California Exodus Watch — another manufacturing operation is leaving the state.
Kiwi II Construction, a Temecula-based manufacturer and builder of steel structures for the self-storage industry, is moving its California manufacturing operations to Arizona.
Parent company Janus International disclosed the move in a new SEC filing. Janus bought Kiwi II in January for about $97 million. Now, just months later, it’s consolidating Kiwi’s California manufacturing into an existing Janus facility in Arizona.
Janus says the move is part of a broader restructuring designed to cut costs and improve efficiency. The California-to-Arizona relocation, along with separate changes in Indiana and Utah, is expected to save the company about $2.7 million a year. Those moves will also generate roughly $1.4 million in severance costs — indicating jobs are being affected, although Janus has not disclosed how many are specifically in California.
This is an announced relocation, not yet a completed one. Janus expects its restructuring to be substantially finished by early January.
And so far, there’s no disclosed Arizona subsidy or tax-incentive package behind the Kiwi move. And Arizona doesn’t need it.
California’s corporate income tax is 8.84 percent. Arizona’s is just 4.9 percent — roughly 45 percent lower.
Employees can see an even bigger difference. Arizona has a flat 2.5 percent individual income tax, while California’s top rate reaches 13.3 percent. The Tax Foundation ranks Arizona 14th nationally for overall tax competitiveness. California ranks 48th.
Then there’s housing. Recent statewide data put a typical California home around $735,000, compared with roughly $395,000 in Arizona — a difference of about $340,000. Median rent runs about $2,036 a month in California versus $1,543 in Arizona.
So when a manufacturer like Kiwi II moves production from Temecula to Arizona, the company can potentially lower its tax and operating burden — while workers can get substantially cheaper housing and a much lower state income-tax rate.
Bottom line: Janus paid nearly $100 million to acquire the California company, but will get that investment back by moving its manufacturing to Arizona. This is a trend California continues to see: a company buys a Golden State operation and immediately moves it to another state, instantly getting a return on its investment. California loses the jobs and tax base. Until state leadership lowers taxes, and brings down the cost of living, it will continue to happen.
