Infrastructure, investments, logistics and economics trump concerns over ‘woke’ policies and taxes
Company efforts to relocate corporate offices from California may be on the increase, but their operations continue here in most cases because they each have a huge market in the Golden State they don’t want to lose.
We all heard the names. Elon Musk’s companies Tesla, SpaceX and X will relocate their corporate offices. Musk has increasingly complained about the state’s “woke”policies.
Chevron too says they are moving their corporate office to Texas where taxes are non existent.Texas has no corporate or individual income tax. Locally Tulare-born Ruiz Foods said they would open their corporate office there.
But what these companies also have in common is that their everyday business depends on a significant presence in California, where the majority of their income comes from.
Take Tesla.The Company sells six times more electric vehicles in California then they do in Texas and that requires repair, dealer service and sales operations to remain in the Golden State where they have a huge stake.
Musk’s political statements recently have reduced demand for new Teslas in the Golden State that have plummeted 24% to 52,211 vehicles in Q2.
How about SpaceX that currently has a manufacturing facility and corporate office in Hawthorne California in the Los Angeles basin.The company is expanding at Vandenberg Air Force Base, where it launches vehicles into space.
Musk may move a few employees but is unlikely to move the company to Texas, says Chris Thornberg of Beacon Economics in a July interview.
“You don’t pick up an enormous, complex operation like SpaceX and move it from one state to another, not without losing half your workforce, which SpaceX can hardly afford to do,” Thornberg said.
SpaceX has a pretty unique workforce of rocket scientists, “who don’t exactly grow on trees,” he added.
“They are not everywhere, and you need to hire them where they live and they start to live where they are hired,” Thornberg added.
Headquarters move all the time, he said, adding that it would only impact 200 or 300 employees, a small percentage of the 13,000 employees SpaceX has overall.
“Would he go as far as to move his production facilities to Texas?” Thornberg asked. “Not a chance.”
SpaceX’s 1-million-square-foot campus in Hawthorne, though, is home to more than just offices — it’s also the company’s primary production and processing facility for its Falcon 9 workhorse and Falcon Heavy rockets.
“ people who live here, live here for a reason — and you’re not going to convince a lot of these people to get up and move to Texas, simple as that.”
That’s part of the issue with these corporate moves. The workforce, which has a long history in California, does not have much interest in moving to sweaty Houston Texas, not known for its quality of life.How do you cool off when the average Gulf water temp is 86 degrees?
“ people who live here, live here for a reason — and you’re not going to convince a lot of these people to get up and move to Texas, simple as that.”
There’s another reason why SpaceX is expanding in California right now, including its partnership with the Department of Defense utilizing Vandenberg Space Force Base.
Writing In the Santa Maria Times in July, former military official Andrew Hackleman, a member of the Governor’s Military Council and the Governor’s Space Industry Task Force wrote “Today, Vandenberg Space Force Base is an integral part of our national security infrastructure. SpaceX is now launching nearly every week from VSFB with reusable rockets.
These missions include launches for the U.S. Space Force and other U.S. Department of Defense customers, U.S. civil agencies like the National Oceanic and Atmospheric Administration for climate and environmental monitoring, and for commercial customers, including allied governments.
Similar to the successful partnership with commercial operators for launches, the U.S. government also relies on commercial companies like SpaceX for global low Earth orbit satellite systems.
These systems, including U.S. government owned and operated satellites, require frequent launches, which are only possible with multiple launch sites across the United States.
The pace of launch that Vandenberg provides isn’t the only vital aspect of VSFB as a launch site. Vandenberg is also the only feasible site in the U.S. for launches into polar orbit.”
Indeed this summary of the logistics of Vandenberg says it all from the US Flight Centennial Commission.
“Vandenberg Air Force Base, which is often referred to by its workers as America’s quiet launch site, is located at 34.7 degrees north latitude, at a spot on the rugged Central California coast where the shoreline runs east and west. Because of this unique geography, rockets launched from Vandenberg can fly nearly due south and not cross over land until they reach Antarctica. This is ideal for launches to polar orbit, because spent rocket stages or failed launches pose no threat to inhabited land. Vandenberg has therefore been the launch site for numerous reconnaissance and Earth observation satellites that require polar orbits.”
Polar orbits are used for earth mapping, reconnaissance satellites, and in some weather satellites.
Instead of pulling out of California, SpaceX hopes to expand its operation at Vandenberg with one report saying”The partnership was previously approved for six launches per year. SpaceX has already completed 26 launches of Falcon 9 rockets from Vandenberg in 2024. They are expected to submit a request in October to boost that schedule to 50 annual launches, and later 100 annual launches.”
This situation illustrates the greater truth that Californa’s location adjacent to the Pacific Ocean is a critical reason why companies find doing business in the Golden State profitable and indeed, necessary. California is where trade with the Far East happens. Its ports are the busiest in the nation. Goods flow in and out of here and it is hubs for rail and air, as well as military bases that can only be located here.
In a word, this is where the action is.
This month the port of Los Angeles is booming in part because of troubles in other parts of the world, including the closing of shipping in the Red Sea and water shortage in the Panama Canal that is steering more traffic to the West Coast this summer, port officials. But it’s not just location. It’s a strategy of investment in key economic infrastructure that is making a difference whether that’s in our ports or in our colleges.
A few more location principles include the fact that California has one of the few spots in the world with the Mediterranean climate enabling it to be the top agricultural production state in the US with most diversity of crops.It is fortified by investment in water moving infrastructure that has happened over the last 70 years.California has double the irrigated acres of Texas where farms depend on rainfall for mostly field crops. If you want to grow oranges or Pima cotton or milk cows, it makes sense to do it in California. Again, economic factors trump the politics.
California has beneficial storms coming into the state from the moist Pacific hitting our high mountains, where the moisture stored as snow – later feeds the extensive state reservoir system. Only because of this investment, rain that falls by 2/3 in the northern half of the state irrigates the southern part of the state where 2/3 of the people live.
Texas has few mountains and that’s why Texans vacation Colorado. In the Golden State, you can go skiing in the morning and surfing in the evening.Can’t do that in the “Panhandle.”
One commenter noted that only “one has a stunningly beautiful 800+ mile coastline, 9 national parks, and subjectively the best Mexican and Asian cuisine this country has to offer.”
Texas, unlike California, has not seen multiple waves of immigrants over the decades that have been welcomed here. Then there is a tradition of tolerance here – unlike Texas that restricts reproductive health for women and once enslaved black people.
California is also home to many of the best universities in the US that help foster innovation and talent beyond any other location in the US. The cluster of innovation for the US is in the Silicon Valley in the Bay Area.Some 41 of the top 50 most valuable companies in California are headquartered in the Bay Area as of May 2024 and amazingly, 80 of the top 100 companies in the state have their corporate offices in the greater SF area showing the breadth of the area’s dominance.
West Coast Dominance
Led by Nvidia,Apple and Alphabet (Google) these companies are also number 2,3 and 4 in the United States with Microsoft, based in Minnesota, listed as number one.
Meta (Facebook) is in the top 10, based in Palo Alto.Other top 10 companies are also from the West Coast based in Seattle including Microsoft,Amazon and Costco. Besides computer companies – California sports top financial firms Visa and Wells Fargo – both based in San Francisco.Nationwide 4 of the top 10 companies in the US are based in the Bay Area.
Anyway back to other companies leaving the state.
Oil giant Chevron wants to move headquarters out of the Bay Area too.
One part of their business that they are unlikely to relocate is over 1800+ Chevron gas stations in California where the company has about a 15% market share of retail gas sales. In terms of retail sales, California is a much more important market than Texas where there are just over 1100 stations.The company will continue operating two of the state’s nine remaining refineries and continue pulling oil from the ground
Chevron gas stations in California are infamous in that they uniformly are the most expensive option for motors in almost every market in the state. Chevron has secured crossroad locations in towns, large and small up and down the state where they are sometimes the only choice.
But motorists fed up with high gas prices are increasingly shopping around for cheaper gas like in Lemoore, California,sometimes a dollar cheaper per gallon.
Despite chatter about the Bay Area losing Chevron the company itself said recently “There would be minimal immediate relocation impacts to other employees currently based in San Ramon, with positions in support of the company’s California operations remaining in San Ramon.”
Chevron currently has roughly 7,000 employees in the Houston area and approximately 2,000 employees in San Ramon.” Somebody has to collect all that money from California motorists.
As for Ruiz Foods – production will remain in Tulare County serving California where people eat more burritos than in Texas.It is where your salad comes from too.