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Regional Report: Southwest

A state-by-state look at what the Southwest has to offer businesses.

California, There They Go

California might have an ideal climate weather-wise. Economically, not so much. Chief Executive readers ranked it the worst state for business in 2013. Several economic-development initiatives from around the country have targeted California chiefs, most prominently Texas and Arizona.

Texas began aggressively recruiting California companies this spring, with advertising messages like “Get out while there’s still time.” The spots touted lower taxes, cheaper living expenses, weak unionization and less onerous regulations. Gov. Rick Perry followed up in person, delivering his “come to Texas” message to business leaders at political gatherings and from a podium in the heart of Silicon Valley. The campaign lasted four days.

“It’s not about debasing California, it’s about promoting Texas,” the former and likely future presidential candidate assured reporters on a conference call. “The ad campaign is doing what it was intended to do: get people talking about the differences of California and Texas.”

California Gov. Jerry Brown dismissed the ads as flatulence, sniping at local media for covering them, thereby ensuring continuing press and TV coverage. The spitting match made front page, top-of-the hour news in both states, inciting speculation as to how many companies had actually moved from one state to the other. (Short answer: no one knows.)

Arizona has been coveting California companies, too. Last November, following the passage of a tax hike on the state’s top wage earners, the Greater Phoenix Economic Council launched an initiative called “California 50.” Communicating mainly through press releases, council President and CEO Barry Broome invited “qualified” CEOS for exclusive, complimentary tours of the region.

“We’re giving California CEOs a chance to preview the Greater Phoenix market and consider expanding their management teams to the region as a way to cut costs,” Broome told CEOs. “Lately, we’ve found that California companies are calling us. No doubt this is because Arizona has worked to provide a business-friendly environment.”

So far, about 20 execs have taken the tour. Deals signed? So far, none. Broome says it’s premature to expect closings; the program is not a year old. Instead, he points to 29 companies over the past five years that resettled in metro Phoenix from California, an influx that’s created $227 million in capital investment and a projected 10,500 jobs.

“We’ve had so much interest, we had to stop giving the tour for a while,” Broome claims. “Now it’s back, and we call it the California 100. I have about 400 companies I’m talking to. It is the best marketing program I’ve ever seen.” Even if he does say so himself.

About Warren Strugatch

Warren Strugatch
Warren Strugatch is a writer, speaker and consultant based in Stony Brook, NY. He covers economic development, global business, management and marketing.