California Wages Economic War With Sriracha Hot Sauce Factory
Business Climate: Los Angeles is buzzing over the possible exit of Sriracha sauce maker Huy Fong to friendlier territory in Texas. But why shouldn't it go? L.A. is so unfriendly it makes Detroit look good, according to two studies.
In a region that has made itself a foreign and venture capital investment desert, it's rather astonishing to see politicians from the industrial Los Angeles suburb of Irwindale do all they can to chase the largest and rarest investor in their town out.
But that's what they've done, hauling the Huy Fong company into court and winning an injunction from the Los Angeles Superior Court to force the $60 million company to cease operations during the three months in autumn when it grinds up locally grown hot peppers for its famous Sriracha hot sauce, which now flavors packaged food from ice cream to popcorn. Apparently, some locals don't like the smell.
New product, new service - and now squelched by the rabid forces of the left around L.A.
It's an appalling specter, given that entrepreneurship is at an all-time low in America in the Obama era.
Huy Fong, named after the rust-bucket freighter that brought its founding Tran family to freedom as boat people escaping the horrors of communist Vietnam in 1979, was begun by an entrepreneur who sells 20 million bottles a year of the spicy sauce.
"Why do you hate me?" Huy Fong CEO David Tran asked the Irwindale City Council, into whose town he put his $40 million plant at its urging in 2010. "Why do you want to shut me down?"
Not for nothing is Los Angeles, the nation's second largest metro area, home to just five Fortune 500 company headquarters. It attracts just one-tenth the venture capital of the Silicon Valley, despite it much bigger size.
The state has the country's worst business climate, ranking rock bottom at No. 50, according to a new study from Chief Executive magazine, and is seeing its companies - such as Toyota - leave the state for Texas, ranked No. 1 by the same study.
"California's attitude toward business makes you question why anyone would build a business here," said one CEO quoted in the May 8 ranking story.
"California continues to lead in disincentives for growth businesses to stay," said another.
Other investors refuse to build plants in the state - most notably Tesla - which last March ruled out California for a $5 billion, 6,500-employee battery plant in favor of Texas, Arizona, New Mexico or Nevada.
Los Angeles is a case study in disastrous policies that have led to economic decline.
UCLA's Anderson School of Business reported this year that Los Angeles had turned into "a poverty factory" that is worse than Detroit. It forecast a bleak future for the region, based on its high taxes, burdensome regulation and hostility to business.
From 1993 to 2013, Los Angeles lost 3.1% of its jobs, ranking the city dead last in job growth among the top 32 largest U.S. metropolitan areas.
And the L.A. City Council's recent "L.A. 20-20 Report" reveals the municipality's endemic poverty, a result of its sanctuary-city laws that bring in low-skilled workers who soak up city services and compete for jobs with existing low-skilled workers, driving wages down.
When one considers what L.A. used to be - a beacon of aerospace, clothing, food and film production, with the world's busiest ports - and what it is now, which is a major exporter of old clothes and scrap metal recycled by the Chinese, it's a sad, sad picture.
And now the disgraceful treatment of Huy Fong underscores the disaster, even as it's covered up by the media and the region's many far-left politicians.
Sure, the company says it's not moving. But a Texas delegation visited the factory last week and the Texas flag was seen flying over Huy Fong's factory this week.
The Whittier Daily News was the only one to note Huy Fong's moves echo others doing what's known as the Texas Two-Step - a factory is built in Texas, some operations move there and gradually all do.
Toyota, once a major regional presence, is doing it this way. So is Huy Fong.
And despite L.A.'s denial, there will be more.
