Local Leaders Look to State to Keep Business as Second San Jose Company Moves HQ

Another big Bay Area company this week announced they would move their headquarters out of California, to the chagrin of local leaders who say the state Legislature has the power to stanch the outflow of businesses.

Align Technologies, the medical device company behind Invisalign braces, announced this week the formerly San Jose-based company officially moved its headquarters to Tempe, Arizona on Jan. 1. Its San Jose presence will remain, but as a “Digital Innovation Center,” the company said.

“This change will afford many new opportunities for Align to expand its industry-leading digital capabilities through innovation in San Jose while achieving greater, long-term operating efficiencies in Arizona,” Align CEO Joe Hogan said in a statement this week. “We chose Tempe for our new corporate headquarters for many reasons, including its proximity to San Jose, favorable corporate operating environment, low cost of living, and overall quality of life.”

Meanwhile, 150 of the company’s corporate and administrative employees have been offered a relocation package to join the company in Arizona. If they choose to stay in California, they’ll be allowed to work from home. None of the employees are at risk of losing their jobs, the company assured in a prepared statement.

Even so, the announcement didn’t sit well with San Jose Mayor Sam Liccardo after Hewlett Packard Enterprises announced they, too, were moving their headquarters last month.

“The pattern from two Silicon Valley long-standing companies, Hewlett Packard Enterprises (HPE) and Align Technologies, is instructive: both employers are investing in expansions of their San Jose technology-skilled workforce while deciding to move their headquarters and top administrative staff out of California,” he said in a statement. “The lesson for our friends in the state legislature: companies continue to want to employ our high-skill talent, but they don’t want to subject themselves to California’s taxes or regulations. Most importantly, they don’t have to.”

Jim Wunderman, president and CEO of public policy advocacy organization Bay Area Council, agreed with Liccardo Friday. The Bay Area Council has advocated for the state to halt tax increases as the economy rebounds from the pandemic.

“The high tax rates in the state are in part responsible for this,” he said. “It’s taxes and regulations and they're causing companies, given the environment, to strategize about how best to deploy their resources and [they’re] making some decisions. ... Headquarters moves are not something one would do lightly.”

A Trend Forms

The corporate headquarters exit comes exactly a month after HPE announced it would move its headquarters from North San Jose to the Houston, Texas area. The company will leave some of its operations in the South Bay city, including the headquarters of its Aruba Intelligent Edge business.

The benefits of that decision, the company said in a prepared statement, included the chance to attract more diverse workers and money.

“We also anticipate long term cost savings associated with this move that we can reinvest in key areas of our business and innovation,” Antonio Neri, HPE’s president and chief executive officer said in a blog post at the time. “Given our company’s long history in the region, this move makes sense for HPE. The world has changed, and we are changing with it for the benefit of all of our stakeholders.”

Oracle last month also said it would move its headquarters from its pastoral Redwood Shores campus to Austin, Texas. The decision for the move came in the face of high taxes, other costs and commutes for employees, according to Bloomberg, which first reported the move.

Before that, Palantir Technologies, a controversial data analytics company, quietly moved its headquarters from Palo Alto—one of the costliest cities in the region to buy or rent office space and housing—to Denver, Colorado. Last May, Tesla founder Elon Musk, frustrated by county orders that all “non-essential” business shutter in an effort to slow the spread of Covid-19, announced he was planning his departure.

"Frankly, this is the final straw. Tesla will now move its HQ and future programs to Texas/Nevada immediately. If we even retain Fremont manufacturing activity at all, it will be [dependent] on how Tesla is treated in the future. Tesla is the last carmaker left in CA,” Musk tweeted.

While the electric car manufacturer still has much of its operations in the Bay Area, Musk himself has moved to Texas where he'll have a chance to see a personal tax benefit, he confirmed last year.

Despite the apparent exodus in recent months, many of the country's largest and most well-known tech companies, including Google, Apple, Facebook, Nvidia, Intel and more, continue to grow in the region and show no signs of packing up their headquarters anytime soon. Some researchers even argue spreading out tech companies would be good for California and the rest of the country.

But Wunderman is not convinced that the level of movement the Bay Area is seeing today is a good omen for the region’s long-term economy.

“The bottom line is talent is going to be moving away,” Wunderman said. “Talent is what really drives the economy in a knowledge-based economy, so there's a lot of risk here.”

Janice Bitters is managing editor for Metro Silicon Valley. Email tips to [email protected]. Follow her on Twitter at @janicebitters.

34 Comments

  1. Failed leadership. Next stop…budget deficit, less services, more crime, more homeless, more filth, more taxes (bonds) and more leaving.

    Vote different. (State and local)

  2. Local leaders are seeing their top political contributors go away. Thank you God? For reordering the world! Adiós Tech people; we won’t miss you! The good thing about a sinking boat is that the rats are the first to leave. I welcome this stage. California will have a new beginning! Bless California! In God I trust until my last breath!

  3. JUST ANON, there were much less of all that you are describing before the tech Industry made our local leaders their puppets. In fact, San José was the safest city in the nation to 2008 year after year! All those social evils you are describing are the result of the tech industry monopoly. Data from different research has shown the pandemic has made the rich richer and the poor poorer. There is one true though. California and local leaders will not be able to grant tax breaks to the rich in the near future. These people are just not used to paying their fair share of taxes. Corporations are not individuals. They must be taxed as such! For years, Google and others received benefits from local leaders through political contributions and lobbying. Not any more for now! Adiós ? amigos!

  4. Well, if you keep finding way to tax them, add more regulations, to treat them like your ATM. Then it is only natural that they will find a greener pastures. In this case, the dessert is greener than here.

  5. SJ Kulak,

    You do know with a 1.3 to 1 jobs to homes ratio, that would likely inflate homes and rents by 60%.

    Boy we haven’t even started the downward evaluation if for example it goes down to 1.15 to 1 ratio, it would result in a long term depreciation of 30% of housing.

    Too bad we didn’t solve the housing shortages before now, these groups would have less cost in using local workers, and be less likely to leave.

  6. Mayor Sam, do you actually read what you put out? Failure of leadership? High taxes and excessive regulations? Seems to me that you are engaged in some “projecting.”

  7. San Jose mayor and his “great leadership” is finally accomplishing its goals Dragging everybody out of San Jose, like Newsom with a rest of Cali. Increase taxes again Liccardo housing prices, ” your friendly” business environment” I am sure only you and your friends on 4 th Street will stay. People leaving Cali like sinking Titanic. Congrats ” job well done”

  8. Most of CA’s “high taxes & excessive regulations” wouldn’t be a real problem if San Jose was simply more affordable. The big difference between the incubation of Silicon Valley starting in the 60s & now isn’t the change in taxes & regulations, it’s the extreme increase of costs for housing (& higher education etc). People at HP & Align who were sleeping in their cars or renting a converted garage will by buying nice places in Tempe; a down payment here is the house there. Talent’s making wiser quality of life decisions; HQ’s following that. Makes a lot of sense in a remote work world…

  9. And, in another “news” outlet in a galaxy far, far away:

    “Wall Street Bullish on the Future of the Satire Industry in Silicon Valley”.

    “New Satire Startups Break Records”

  10. The ONLY way this Newsom nonsense will stop is by recalling him.

    Please Take 15 min to fill this https://recallgavin2020.com/petition/

    We are 1.1M Signatures already of required 1.5M, like President Biden said in his inaugural speech,
    “We will NOT lead by example of our Power, rather power of our example”.
    This aptly applies here. Save your Businesses, Jobs, Schools, Communities and State from these Morons and throw them into their “French Laundry” for a full wash.

  11. I recently retired, sold our SJ home and love living in rural Montana. Built a beautiful custom home on 30 acres, pay $1,200 per year in taxes. No homeless panhandling at the Safeway, no illegal aliens in the Home Depot parking lot, no filthy and disease-infested homeless encampments in highway intersections and behind the Walmart.

    Young tech workers can’t afford the American dream of home ownership there. If they have kids, teachers can’t afford to live there either.

    The companies are moving out, and while keeping staff in SJ the new hiring is out of state- for obvious reasons.

  12. Good Riddance. “I made mine while I was in San Jose the moved to Montana the State with more Cows than people”

  13. Top-down California is the worst-run state in the country. From Gavin to Sam, they and their predecessors have made a mess over the past 30 years. And Biden wants to use this state as the model for national governance. Taking California national. What great leadership.

  14. The longer the lockdowns with fake data…means more businesses leaving CA. 0 Tax for cities / counties and the state. Malls can be open yet a small coffee shop or restauraunt can’t recall the health officials and newsom. I will move my business out of state also. F California scamdemic leadership.

  15. Thank you! Next.

    Share the wealth. Spread the job opportunities across USA.

    A studio is still $1300. Not even close to affordable to rent. Should be $900-$1000.

  16. Don’t expect tech, especially in a business not in today’s “tech” mold, to keep its high-paid employees (that can often be replaced by lower-paid employees from abroad) in a high and increasing cost, getting worse all the time place like so much of California forever. Eventually they may go. There are other places that they can go, as there is plenty of people in science and engineering in many other places in this country. Anyone who knows what the rest of this country is like (as with the rest of the state, or even parts of the Bay Area) that the ignorant many are oblivious to know why more and more people and businesses are moving or thinking of it, or plan to when the kids leave or when they retire. This isn’t the place it used to be or what people are led by the “progressives” to believe while it gets worse all the time, not just with costs, but with quality of life.

    Headquarters and lower-paid jobs can be the first to go, the HQs to save on taxes and the lower-paid jobs to make it actually possible to continue when it makes less and less economic sense to keep them in-state (and in a very high-cost area). Make no mistake the other jobs can move, too. They have already, tech and other jobs, even if not in the kind of companies that are thought of with today’ tech. Aerospace left, which is tech plus manufacturing.

  17. Looking to the state isn’t likely to pay off much, but it’s better than looking to the federal government for anything, including for plain bailouts. (What do you think is going to happen when the pension costs are too high for local and even state governments to sustain themselves?) New York City bankrupted itself in 1975 with liberal policy, and it and a group of like-minded people primarily in the Northeast expected and behaved as if the city were entitled to money from everyone and everywhere else. Expect the same when more localities and state governments like in Sacramento get in deep financial trouble later.

  18. This is nothing new. The leadership from Governor to local leaders had failed for years. I just hope that I can hang on for another 10 years then just get the hell out of California. Total failures will come one day if big tech like Google amd FB will no longer want to use those “Fail Politicians”. I no longer want to strive and move up the ladder in any work place. The more money I made, the more tax I have to pay…”Pay for what?” Nothing get improve ie. Highway etc… So why the hell should I be working hard for? All the damn money is going to those Crooks in the high office of the goverment.

  19. Good riddance to the tech company bosses who have selfishly availed themselves of the publicly-financed education of engineers, technicians, managers and dozens of other types of experts and specialists produced by the state’s schools, community colleges and universities; who have directly benefited from the publicly-financed health systems and measures that enable a healthy population and workforce and protect us during a pandemic; who have built their manufacturing, service, research, distribution, delivery and office operations on the back of the massive and publicly-financed infrastructure of roads, water and waste water systems, energy systems, sanitation and waste management systems, environmental health and safety systems, seaports and airports; who have been served by the publicly-financed police and public court systems that protect their property, enforce the law and adjudicate their contracts and by the fire and emergency personnel who protect their businesses and employees; and who have been the recipients of billions of dollars in state and local incentives and subsidies (https://businessfacilities.com/2014/07/ca-incentives-and-workforce-development-guide/; https://www.voiceofsandiego.org/business/for-a-business-unfriendly-state-california-offers-lots-of-subsidies/; https://www.ocregister.com/2016/11/01/california-companies-get-billions-in-tax-breaks-especially-aerospace-entertainment-media/; https://business.ca.gov/advantages/incentives-grants-and-financing/)

    Our message to them should be: “Don’t let the door hit your asses on the way out.”

    What neoliberals like Messrs. Liccardo, Wunderman, Neri and Musk are missing–and are paid to miss–is the unadulterated reality that the public sector is the very foundation of the private sector–and not the other way around. Those businesses and their employees would neither have a pot to pee in, nor a way to process the resulting waste, if it were not for the publicly-financed and publicly-produced infrastructure. These corporate thugs need us more than we need them and all those politicians who say otherwise are bought and paid for by private sector lobbyists and their funders to convince us otherwise. And Liccardo, of all shills, has the nerve to speak after he and the “gang of six” majority in the last council configuration gave away tens of millions in future public revenues to wealthy real estate interests to protect and insure their projects and profits (https://sanjosespotlight.com/san-jose-city-council-whopping-break-for-high-rise-developers/).

    Which brings me to that pestilence, otherwise known as Elon Musk, whose defiance of the law during the pandemic–with the passive complicity of state and local authorities–has resulted in physical harm to hundreds, maybe thousands of Tesla employees, their families and member of the communities in which they live. Like Trump, Musk disparaged and publicly challenged the known science about the corona virus, propagated conspiracy theories regarding the pandemic, criticized and defied the shelter-in-place policies as adopted at state and national levels and as applied by Alameda County officials. Tesla fired several workers who continued to shelter in place using Tesla’s own opt out and later hid information about the number and sources of COVID-19 cases among the 10,000 Tesla factory workers, as well as company measures to insure social distancing and sanitation practices in the factory (https://www.cnbc.com/2020/03/17/tesla-keeps-fremont-factory-open-amid-covid-19-shelter-in-place-orders.html; https://www.cnbc.com/2020/03/17/tesla-fremont-factory-not-essential-business-says-alameda-county.html; https://www.businessinsider.com/tesla-ceo-elon-musk-kimbal-question-coronavirus-false-positive-data-2020-7; https://www.businessinsider.com/elon-musk-misinformation-about-coronavirus-cases-2020-7; https://www.businessinsider.com/elon-musk-coronavirus-death-counts-lie-too-high-2020-5; https://www.bloomberg.com/amp/news/articles/2020-03-17/musk-signals-tesla-s-fremont-plant-to-stay-open-despite-virus?__twitter_impression= true; https://www.cnbc.com/2020/04/29/elon-musk-slams-coronavirus-shelter-in-place-orders-as-fascist.html; https://www.politico.com/news/2020/05/27/trump-musk-moon-space-283608; https://www.cnbc.com/2020/05/08/tesla-not-given-the-green-light-to-reopen-says-alameda-county-rep.html; https://nypost.com/2020/07/14/coronavirus-cases-reportedly-surging-at-tesla-facility-in-california/; https://www.nbcbayarea.com/news/local/tesla-workers-were-fired-after-opting-to-stay-home-out-of-virus-concerns-report/2318710/; https://www.sfgate.com/business/article/Tesla-fires-three-more-overriding-guidance-15378903.php; https://capitalandmain.com/tesla-bullies-workers-and-alameda-county-over-covid-0706;https://www.courthousenews.com/tesla-employees-accuse-automaker-of-covering-up-covid-outbreak/).

    We should remember that Musk’s soaring wealth accumulation has been underwritten by multiple billions in grants, tax subsidies, tax breaks and contracts from federal, state and local governments. In exchange, this sociopath has derided the role of government in the economy, repeatedly “blackmailed” the state of California with threats of moving his production facilities–and himself–out of state (https://www.forbes.com/sites/ alanohnsman/2020/07/28/elon-musk-is-government-subsidy-critic-but-teslas-q2-results-were-helped-by-covid-19-aid/#5227a3e64543; https://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html; https://thehill.com/blogs/pundits-blog/economy-budget/345338-can-we-wean-elon-musk-off-government-support-already; https://www.npr.org/sections/coronavirus-live-updates/2020/05/09/853313775/elon-musk-says-tesla-suing-california-county-moving-headquarters-out-of-state; https://markets.businessinsider.com/news/stocks/tesla-spacex-elon-musk-discusses-regulations-leadership-candy-ai-memes-2020-12-1029880824).

    With Musk and Tesla headquarters moving to Texas, Californians can breathe a sigh of relief. But we should demand refunds of every single dollar in state subsidies given to Musk businesses, as well as pro-rated charges for the use of our infrastructure and institutions. That public money and our public resources were given to this corporate criminal as investment and employment incentives. If Musk breaks the deal, the state should get a refund.

    However, if Musk promises to immediately act on his dreams of colonizing Mars, with a signed, legal commitment not to return, then I as one Californian, am willing to forgive the debt but let’s accelerate this process if at all possible (https://www.entrepreneur.com/article/363115: https://www.vanityfair.com/news/2017/03/elon-musk-billion-dollar-crusade-to-stop-ai-space-x; https://www.cnbc.com/2020/12/01/elon-musk-highly-confident-spacex-will-land-humans-on-mars-by-2026.html;https://www.inverse.com/innovation/the-abstract-spacex-starship-paving-the-way-to-mars-city).

  20. Are Californians stupid enough to keep voting the same people?

    OR

    Is it a sign that cheating has been rampant for decades here? It sure as hell would explain why idiots get elected all the time.

  21. Government, at best in reality, is overhead. Excess is a liability, not an asset, to us, and it gets worse from there with wrongdoing, especially if infected with this or that variant of the leftist or worse, “progressive” disease. This state has been getting worse decade by decade, and government’s actions as well as its growth is responsible for much of the worsening. They’re just doing it California (especially weird) style instead of New York or Illinois and Chicago style, the older main models of and for liberal government. Run up costs and otherwise make it less tenable for people or businesses to stay, they will leave. In the meantime it’s a sick form of charging (with costs and social and cultural, etc., decline) more and more while ignoring what the “traffic” (residents and businesses) will bear. The climate and scenery the superficial and defensive boast stupidly about so much, or the size of the economy forming often before, or if not, despite how bad and worse things are getting, have not justified ever-higher costs or societal ruin.

  22. there is a guy that comments here saying he’s not worried about people leaving CA because smart people will always want to live there

    honestly,

    I think he’s right, it is just too attractive a place for people around the world

    if you are jumping up for joy that you will finally be able to buy a house for $350K again or your rent is going back to $700/month, you are probably deluding yourself.

  23. > there is a guy that comments here saying he’s not worried about people leaving CA because smart people will always want to live there

    > honestly,

    Probably, a lot of truth.

    The election shows (if you can believe the Dominion Voting Machines) that a large percentage of Bay Area votes bought the Joe Gas-lighter narrative that the only thing wrong with California was that Trump was president.

    I expect a lot of inflation, a lot of pay increases for the Googlers and other Silicon Valley oligarchs, increasing densification of housing (more developer profit per square foot), and increasing housing prices.

    Life is good for Republican property owners in the Bay Area. Life probably won’t be so good for Democrat’s on fixed incomes or waiting for the the Democrat political oligarchs to deliver more “affordable housing” or “social justice” ransom.

  24. The medical equipment company Align, which owns Ivisalign, is a growing company whose original tech, created by a former Stanford grad, improved medical scanning equipment. There’s not much more to say about the company which, though successful, is not in any top list of medical equipment providers in the U.S. Companies move all of the time. I don’t think anyone should lose sleep over this particular company moving out of San Jose as either one of the larger local companies will gladly take over their footprint or – more hopefully – a newer tech company will move in.

  25. > What neoliberals like Messrs. Liccardo, Wunderman, Neri and Musk are missing–and are paid to miss–is the unadulterated reality that the public sector is the very foundation of the private sector–and not the other way around.

    Then why not just eliminate the private sector all together?

    The government could tax well-paid, unionized public employees to fund its “foundational” activities, and raise the minimum wage to — not $15 per hour — $150 per hour. All housing would be “below market rate” and, therefore, affordable to anyone making $150 per hour.

    Creating utopia is really quite simple. It’s amazing that no one thought of this before.

  26. There was a prevailing philosophy that tech companies located in downtown SJ were very important to the downtown economy because it meant that 100s-1000s of VISA cards would be walking around downtown, and spending would increase for local and small businesses. It was true symbiotic relationship.

    But now with the stunningly prolonged shutdown and SIP order, without reasonable consideration for small businesses to remain open, has served as a wake up call that tech businesses no longer need DTSJ, and can move to more friendly environs, and employees can, or not, follow along. Employees can continue to work from home, or now move to less expensive areas.

    This prolonged shutdown response to Covid, especially in the summer of 2020 when the case rate was fewer than 50/day (if not less) has destroyed the local economy, and served to accomplish nothing. It didn’t stop the virus spread because it travelled into our County from other areas. The objective of trying to obliterate the virus by shutting down everything indefinitely should NEVER have been considered, without weighing expected costs.

    The cost benefit of doing this should have been considered prohibitive, because we are seeing exactly what this cost now…Hundreds of empty storefronts, closed businesses everywhere, the highest unemployment ever, the inability to even collect unemployment legitimately, an overall sense of unhealthy isolation and general fear of other people because they “might” be covid carriers. This is all related, and attributable to this misguided shutdown with no end, instituted County Health officials around the State without regard to cost. To this, local County elected leaders such as Chavez, Simitian, Wasserman, Ellenberg and (fmr sup) Cortese are all to blame for not keeping Dr Jeffrey Smith reigned in and holding him accountable for the soaring County deficit, which appears to be approaching the $370M range, and staqgeringly reduced revenue projections.

    If politicians could not see or forecast this, then they have FAILED in the most cataclysmic way imaginable.

  27. As long as Newsom and his cronies are running CA government we will continue to lose businesses, their taxes for having their headquarters in the state and the jobs that go with them, HP, Tesla, Align Tech, Oracle are just a few of the employers fleeing CA for states where their employees can afford to buy a nice house for less than 500k, where there is no income tax, where schools are well funded, where crime is mostly lower and at least criminals serve out their terms, where people say hello to you and help out their neighbors. My only fear is that tech is going to ruin these states like it has California in the last 25 years.

  28. Once the tech giants start leaving California, the downfall is in sight. Elected officials who think it’s perfectly acceptable for San Jose residents to pay $1.2 million for a 60 year old, 1500 sq ft tract home are clueless. They’ve sat and done NOTHING about this issue for 40 years. Jerry Brown and Newsom have a little blame here, but the state and local elected officials (past and present) deserve 95% of the blame for the housing situation. Teachers, police officers, nurses, firefighters, the professionals needed for every city, cannot afford a decent home in Santa Clara County. Forget the blue collar workers. They’re forced to rent shacks. Silicon Valley has helped the world in many ways, while devastating Santa Clara County communities. I grew up in San Jose when average families could afford a home in what was already a diverse region before “diversity” was a thing. I watched developers swallow up every inch of land they could grab and build more homes. Progress is necessary, but many families who lived in San Jose for generations have left. If even just 1/3 of the tech companies leave, it will be better for many.

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