Local business owner Clive Riddle forwarded to me an email he received this week from a northern Nevada business developer trying to get companies to relocate to the Silver State.
“I thought you might find this interesting that they’re poaching the ‘lowly’ Central Valley,” Riddle joked, amused by the overture. His company, MCOL, produces print publications and social media services for health care businesses. He employs a dozen people in Modesto and contracts with a handful of others elsewhere. It’s the first time he’s been targeted by trolling like that, but probably won’t be the last.
“Why Nevada?” the email read, going on to tout the state’s information technology and green power sources, but failing to mention that the state’s most powerful power company recently succeeded in killing the rooftop solar industry by imposing fees that make it too unprofitable to consumers and therefore also to installers.
It cited Apple Computer’s plan to build an iCloud Data center in northern Nevada and the area’s manufacturing prowess.
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And it boasted of a business-friendly environment with no personal or corporate income tax, no unitary tax (on worldwide income) and no franchise tax. Much of that can resonate well with business owners in California who frequently complain that state and local municipalities are business-unfriendly.
This is nothing new. Economic development officials in many states, cities and counties – including Stanislaus, San Joaquin, Merced and others in the region – constantly look to generate new businesses whether by expanding existing local businesses, helping start-ups or raiding the county next door, the state next door or half a continent away. They all go after one another’s companies and businesses without a bit of guilt. That’s what brought then-Texas Gov. Rick Perry (before his criminal indictment for alleged abuse of power) to California to lure businesses to the Lone Star State, which happened when Toyota announced it will move its headquarters to Plano, Texas, from Torrance in Southern California.
Nevada scored big when Tesla chose Sparks, just east of Reno, to locate its new Gigafactory battery plant that California desperately wanted. When Hilmar Cheese expanded, it chose a city in Texas for a second facility of boosting its operation, but then also added a powdered milk plant in Turlock.
When Hershey’s left Oakdale for Mexico, Sconza Candy moved from the East Bay to the empty factory in Oakdale. Lose some, win some.
While areas of the U.S. are cannibalizing each other, low-wage Mexico is grabbing U.S. companies. Hershey’s chocolate once had a flourishing plant and distribution center in Oakdale. Now it’s in Monterrey, Mexico. Procter & Gamble once had a huge plant on Crows Landing Road that it shut down more than a decade ago. The equipment went to Missouri. Then it turned right and headed to Mexico.
Last week, heating/air-conditioning manufacturer Carrier – which once had naming rights to the domed stadium where the Indianapolis Colts played their NFL games – announced that 1,400 jobs will go Mexico because the company can pay Mexican workers $3 an hour instead of $20 to Indiana workers, according to union leaders.
But those are all big businesses with employees numbering in the hundreds or thousands. Why approach a little guy like Riddle? And how many other small businesses received similar invites? The gent who sent Riddle the email didn’t return my call.
“You always wonder how they found our address,” he said. “But we’re tech-related, and they are looking for transportable companies. We do virtually no business in Modesto. We could do what we do from anywhere. But we aren’t going anywhere.”
Transportable companies are those that can, with the right amenities, set up shop anywhere. Those amenities might include lower wages, less-restrictive work rules, sweetheart lease and power deals, and the aforementioned lower taxes. It also helps to have a well-trained potential workforce capable of passing drug screens.
“I don’t know what you do in Colorado where everybody is smoking marijuana,” joked Mike Amman, president of the San Joaquin Partnership in Stockton, referring to the state that permits adults 21 and older to possess an once of pot.
The partnership has enjoyed plenty of successes in luring both manufacturing and logistics companies to San Joaquin County, and often concentrates on Bay Area companies that have outgrown their abilities to expand at their existing sites.
Stanislaus County in the past few years has seen Amazon and other retailers open distribution centers in Patterson.
Any place that lures manufacturing, warehousing and tech firms that employ hundreds or thousands considers it both a blessing and coup for the local economy. And they’ll also go after the small-business little guys like Riddle because, if satisfied and experiencing greater profits by moving, they can become an area’s best recruiters. Northern Nevada tried.
“What’s funny is that we did have an employee leave us to go to Reno,” Riddle said. “He’s working in a call center for less than we were paying him, so it wasn’t like he went for more money.”
Otherwise, Riddle was flattered by the overture. But no, thanks.
“We’re staying put,” he said.