Friday, April 22, 2011

An Orange County company expands into Ontario - but will it remain in California?

I work in Orange County in an area with older commercial and industrial buildings. The building in which I work, for example, is at least a quarter century old. (For professional sports team owners, a building of that age is an immediate excuse to relocate to a new city. For all other businesses, a building of that age is par for the course.)

Some of the buildings in this area have partially filled parking lots, while others have nearly empty parking lots. But there's one company that owns three buildings with parking lots that are filled to the brim.

That company is C Brewer Co:

We are Michael and Chuck Brewer III.

We are second-generation molders and third-generation mold makers. Our company is our namesake, and we place our family name on the line with every part we mold.

More than thirty years ago, our father created C. Brewer Company as a proving ground for resourceful people with a passion for excellence with unmatched responsiveness. Today we blend technology and technique to deliver scientific molding solutions — solutions built upon our father's formula for success in exceeding a customer's expectations.

The company's facilities in Orange County (they have more than the three buildings that I've seen) are all ISO 9000:2001 certified.

And they have recently expanded into San Bernardino County:

C. Brewer Co. of Anaheim is integrating a recently acquired Ontario, Calif., operation. The company is introducing C. Brewer-oriented culture to the plant, as well as cavity-sensor and scientific-molding practices.

C. Brewer bought the assets of the former Kipp Group plant from CareFusion Corp. and took charge of the location on Nov. 22, said Chuck Brewer III, CEO of C. Brewer. Terms were not disclosed.

The Ontario site has 17 Engel, Nissei, Sumitomo and Toyo injection molding machines with clamping forces ranging from 55-260 tons. The plant, which is ISO 13485-certified, also has a Class 8 clean room, and is running around the clock on a five-day schedule.

The Kipp Group/Care Fusion/C Brewer facility is on the east side of town.

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But another article that talked about the Ontario purchase made some points about doing doing business in California:

By leasing the Ontario building instead of buying one, the company is keeping its options open about remaining in California or moving.

“My mom is a past assemblywoman; all my brothers are native Californians. We have real affection for California,” Chuck Brewer said.

“But we have to wait and see if we can remain competitive in California or are we going to have to exercise other options.”

How does C Brewer's California location hurt business? One example is California's sales tax:

Brewer Co.’s customers pay $20,000 to $100,000 for a mold that then is used to make their products. The sales tax in Anaheim currently is 8.75%, which adds $1,750 to $8,750 to the price of a mold.

California’s sales tax rate is second highest in the United States, and five states don’t charge any sales tax, according to the Tax Foundation. California’s rate is due to drop to 8.75% July 1, but Gov. Jerry Brown is trying to get a five-year extension of that one percentage point and other taxes to help deal with the state’s $26.4 billion budget deficit.

As a point of clarification, it should be noted that counties can added their own sales taxes on top of the state sales tax. Thus a drop in the state sales tax to 8.75% will allow Orange County to drop its current sales tax BELOW 8.75%.

But it's not just tax. The article also notes that California workers compensation costs, wages, and cost of living exceed the national average.

I don't know the Brewers, so I don't know if their statements are merely negotiating ploys, or whether they're actually planning their California exit right now. But it's certainly something to consider as California fights to get out of its own recession. Some of those cars in the C Brewer parking lots may be relocated to states with lower vehicle registration fees...while other cars may stay behind as their owners scramble for new jobs.

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