Governor Rick Perry is calling his three-day, business-recruiting trip to California a success. He says the traffic on his economic development website has increased 1,000 percent.
But will his California bashing reap dividends for Texas?
The governor has made other fairly discreet trips to lure California companies to the Lone Star State. This one, however, is being characterized as in-your-face. Poaching. Maybe even bad-mannered. Mostly because of that radio ad Perry aired in the Golden State.
In it he urged CEO’s to check out Texas saying, “Building a business is tough but I hear building a business in California is next to impossible.”
That irritated some Californians including Governor Jerry Brown, who shrugged off the small $24,000 ad buy.
“If they want to get in the game let them spend $25 million on radio and television then I’ll take them seriously,” Brown said.
But Perry claims the little ad has had a big effect.
“So far the ad campaign is doing what it was supposed to do, getting people talking about the contrast between Texas and California and the differences between our two approaches,”Perry said during a Wednesday phone conference with reporters.
The question now is whether the tall talk will lead to new jobs and investment. Will Perry’s chatter about higher taxes and unemployment in California, about fewer business restrictions here prompt companies to pack up and head our way?
Southern Methodist University economist Bud Weinstein says it may depend on which companies you’re talking about.
“I don’t think the governor is going to have much success when it comes to the main industries that drive the California economy,” he said.
Weinstein’s talking about California’s big three- entertainment, information technology or IT, and military contracting.
Weinstein doesn’t believe those prized industries relocate because of taxes and business regulations.
“Particularly when it comes to entertainment and IT, what’s most important to them is the human capitol, the networking and the companies that are already there,” said Weinstein.
Steve Wright of the Silicon Valley Leadership Group agrees. His group represents some 375 Internet and social media companies. He says low costs aren’t at the center of what he calls their “secret sauce.”
“Part of the ecosystem of Silicon Valley is the network of colleges and universities,” he said reeling off the names of a half dozen nearby institutions including Stanford, University of California, Berkeley and University of San Francisco.
“All of those help generate connections among students, among professors, among venture capitalists,” said Wright.
“It’s that kind of early stage, idea forming and problem solving that really allows Silicon Valley to push forward with wave after wave of innovation,” he said.
Some of those big IT companies have expanded in Texas. Apple, for example, opened a customer support center in Austin last year that will have 3,300 employees.
But when it comes to relocations Weinstein says Texas will probably be more successful in attracting smaller companies including manufacturers.
“Start up companies may relocate here partly because of the more hospitable regulatory tax climate. Personal service companies, financial service companies may find Texas an attractive location,” said Weinstein.
But big technology icons like Google or motion picture studios? Fahgettaboudit.
Weinstein says in California they’ve found an energetic, creative environment even low taxes can’t buy.
Here's a list of California companies that relocated to Texas in recent years, compiled by the Governor's office: