Friday, December 14, 2012

As Small Auto Businesses Flee California, Their Takeover Prospects Increase

The relentless trek from CA has not abated:
Pollock’s own decision to leave California was caused by “a culmination of frustrations,” he said. “I had to buy a new business license in Riverside, and the fee was dictated by my gross sales. You can pay an exorbitant fee for a license and not even be making a profit in your business.” Though Phenix still has one facility left in Riverside, Pollock is hoping to move that eventually to Arizona or Nevada, as he stressed he is “not happy about having any physical presence in California.

Many of the problems plaguing California manufacturers stem from local environmental agency crackdowns, which place “staggering fines on minor violations,” said Pollock. Although Idaho is proud of its natural beauty and clean water and does not welcome chemical polluters, “there’s a little more rational thinking into what is considered polluting and what isn’t,” he said. “We place five gallons of oil in our machines, and change the oil once a year, and put it in a container and recycle. We’re not producing pollution.” Therefore, Pollock was allowed to start working in Idaho with little to no hassle. The company, which does not disclose its revenues, has added “eight or nine percent to its bottom line” since the relocation, he estimated.

Small companies seem to be exiting California at the fastest clip, as they have a lighter load of assets than, say, foundries with heavy machinery. Pollock said that he recently heard from the Caldwell Economic Development Council that about 18 small California manufacturers are about to make the same move, and he anticipated that they will see their business valuations go up considerably.

Though Hewlett-Packard (NYSE: HPQ) and other large businesses have established a presence in the Treasure Valley area of Idaho–which comprises Boise, Garden City, Eagle, Meridian and other cities–the region is notably lacking an automotive parts manufacturing footprint, which Pollock hopes to fill in.

No comments:

Post a Comment