Business & Real Estate

Report: Sales in Texas wholesale trade sector blew past California between 2007 and 2012

Texas, California’s periodic rival for jobs and business, has another reason to crow.

A Sept. 30 tip sheet released by the U.S. Census Bureau said the Lone Star State blew past California between 2007 and 2012 as the state with the largest volume of sales in the wholesale trade sector.

The bureau’s recent economic census said California led the nation in 2007, with $925.3 billion in sales, but its increase was only 4.7 percent to $969.2 billion in 2012. Texas, which was second in 2007 at $663.7 billion, saw wholesale sector sales skyrocket 70 percent to $1.1 trillion in 2012.

In a nutshell, the sector comprises wholesale sales of merchandise or services, the step prior to the retail marketplace. The Census Bureau said the merchandise in the sector includes agriculture, mining, manufacturing and information industries, including publishing.

So, what does the Sept. 30 tip sheet mean?

Several economy experts contacted by The Sacramento Bee say it means Texas was neck-deep in building business activity during a period when California industries – including manufacturing and housing – were mired in recession.

“The business climate in California is simply not favorable to boosting business activities,” said Sung Won Sohn, a former Wells Fargo chief economist who teaches at California State University, Channel Islands, in Camarillo. “Quite frankly, California has lost good jobs and businesses to others, including Texas.”

Sohn echoed the claims of some businesses that have left the Golden State, as well as other entrepreneurs who have soldiered on, albeit unhappily, in California.

The list of state and locally based companies that either fled California or subtracted jobs in recent years includes Occidental Petroleum, Raytheon, Legalzoom, Waste Connections, Daegis, Revionics and Toyota.

Waste Connections, the multibillion-dollar trash-hauling company that was once headquartered in Folsom, was the largest publicly traded firm in the Sacramento area in August 2011 when chairman and CEO Ron Mittelstaedt said California was “the worst state in the country to do business in.” Before 2011 ended, Waste Connections announced it was moving to Texas.

Most upsetting to California business advocates, former Texas Gov. Rick Perry made public sport out of poaching Golden State companies and jobs.

Just last month, California received an “F” grade in an annual survey measuring small-business friendliness. It was the same grade that San Francisco-based Thumbtack awarded the state in 2014.

Other economists noted that wholesale trade sales are just one economic indicator in a blizzard of indicators. And they pointed out that the largest nationwide industry sector in the Census Bureau tip sheet was petroleum and petroleum product merchant wholesalers, with $1.4 trillion in sales. Texas is a hotbed of oil and gas businesses.

Economists also stressed that much has happened in California since 2012. For example, California has been adding jobs at a nation-leading rate. Since February 2010, the state has seen an overall gain of more than 2 million jobs.

Other recent developments have not fallen Texas’ way.

For example, last week’s analysis of California’s August exports by Beacon Economics said that Golden State businesses shipped merchandise valued at $13.24 billion, down nearly 10 percent from $14.55 billion in August 2014. Over the same period, Beacon said Texas merchandise exports plunged nearly 20 percent.

The Governor’s Office of Business and Economic Development, or GO-Biz, likewise notes that California’s fortunes have been on the rise since 2012, growing in key economic areas where the state historically has done well.

“As the eighth largest economy in the world, California is not only the largest, richest and most diverse economy in the U.S., but also one of the fastest growing economies as well,” said GO-Biz Chief Deputy Panorea Avdis. “California leads the nation in several economic categories. It’s the No. 1 state for manufacturing and technology, agriculture, biotech, entertainment and tourism.

“California is also home to more venture capital, patents and Fortune 500 companies than any other state,”

So, how is California doing against Texas right now in the wholesale trade sector? We’ll have to wait until 2017 to find out.

Mark Glover: 916-321-1184, @markhglover

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