Issues & Insights

Elon Musk Threatens To Flee Virus Infecting California — And, No, It Isn’t COVID-19

Tesla's highly-automated factory in Fremont, Ca., is opening this week, despite Alameda County's order to stay closed. Source: Wikimedia Commons

I&I Editorial

Angered at having his company shut down by local bureaucrats, fed-up California billionaire entrepreneur and Tesla founder Elon Musk says he might move his signature electric-car factory to Texas or Nevada. California’s progressive politicians beware: You can’t spend money if you have no companies left to tax.

California has gone through waves of corporate out-migration as local regulatory burdens, high tax rates and a generally unfriendly business environment spur disgusted owners and CEOs to head for more-business-friendly states, including Nevada, Idaho, Utah, Colorado and Texas.

Musk is a good example of this thinking.

He’s angered, as are many business owners, by the high-handed local mandarins who have decreed his factory must remain shut indefinitely due to the coronavirus pandemic. This has become a serious problem as states struggle to reopen and get their economies moving again. With 33 million people now jobless nationwide, it’s an open question whether the economic damage done by the outbreak will exceed the human toll of the virus.

Musk has had enough. He’s defying the law. As he tweeted Monday, “Tesla is restarting production today against Alameda County rules. I will be on the line with everyone else. If anyone is arrested, I ask that it only be me.

Yet, California’s political class has been singularly unsympathetic to the companies that pay the bills. It often lands at or near the top of lists ranking states for business unfriendliness.

California’s ultra-smug Democratic Gov. Gavin Newsom, who calls California a “nation-state,” last week warned the state’s businesses and workers that life is “not going back to normal” until a vaccine for virus is found. That could be as long as later this year or even in 2021.

While he’s permitting a handful of smaller businesses such as book and clothing stores, florists and sporting goods retailers to open, others will have to wait for what he calls “a later Stage 2 opening.” That includes offices and sit-down restaurants, huge employers in the state.

It’s economic suicide. Yet, Newsom’s imperious style is being aped by local bureaucrats and politicians.

And that’s why Musk drew the line.

The order that kept his high-tech electric car factory in Fremont closed will idle billions of dollars of equipment, raw material and thousands of workers.

Breakin’ The Law, Breakin’ The Law

That was too much. So Musk sued Alameda County. And now he’s defying the law. As he tweeted Monday, “Tesla is restarting production today against Alameda County rules. I will be on the line with everyone else. If anyone is arrested, I ask that it only be me.”

Earlier, Musk went even further on Twitter: “Tesla will now move its HQ and future programs to Texas/Nevada immediately. If we even retain Fremont manufacturing activity at all, it will depend on how Tesla is treated in the future.”

Why move? Musk’s suit alleges that Alameda County “violated the due process and equal protection clauses of the 14th Amendment and sought an injunction that would allow the company to operate.”

Leftist commentators from politics, academia and Hollywood scorched Musk for his sheer effrontery in fighting the status quo.

Former Labor Secretary Robert Reich said Musk represented “Capitalism at its worst.”

Comedian Michael Rapaport threw a schoolyard taunt Musk’s way, tweeting, “Youre(sic) no Iron Man. No Free Captain America. Ant Dick Man.”

If you thought office-holding politicians wary of their image would be any more dignified, you thought wrong. California State Assemblywoman Lorena S. Gonzalez tweeted out: “F*ck Elon Musk.” We’ll let you guess which vowel the * stands for.

Gonzalez, by the way, is author of California’s notorious Assembly Bill 5, responsible for thousands of lost jobs in the once-Golden State. But that’s not surprising, since the San Diego Democrat is, in the words of PJMedia’s Stephen Green, “a wholly owned subsidiary of California’s labor organizations.”

Taking Precautions To Open

Hey, it’s not as if Tesla, which says it falls under Newsom’s category of “essential” businesses, wants to simply throw open its doors and start up again, making all its trained workers sick. It opened Monday in an act of civil disobedience using lots of precautions. Other companies large and small will no doubt be watching how Tesla gets treated, and the county seems to be unwilling to get in the way, at least for now.

CNBC describes the precautions:

“Each Tesla facility has a back-to-work plan and a response team, which includes a physician, is establishing health and safety guidelines based on location and job-specific risk assessments, according to the company. In some cases, partitions and barriers have been added to minimize employee interactions.

“Tesla’s reopening plan outlines several safety guidelines and protocols for Tesla workers, including increasing cleaning and disinfection in work areas; enforcing social distancing; controlling access to facilities and imposing temperature checks at some locations.

“We are taking the time we need to get our personnel properly trained before they begin work and all employees must complete an online video training before returning to work at any Tesla facility,” the company said.

Musk notes that his so-called GigaFactory in China has been reopened successfully, with many of the same protocols, and has so far been healthy.

Business finances California’s massive $209 billion budget, both through direct taxation and also by employing tax-paying workers. Yet, business owners are routinely treated like criminals or undesirables, as the puerile hate-statements above indicate. And right now, an estimated 23% of the state is jobless, a level on par with the Great Depression. On Monday, Newsom said things will likely grow worse.

Leaving California…

Many businesses, already fed up with the abuse, have pulled up stakes. Another wave may be coming, says Joe Vranich, a business relocation consultant and author of the 2019 study, Why Companies Leave California.

“I’m in the midst of updating a study on company migrations, which thus far finds that a minimum of 17,000 businesses have left California in full or in part from 2008 through 2019,” Vranich wrote this week in a open letter to Musk. “The capital diversion totals $99 billion, a conservative number because only about 35% of the companies reported their relocation-related investments.”

In just the last year alone, the departures have been numerous, despite an ongoing tech and digital media boom that has helped keep California’s economy afloat.

Among the departed, McKesson quit San Francisco for Irving, Texas, taking 500 jobs with it. Callaway Golf departed San Diego for Salt Lake City. Mitsubishi Motors abandoned Orange County to reboot in Franklin, Tennessee. Made In Space exited Santa Clara, part of the Silicon Valley sprawl, for Jacksonville, Florida. And Xojet Aviation beat it out of the state capital of Sacramento in favor of Fort Lauderdale, Florida.

That’s just a partial list. Dozens of much smaller companies have given up on California, too.

Musk’s legal gambit is no game. He’s desperately trying to save a high-risk business that right now can’t operate. Meanwhile, California’s trendy-lefty political class, the same one that brought the nation Nancy Pelosi and Adam Schiff, seems to relish treating successful, job-creating businesses as serfs, not vital parts of the state economy.

Before more leave this hostile environment, California’s public officials should wise up and open up. Like or not, Musk and Tesla mark the possible start of another surge of business defections from a state that can ill afford them.

— Written by the I&I Editorial Board

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5 comments

  • Texas dodged a bullet, true business is good but 51,000 new Democrat voters is not worth it.

  • Musk is one of them. Amazing how much the Leftist elitists value Liberty once they feel the oppression personally.

  • Sadly, even though Tesla’s stock value is now worth more than Ford & GM combined, Tesla and Musk can I’ll afford to “move” its California production facilities out of state. To do so would realistically involve a process of building a new vehicle factory, while running the existing one before moving production, and then being stuck with the old facility with little prospect of selling it. Historically cash-poor Tesla can not afford to execute what Tesla promises.

  • I think this article is misdiagnosing California’s economic problems. First of all, the numbers suggest California is a powerful economy, and by some data I’ve seen, the 7th biggest economy in the world if it was its own country. It’s home to the world capitals of tech and entertainment in the Bay Area and LA. If several companies were to leave, it would not be because of oppressive regulations but rather because of an insane cost of living. California has wildfires, a homeless crisis, water shortages and tons of real problems. Saying that Californias big problem is oppressive regulation and a business exodus is just unsupported, frankly.

  • [print-me target="#post-%ID%"]

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