Apex Leaves California
Today's news section contains the formal announcement of Apex Tactical Specialties' relocation from California to new digs in Peoria, Arizona.
Even with an opening line that flatly attributes the decision to relocate to "the repressive business climate" of California, their release doesn't adequately convey just how difficult it is to be in virtually any business there, much less to manufacture aftermarket firearms parts.
Apex principles Randy Lee and Scott Folk have been friends since before they were in business together. And Apex is one of those small, smart companies I consider a bellwether of just how the industry's doing.
And over the years while I've watched Apex grow, I've frequently badgered both of them about moving "someplace where you're wanted". It's a suggestion I make to any firearms-related business owner I meet who (still) has facilities in California.
It was a great tag line, but Apex Tactical Specialities decision to (finally) leave California for Arizona means they're going to need another catchy marketing phrase, although the part about aggravating California officials is still valid.
Through all my badgering, Lee and Folk have been tolerant, even making light of the home state's political situation. Last year, I laughed out loud when I saw the caption "manufactured behind enemy lines" on Apex's product packaging. It was funny, but not really that much of an exaggeration.
After all, California- at least the California represented by the enormous number of liberal voters from Los Angeles, San Francisco and Sacramento- wants their state to be gun-free. They've made that abundantly clear via numerous ridiculous and unenforceable regulations they continue to offer up at any opportunity.
Yet, despite that decidedly anti-gun company bent, I was surprised when Scott and Randy told me more than a year ago they were really going to be leaving California.
Randy and Scott are native Californians and even with their love for guns, gunsmithing and competitive shooting, that's a difficult family connection to break. And like most successful small businesses, they care - a lot - about their employees- also Californians.
But they're technology businessmen, guided by facts and research.
And as they researched, they realized an unpleasant fact California is largely a horrible location for a business. Although as Randy offhandedly remarked yesterday, "wineries still seem to do well."
May be, but the latest annual "Best and Worst States for Business" survey conducted by Chief Executive Magazine ranked California dead-last for a twelfth consecutive year
. in the minds of 513 CEOs across the country.
Reasons cited include dtaxes, regulations and politics that the Orange County Register says have "crippled business in just about every other industry, particularly those without strong political connections
(I added the italics).
As a former California business owner I know
that's no exaggeration. And our business fell into one of those rare "acceptable" categories- motion picture and TV production.
"We started crunching numbers," Folk told me over dinner at last year's SHOT Show, "and our accountant- a Californian - looked at us and said, 'you're moving to Arizona.'"
"I said, what?" Folk continued, to which the accountant said, simply "you'd be crazy not to."
As Folk continued to lay out the reasons to me in purely financial terms, I wondered why anyone in the firearms industry would even consider staying there.
But numbers don't tell the whole story of any small businesses. Small businesses are also about people. And Randy Lee and Scott Folk consider the 34 people working for them more like family than employees.
So before committing to relocation, they wanted to see if it would make sense to consider asking them to relocate, too. It did, to the point that 28 of the 34 have also packed up their families and relocated to Peoria. "The differences in costs," said Lee, "are amazing."
For example, Peoria's consumer prices are 18 percent lower. Rents lower by forty percent, and median home prices are less than half ($514,333 median listing price for San Luis Obispo County, California versus $244,145 for Maricopa County, Arizona).
Because of the relocation, some Apex employees who couldn't consider home ownership in California have bought homes in Arizona.
Like the company, Apex's employees are finding their dollars go considerably further outside California.
Manufacturing relocations like this don't happen overnight. And they're never without aggravation and unforeseen complications.
Apex has suffered through both. But Lee and Folk have been able to keep good attitudes, because aggravations aside, they know relocation was in the best interests of Apex- the company- and the people who have helped make it so successful.
Their new home, incidentally, is considerably larger than their California facilities, but not just because of increased purchasing power. Apex continues to grow. There have already been four new-hires and Lee tells me they expect 50 (or more) people will working there by the end of 2017.
And Arizona has also improved the company's hiring prospects. "When we listed a job in California we might get 10-11 applicants," Lee told me, "here we'll get 40-50 who really want the job." The fact the area has several trade schools and junior colleges offering instruction on CNC machine operation only helps a company that depends on those skilled operators.
It's still a small business, but Apex is indicative of what many small companies in various industries have already learned about California's – the state's politicians aren't living in the real world. And they continue to make it more difficult for real-world businesses to survive there.
With their relocation almost done, neither Lee, Folk, nor any of Apex employees need be concerned by California's latest anti-gun legislation.
Last month, California voters passed Proposition 63- requiring a new fee (as much as $50) for a mandatory background check just to purchase ammunition. It also mandates that all ammunition purchases be made face-to-face via a licensed ammunition vendor, eliminating the ability to order ammunition from outside the state. And, it prohibits possession of standard-capacity or large-capacity magazines- the kinds required for normal R&D testing by Apex.
Magazine and firearms restrictions already in place, says Lee, were large contributors in the decision to move. "Some companies were reluctant to send firearms to us," said Lee, "and we told others not to send magazines because of the restrictions on capacities." Imagine trying to design after-market components for a firearm without the ability to actually test the gun with the magazines used by the vast majority of consumers.
Maricopa County, Arizona is a big adjustment for everyone who works at Apex. Any relocation takes some getting accustomed to.
But moving where your business is welcome, has made that adjustment considerably simpler.
Relocating from a toxic business climate is an action I'd suggest other business owners and organizations in gun un-friendly regions like California, New York, Connecticut and Massachusetts consider. Otherwise, their continued presence (and tax dollars) only fuel legislators' efforts to drive them out of existence.
Yes, I realize that's cheap advice from a guy whose work requires nothing much beyond a reliable internet connection, laptop computer and digital camera. But I have owned and managed large enough businesses to know it's easier to work where you're welcome.
Not every business can relocate for a variety of reasons, but relocation is one of the few actions any business can take that has the potential for causing real political consequences. Those consequences can get the attention of even the most ideologically driven public official.
As always, we'll keep you posted.
— Jim Shepherd