Kaiser Aluminum Corp. has departed Foothill Ranch for Franklin, Tenn., the latest in a string of Orange County publicly traded companies to move their headquarters out of state.
“Our state is open for business, and we make no bones about it,” Bob Rolfe, Tennessee’s commissioner for the Department of Economic and Community Development, told the Business Journal.
“We’re aggressively recruiting companies.”
Kaiser Aluminum (Nasdaq: KALU), which has a $1.6 billion market cap, is a producer of semi-fabricated specialty aluminum products for aerospace, automotive and other industrial applications.
The company didn’t issue a press release on finalizing the move, which was first disclosed last summer, nor did its spokespeople return messages from the Business Journal.
Regulatory filings indicate the move to have been completed in recent weeks.
“Williamson County provides the benefit of a corporate friendly business environment and access to a highly talented workforce that fits well with Kaiser Aluminum’s corporate value of being a preferred employer and a great place to work,” Chief Executive Keith Harvey said when the state last July announced the planned move.
The relocation was among the first big moves by Harvey, who was named CEO in 2020. Harvey, who holds a Bachelor of Science degree in Industrial Engineering from West Virginia University, joined Kaiser in 1981.
70 Local Workers
Kaiser Aluminum employs almost 4,000 people working at 14 facilities encompassing 10.6 million square feet, the largest of which was a 3.8-million-square-foot facility in Indiana.
Only about 70 worked at its Foothill Ranch headquarters, according to the company’s latest annual report.
Records from real estate tracker CoStar Group Inc. indicate the company leased about 36,000 square feet at the Foothill Plaza office complex next to the Foothill Transportation Corridor (241) toll road.
As part of the relocation, the company is investing $3 million and creating 80 jobs in Tennessee.
“If you get the C-suite, it’s usually the higher end salaries and they give back to the community. When you have the headquarters in your backyard, they’ll look favorably on local investments,” Rolfe said.
“We’ve been intentional on relocating headquarters not just from California and other states but from across the globe.”
The state government didn’t actively recruit Kaiser Aluminum when it was in Foothill Ranch, Rolfe said.
Instead, after the company decided to leave California, it hired a site consultant who narrowed the search to four states, which is when Tennessee learned of the relocation plans, Rolfe said.
The state of Tennessee gave $1.2 million in cash to Kaiser Aluminum for the relocation. It also has favorable tax laws, including no personal income tax, Rolfe said. California’s top state income tax is 13.3% and legislators are considering boosting it to 16%.
Another benefit is that the Nashville airport has nonstop flights to 88 cities, he said.
“We’ve more recently been more successful in incentivizing companies from California,” Rolfe said.
In the past two years, 30 companies have moved from California to Tennessee, bringing 12,500 jobs and capital expenditures around $2.5 billion, he said.
A recent survey found that 63% of CEOs rated California’s business climate as highly unfavorable or somewhat unfavorable, according to a Leader Board by Chapman University President Emeritus and economist Jim Doti and three other authors in the April 11 Business Journal. The survey also revealed that 39% of CEOs are seriously considering moving out of state and another 18% would move if they could.
Among public companies moving their headquarters designation in recent years include Healthpeak Properties Inc. (NYSE: PEAK), NextGen Healthcare Inc. (Nasdaq: NXGN), Tri Pointe Homes Inc. (NYSE: TPH), First Foundation Inc. (Nasdaq: FFWM), Montrose Environmental Group (NYSE: MEG) and Smith Micro Software Inc. (Nasdaq: SMSI).
Some of those firms have retained operational presences in OC, while moving their exec offices or headquarters designation out of the area.
Companies that have moved their headquarters to Tennessee from Orange County in recent years include automaker Mitsubishi Motors North America and cold-chain logistics firm Cryoport Inc. (Nasdaq: CYRX).
“Doing business in California carries its own set of challenges. I’m not sure whether it’s taxes, the cost of living, regulations, challenges in the quality of life,” said Rolfe, who personally experienced the state’s business climate as a private equity investor who ran four companies.
“We had operations in California. It’s just not business friendly.”