where it is no longer rational to make new investment in this state,” Holden wrote. “Therefore, while he is not talking at this point about relocating his entire operation out of state, [Haas] feels that any growth from this point forward needs to happen elsewhere.”
Tavi Urdea, the human resources director at Haas and a 20-year veteran of the company, told a group of Ventura County business leaders last year that California can be a harder place to do business than other countries. At the same time, he said the company must compete on a global stage — as much as 70 percent of its sales coming from exports.
Zierhut said Haas’ growth is coming from Europe, China and the U.S.
Perry CKE courted too
Haas is not the first tri-county company to be courted by Texas. In 2011, Perry hosted executives from CKE in an attempt to woo the parent of Carl’s Jr. to move its corporate headquarters from Carpinteria to the Dallas area.
CKE employs about 140 people in relatively high-paying corporate positions at its South Coast headquarters and had 2011 revenue of $1.2 billion, making it the second-largest private company in the Tri-Counties.
CEO Andy Puzder has told the Business Times the firm is considering a move to the Lone Star State in 2015, when its lease on its South Coast headquarters expires. The outspoken fast-food executive has criticized
California’s business regulations and wage-and-hour rules as overly onerous and said the company is considering moving its corporate operation to where its business is growing — CKE plans to build out 300 new restaurants in Texas over the next decade.
Speaking to a crowd of business leaders in Camarillo two years ago, Puzder compared the business climate in the two states by saying it takes CKE eight months to get permission to build a restaurant in California and only six weeks in Texas. Regulations on overtime and work breaks are more flexible in Texas, he said, and there is no state income tax there.
CKE officials said Perry’s office has not contacted the company regarding his visit to the region later this month.
Bill Watkins, the chief economist at the Center for Economic Research and Forecasting at California Lutheran University in Thousand Oaks, has studied the causes and effects of California’s negative population growth.
Citing data from the California Department of Finance, Watkins has noted that California’s population has stagnated at sub-1 percent rates for seven consecutive years. Zero population growth is the result of negative migration into the state, declining international migration and declining births, he said, and that is the result of fewer career opportunities in the Golden State.
“The families leaving California are the heart of the community and the workforce — upwardly mobile young families. As the middle disappears, the population becomes bi-modal. There is an older, wealthier population and a younger, poorer population,” Watkins said in January blog post. “The process becomes self-reinforcing. Employers leave. The tax base deteriorates. School quality deteriorates. The pressure for upwardly mobile families to move away increases.”