After considering relocating to Texas, medical products maker ResMed has decided to keep its headquarters in San Diego.
The company said Tuesday its board decided last month that the benefits of staying in San Diego outweighed the benefits of moving.
But California’s business climate of high taxes and regulations remains a worry, said David Pendarvis, ResMed’s global general counsel and chief administrative officer. The company might still decide to move some functions out of state under the right circumstances, he said.
ResMed’s dissatisfaction with California came to a head in November, when the company said it was appointing a task force to consider moving its headquarters out of California, with Texas the most likely destination.
San Diego actually scored sixth out of seven cities in purely economic terms, Pendarvis said, declining to name the cities. But the company decided that a move would put its high-performance culture at risk, he said.
The San Diego headquarters, which employs about 400, is productive and works well together. Moving could disrupt the core team and in the long run hurt ResMed, he said.
ResMed makes devices to treat sleep-related breathing disorders such as apnea. A publicly traded company, ResMed’s market capitalization of $6.5 billion makes it one of the most highly valued companies in San Diego County. That makes the company a choice prize for states that are on the hunt for California companies.
Mark Cafferty, chief executive officer of the San Diego Economic Development Corp., said his group and others, including the offices of Gov. Jerry Brown and Mayor Bob Filner, worked together to make a case for ResMed to stay. The team made ResMed aware of existing advantages, such as the benefits of being in an enterprise zone, he said.
ResMed didn’t get any new inducements, Cafferty said. It was a matter of making ResMed and an impartial adviser aware of all the benefits of remaining in San Diego, he said.
Joe Panetta, CEO of the life science trade group Biocom, said more work needs to be done to keep ResMed and other biomedical companies from relocating.
“We do want to continue to work with the state of California and with companies like ResMed to understand what it’s going to take to continue to remain competitive,” Panetta said. “When we have issues with companies like ResMed, when there’s a chance they might move, we need to get ahead of that situation and talking with our state government about how we can improve things here.”
In December, Texas Gov. Rick Perry visited California and met with executives from ResMed and other companies to persuade them to relocate to Texas. As Texas governors have done for decades, Perry touted Texas as a business-friendly state with low taxes and regulations.
Pendarvis said California is far from resolving its fiscal and regulatory problems, and ResMed will take that into account as it assesses its opportunities.
April 1st, 2013