California is now having massive business departures as hundreds of companies leave the state to maximize their profits.
According to the LA Chamber of Commerce, departures in California businesses doubled from 2012 to 2019.
High taxes and heavy regulation seem to be the top two biggest reasons why businesses have departed the state of California.
“The final relocation of a Californian business to Texas has resulted in the loss of 225 jobs in California,” reports Ash Jurberg.
Earlier this year, Cacique Foods, one of the leading brands in Mexican food products, relocated the company’s corporate headquarters from California to North Texas.
Cacique is the market leader and has products in 80% of grocery stores across the United States.”
“This has now been followed by the recent closure of the manufacturing operations from a facility in the City of Industry as well as a distribution center in Irwindale.
The manufacturing has also moved to Texas,” Jurberg continued.
A 2022 report by the Hoover Institution shows 352 businesses leaving California and moving their headquarters to a different state between 2018 and 2022.
A recent poll has also showed that four in ten Californians are considering moving out of state, with the majority saying it’s too expensive to live there.
“The state’s culture and diversity have proved to be a very powerful magnet to keep a lot of people here, even despite the affordability challenges.
But as the cost of living continues to be a greater challenge, it’s logical to assume that the allure of moving to a more affordable location is going to continue to grow”, says Dan Schnur, a communications professor at USC, Berkeley.
Other Economy News Today
A popular mall retailer is now at high risk of bankruptcy as the company’s sales continue to drop and debt mounts.
Express is an American multi-fashion retailer known for its high quality apparel and rather high-priced items.
“Over the last few months, speculation has been mounting about apparel retailer Express’ financial state.
While some might speculate that one big thing has caused the retailer’s failure, that’s just not how bankruptcies work.
Several things have been going wrong over a prolonged period,” says Matthew Debbage, Creditsafe CEO of the Americas and Asia.
According to Creditsafe data, 35% of the company’s owed payments are past due, which amounts to over $3 million.
“On top of this, Creditsafe data reveals that the value of these late payments is well over $3 million.
While this might not seem like a big chunk of money compared to Express’ annual revenue, the fact that the retailer’s DBT (Days Beyond Terms) has increased consistently for the last six months indicates that its cash reserves are likely low, which will only drop even lower if sales continue to decline, operating costs keep rising and its debt load grows,” he continued.
“When you combine all these factors, I can see why some analysts are speculating that the company could be at high risk of bankruptcy.”
Debbage believes the company should be taking steps to prepare for a Chapter 11 filing (even if it ends up not needing one).
This will essentially help the company restructure its financials to keep its operations going.
“What Express needs to be thinking about right now is how it can cut operating expenses with a recession looming and consumer spending expected to drop significantly,” he wrote.
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