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Best & Worst States for Business 2019: Where To Be

Recent deals gone awry suggest technology is disrupting economic development along with every aspect of business. Here’s our annual look at how the 50 states stack up.

Meanwhile, the state’s educational institutions openly fretted about being able to provide enough qualified technical workers for Foxconn. Rumors flew that Foxconn already had decided to import engineers from Asia. Skeptics claimed that Walker hadn’t protected Wisconsin adequately against underperformance by Foxconn. And when it came time to judge Walker’s generosity in the 2018 election, there were not yet any Foxconn workers to show up at the polls. He lost re-election in November.

Foxconn still promises to honor its commitment with some combination of assembly and engineering jobs. “Foxconn still has big plans, and, of course, the scale they’re talking about won’t happen overnight,” says Len Koren, CEO and owner of International Mold and Production, who moved his injection-molding company last year from Grayslake, Illinois, over the border to Kenosha, Wisconsin, to get closer to Foxconn—and after getting $110,000 in income-tax credits over three years to create 25 jobs in the state.

In any event, the Foxconn controversy disturbed some CEOs in the Chief Executive survey because Walker was a Republican who had helped solidify the Upper Midwest for economic investment over his two terms. Now Wisconsin is led by Democrat Governor Tony Evers, a former career school administrator. “There’s concern about how much of a priority economic development will be now,” says Larry Gigerich, head of consultancy Ginovus.
Michigan’s governorship also has flipped to a Democrat after Republican and former Gateway Computer CEO Rick Snyder helmed the state for eight years and led a remarkable turnaround in a once-woeful business climate.

But while Amazon and Foxconn stirred the pot, the impressions of CEOs in the Best States & Worst States for Business survey remained relatively stagnant when it came to their very most favorite, and very least favorite, locations. The rankings once again showed a huge red-state-blue-state political cleft: This year’s top 12 “Best” states are considered Republican red, and the bottom 11 “Worst” states are Democrat blue.

But the results weren’t simply a reflection of the political preferences of the surveyed CEOs. For example, many of the red states are headed by governors who were CEOs, including Florida Governor Rick Scott. In Tennessee, former Governor Bill Haslam, scion of the Pilot Flying J truck-stop empire, has been followed by family-business owner Governor Bill Lee.

“They know what it’s like to put a signature on a check,” says Charles Wood, vice president of economic development for the chamber of commerce in Chattanooga, Tennessee. “They’re business-minded leaders who put business-friendly policies in place.”

Meanwhile, blue states typically are led by career politicians and dominated by public-sector unions and other progressive elements that similarly ensure high corporate and personal taxes and strict regulations that by themselves discourage many CEOs.

For such reasons, while the middle of the rankings were typically fluid, there wasn’t much change at the top and bottom this year. Texas, for instance, just purrs along as No. 1, wearing its pro-business credentials on its sleeve. And California remains at No. 50, all-in with its anti-business identity.

The divergent fates of California and Texas are illustrated in a single development. Toyota is very happy that it yanked its sales and marketing operations from Southern California two years ago and consolidated its nationwide U.S. staff of 4,000 people at a new headquarters in the Dallas area.

“I want to be an employer where people want to come, and in the case of California, the cost of living was eroding the quality of life,” says Jim Lentz, CEO of Toyota Motor North America. “In Texas, the hospitality of the South and the pioneer spirit of the West and the values of the Midwest all blend together to create this very positive climate that results in a great quality of life.”


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