Posted on 07/17/2011 7:37:45 PM PDT by Maelstorm
REVIEW SUMMARY
Florida Gov. Rick Scott may want to add California to his list of high-tax states from which to recruit employers.
Consider the case of Accutek Packaging Equipment Companies, a privately held manufacturer of packaging equipment now based near San Diego.
Darren Chocholek, the companys chief financial officer and vice president, says hes so impressed with Floridas favorable tax and regulatory climate that hes considering moving his companys headquarters to Fort Myers.
Chocholek formed a separate company in Florida and recently acquired enough industrial space in Fort Myers and Cape Coral to fill two football fields. The 133,000 square feet of space Chocholek acquired in the Fort Myers area is more than the 118,000 square feet Accutek owns in California, where 70 employees work.
When you factor in taxes and regulations, Chocholek estimates labor in Florida costs 20% to 25% less than in California. Its also less expensive for executives to live in Florida, which has no state income tax. California taxes 11% of high earners income.
Still, Chocholek (pronounced cho-ho-lek), 42, says his neighbors dont understand why hes moving to Florida. Everybody thinks were crazy, he says. But all our customers think its great.
Fact is, many of Chocholeks customers have already moved out of California for the same reasons Accutek is expanding to Florida. Every third customer is moving out of state, Chocholek says.
Accutek currently has about 11,000 customers, which range from industry giants such as Procter & Gamble and LOreal to small entrepreneurs who make small batches of hot sauces. Accutek makes equipment that fills bottles, caps them and labels them. The machines cost from about $500 for a handheld capper to as much as $400,000 for one that fills, labels and caps 700 bottles a minute.
Those customers who remain in California tell Chocholek: Wow, I wish we could do it. Whats more, Accuteks Florida location now allows it to be closer to customers on the East Coast and South America.
Chocholek is somewhat of a pioneer by moving across the country. Jerry Messonnier, a broker with the commercial real estate firm Grubb & Ellis 1st Commercial in Fort Myers, says its hard to lure Californians out of that state.
People from California dont want to live in this weather, says Messonnier, who has lived in Californias temperate climate and helped Chocholek find space in Fort Myers. You get someone to move from L.A. to Fort Myers or Naples, thats a culture shock.
But Chocholek says he grew up in the Midwest and finds the Gulf Coast of Florida more hospitable than its east coast.
Taxes and regulations For manufacturers like Accutek, Californias regulations are so burdensome that theyve become an everyday aggravation.
For example, at least four agencies regulate occupational safety in the San Diego area. Federal, state, county and the local fire marshal all have a say in how the company operates. Recently, for example, San Diego County ordered Accutek to obtain a $300 permit to store cans of spray paint. The county is the worst, he says.
Still, Chocholek was surprised when Lee County officials told him he needed a permit to adjust the sprinkler system in his new Fort Myers building. Changing building interiors in California isnt as strict as it is in Florida, he grumbles.
But clearly the lower cost of manufacturing in Florida is much more advantageous than California. Energy is way cheaper here, he notes. Thats because power companies in Florida dont have to subsidize renewable energy projects and low-income households like they do in California, which lightens the burden on employers.
Chocholek is most concerned about the disappearance in California of the small, risk-taking entrepreneur. He says those are the kinds of customers Accutek can help grow into large operations.
For example, Chocholek says the small operator who makes sauces in his kitchen may grow his operation substantially and buy Accuteks filler machines over the businesss lifetime. That guy has disappeared in California, Chocholek frets.
On the tax front, Californias state income taxes create dilemmas for employers and employees alike. For example, Chocholek warns employees that a raise may vault them into the next tax bracket and they might actually bring home less money after a raise than they did before.
Taxes are huge, says Chocholek. My Dad moved here.
Florida headquarters While Chocholek has acquired more space in Florida than in California, moving the companys headquarters to Fort Myers remains under consideration.
Initially, doing business as Accutek Factory Outlet in Florida, Chocholek plans to start with a sales office of about a half dozen people who will service customers on the East Coast, the Caribbean and Latin America. Eventually, Id like to do manufacturing here, Chocholek says.
Accutek, which is a privately held, family-owned business, generates between $10 million and $20 million annually, Chocholek says.
The last few years have been a challenge, in part because the 220 finance companies that helped Accuteks customers have been reduced to three or four by the financial crisis.
Chocholek says it will take about a year to decide on expanding Floridas operations. Once I build up sales, Im going to have to look at shipping costs, he says. With the exception of real estate, the company has grown since 1987 without debt.
Depending on the success of Floridas expansion, Chocholek says he might replicate the model elsewhere.
Moving the companys headquarters from California isnt going to be an easy decision. Whats more, Chocholek says he plans to maintain the companys California manufacturing facility.
Chocholek says Florida state officials havent been particularly aggressive about courting the company. Economic development officials in the Tampa area didnt return Chocholeks calls and only Lake County was responsive.
While Californias business-retention efforts are nonexistent, Chocholek says the state of Florida should take a more aggressive approach to recruiting companies to the state and not leave it up to each individual county.
Chocholeks first choice was Fort Lauderdale because of its airport access to the east coast and South America. But commercial real estate costs were excessive and people were rude, he says.
While Fort Myers was more competitive for commercial real estate, Chocholek says Southwest Florida International Airport isnt as accessible as Fort Lauderdales airport.
The flight schedule is really poor, he says. They need more international flights.
The area is full of transplanted retired yankee union employees who vote democrat. Who'd want to move there?
Environmental and “well-intentioned” individuals/groups are strangling California’s economy.
For the good/well-being of the people transforms itself into for the good of all....A socialist, marxist, totalarian state of thinking and action.
I’m trying to get the heck out of CA. Any construction/Engineering Co.’s needing Document control people in Texas I will move myself. 20 years in Construction.
Haven’t these freedom seeking employers ever heard of New Hampshire?
Live Free or Die, Baby...
People from California dont want to live in this weather, says Messonnier, who has lived in Californias temperate climate and helped Chocholek find space in Fort Myers. You get someone to move from L.A. to Fort Myers or Naples, thats a culture shock.
That’s for sure!
I’ve spent a lot of time in SW Florida and there’s a serious redneck element in Fort Myers and the Lee County area. Couple that with a borderline paramilitary sheriffs department, a generally cruddy school system and an anal-retentive permitting process and that’s a recipe for disaster.
The State of Texas is gaining ground with companies moving from CA and other places that are not business friendly.
Socialist thoughts in the works for the last century.
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