The Challenges of Doing Business in San Diego
In coming weeks, we’ll examine the difficulty of doing business in San Diego, whether regional policies are driving an exodus of companies and what’s motivating the firms that do move here.
The flood of companies leaving San Diego and other California cities seems constant.
This month San Diego-based Omnitracs and Active Network announced plans to move their headquarters to Dallas. Security firm Websense is also on its way to Texas. All three have been purchased by San Francisco-based Vista Equity Partners. Poway defense contractor Pratt & Whitney and American Specialty Health are preparing for moves too.
More announcements could be coming. A recent survey promoted by the Chamber of Commerce found 14 percent of San Diego County companies are at least casually mulling a move elsewhere. Five percent of the more than 200 companies polled said they’re seriously considering relocation.
Such threats amplify the growing sense that the city and state aren’t friendly to business. Business leaders have bemoaned state regulations and recent City Council decisions to hike the minimum wage and affordable-housing fees, dubbing both job-killers.
The concerns, the threats, the businesses leaving with one-way tickets: They all raise big questions about our economic future. Is San Diego shedding more jobs than it’s gaining? How many companies are leaving our city? Are there onerous regulations burdening businesses more than they’re safeguarding San Diegans? Are there specific laws we need to change? What would we need to do to better retain companies and what are we willing to do? And how worried should we be when we see headlines about Texas Gov. Rick Perry courting local companies?
I’ll try to answer some of these questions in the coming weeks, and I hope you’ll add some of your own as I try to separate fact from fiction. I want to shed light on recent state and local efforts to retain businesses, as well as the realities facing businesses that have opted to leave or may be considering it.
We do already know a bit about the volume of companies moving in and out of our state in the past two decades.
Economic development consultant Donald Walls has long tracked the comings and goings of U.S. businesses nationwide in a database known as the National Establishment Time-Series. The analysis relies on data from Dun and Bradstreet, a respected global business information company, and tracks tens of millions of U.S. businesses. Each January, Walls takes a snapshot of information from these companies that reveals any moves they’ve made in the past year. That means the snapshot in January 2012 reflects moves made in 2011.
Walls’ massive database reveals San Diego region lost a net 3,440 jobs to out-of-state business moves from 1989 to 2011, or about .25 percent of current estimated employment in the area. California as a whole lost a net 231,000 positions, which amounts to about 1.5 percent of the latest statewide employment projections.
But that’s not the whole story. See, companies and jobs aren’t just leaving our region. Hundreds move here each year too – another dynamic I hope to unpack.
Here’s how the number of new businesses compared with those that departed San Diego and California over the 22-year period Walls’ data covers.
I’m planning to use Walls’ database to examine the dynamics of such moves – and specifically where San Diego companies are heading – as my quest continues. Walls’ database stops at 2011, so I’ll use other sources to uncover the comings and goings of San Diego businesses in more recent years.
Before I start crunching numbers, though, I’d like your input. Your suggestions and questions will help guide the direction of this reporting journey.
What do you want to know about businesses migrating in and out of our region? Are there related claims by business leaders and politicians you think merit some vetting? What industries, regulations or business threats deserve a deep dive?
Please add your thoughts in the comment section or email me directly at email@example.com.
This is the kick-off to our quest digging into the difficulties – real or perceived – of doing business in San Diego. Check out the next story in our series, Businesses Bailing on San Diego: Required Reading.