Minimum Wage Claims Its Latest Victims - Ashley Furniture Slashes 840 Jobs In California

Tyler Durden's picture

A few weeks back we pointed out a couple of the reasons that businesses are fleeing California by the 1,000's ("3 Simple Charts That Help Explain Why 9,000 Businesses Have Left California In Just 7 Years").  Clearly the implementation of a State-wide $15 minimum wage hasn't helped "lure" business owners.

On Friday, Ashley Furniture's 840 employees working in the company's production and warehouse facility in Colton, California became the latest victims of California's minimum wage hike.  Ashley announced they would be leaving open their retail store in Colton, but would be relocating the production facility that accounts for most of the location's jobs.  Per the San Bernadino Sun, Ashley Furniture released the following statements about the closure:

We thank our employees for all their hard work, but closing these plants on Oct. 25 and rebalancing our manufacturing mix strengthens production capability and cost structure and will help ensure Ashley’s continued ability to compete effectively long-term in the global marketplace from a U.S. base.

 

The majority of production in Colton will move to U.S. plants in Wisconsin, Mississippi and North Carolina.

By shifting the majority of Colton production to other U.S. facilities we will create more efficiency and better use of existing capacity in our manufacturing network.

Ashley Furniture

 

Certainly, it's not surpurprising that Ashley would choose to relocate their California prodcution capacity to Wisconsin, North Carolina and Mississippi given that they each sport minimum wages that are a mere 52% lower than California's proposed $15 floor.

Minimum Wage by State

 

But, as per the norm, misinformed politicians rarely seem to take the heat for their reckless policies as Ashley employees prepared to protest the layoffs in Colton. 

We cannot let companies like Ashley bleed the American dream,” Naja said. “It’s not only the employees, but the families, the kids, the wives. They’ve got wives with medical situations and things like that. There’s no way a huge company like Ashley’s can shut down the doors.

 

We’re going to be here making a protest and we’re calling everybody that can come to please support us and find out what they did to us,” Zuniga said. “Come and support all the hard-working employees and parents that take income to their house. I’m the only one supporting my family. I’m the only one paying a mortgage.”

Might we kindly suggest the better place to hold your protest would be in front of Jerry Brown's office in Sacramento. 

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DownWithYogaPants's picture

Von Firstenberg!

Shrillary has old Crone's disease.

erkme73's picture

So when HRC's anti-trump commercials show him speechless as Letterman points out that his ties are made in Singapore, THIS should be his explanation.   Either make products with profits, or make no products at all.   Classic case of blaming the dog for eating the steak the owner left on the coffee table, instead of blaming the owner.

espirit's picture

Ashley's?

Is that like Craigslist?

FireBrander's picture

News Flash...even at $9 an hour, Wisconsin businesses have trouble filling positions for burger flippers.

I don't know what the hourly wage is in the CA factory, but I guarantee you it won't be $7.25hr in Wisconsin.

Also, the $15hr wage is CA doesn't go into effect until 2021; so I doubt that played much of a role in the decision to move in 2016.

I MISS KUDLOW's picture

Now listen i saw the ceo of TASK RABBIT on bloomberg or cnbs recently,,,they are providing millions of jobs,,,they got it covered

 

so no big deal if we keep bleeding jobs like we have for 9 years

wee-weed up's picture

 

 

Yep, just more consequences of Lib Socialist "pie in the sky" "gravity does not exist" agenda...

But the Lib Socialist MSM will ignore it...

In order to try to help Hitlery win in November.

espirit's picture

Taxes.

Environmentals.

Beni's.

Need Moar?

FireBrander's picture

I'm betting taxes and utilities in CA combined with a nationwide slowdown for crappy furniture forced them to consolidate in other states.

How about a little more research for the story....

A. Factory wages in CA.

B. Factory wages in WI.

My guess, pretty much the same...but then you couldn't blame the CA rise in minimum wage IN 2021 for the move....so much for honesty in the media.

PS> I just did a quick job search for a manufacturing job...window manufacturer is hiring..starting pay is...$14hr.

gammab0y's picture

You overall point that this is not a minimum wage story might be right, as there are plenty of other CA regulatory headaches that will make any sane employer run.  I would bet their legal bills for dubious workers comp awards far exceeds their additional wage costs.

But your logic is still wrong  You can't compare CA minimum wage to other states' manufacturing wages.  There is a reason why a manufacturing employee in Wisconsin can demand a premium over the burger flipper next door in McDonalds.  The CA manufacturing employee will demand the same premium.  A minimum wage probably compresses that premium, but it will still exist.

CNONC's picture

Ashley is in a very small town in the boonies in WI, south of Eau Claire.  Very much like so many other areas in the hyperborean north, many people work seasonal jobs.  Construction there is seasonal as it gets hard to work in sub zero temps.  Year round jobs, then, are at a premium for job seekers which tends to drive down wages.  Their NC plant is also in a semi rural older industrial area.  Wages are pretty low there as well.  Air emission standards are much more stringent in CA, and every plant has paint booths and laminate sprayers which are large emitters of VOCs.  Some of their paint booths are heated by direct fire burners, which are emitters of NO and NOx.  The new CA requirements for low NOx emitting burners can really add to the cost for a simple process heat machine.  I just replaced an older 6MMBtu burner in LA with a new low NOx model.  A conventional burner would have been about 4500 dollars.  The low NOx was 40,000 dollars.

Ashley is in a low margin business competing with low cost importers.  They developed along the old vertical integration industry model, owning production, shipping, distribution, and retail outlets.  They have a good job of staying alive.

FireBrander's picture

Which furhter proves that on the list of reasons for Ashley to leave CA, the $15hr min wage in 2021 was on the list, but closer to the bottom than the top.

Max Cynical's picture

The wage is only a fraction of the total cost for any employee.

It's the total burdened cost that matters...and in California, tack on another 50%+ to the cost of every employee. 

oooBooo's picture

" the $15hr wage is CA doesn't go into effect until 2021"

Companies won't wait around for things to come into effect if they've done the math and it doesn't work.

That said I agree with your point. This probably has less to do with minimum wages in CA and more to do with fuel/shipping costs presently being low enough to cut the entire overhead of a west coast facility. When fuel prices go back up they'll be in a bind. Whomever came up with this plan will be long gone by then. Bonus check long cashed.

Sick of Government Lies's picture

News Flash..... A business is not going to wait until 2021 to make the move.  They'll do it now so they can sucker some sucker into purchasing the building.  Bigger businesses plan 4-5 years out when it's dealing with production, etc.  As a small business owner, I wouldn't be able to pay $15 per hour to someone 16 or 17 I'm training HOW to work.  Yes, most are clueless how to mop, sweep, clean bathrooms, etc.  If they do have some previous work skills they also know how to beat the system.  They end up sitting around doing nothing because they think no one is watching.

 

 

JRobby's picture

People need housing payments and food.

Why buy new furniture when there is good quality used furniture all around?

Why buy a new car when there are millions of good used cars (and repos)?

FireBrander's picture

Looking at used cars recently.

New car ~$18,000

Same car, 1 year old with 15,000 miles (dealer loaner) is $12,000....$6000 depreciation the first year! You've got to be an idiot, or broke (0% finance), to buy a new car.

FireBrander's picture

Clinton pulled all of her ads from my state...they were moving resources away from states they felt were "wrapped up"....guess what..within a few days of Trump "making changes" that included "acting more Presidential"...the Hillary ads are now back on my TV...

The DNC has to be shitting it's pants...their internal data shows blacks warming up to Trump...how do I know this? Hillary coming out and telling blacks they are better off with her...why would she do that unless Trumps "what do you have to lose by going with me" question is resonating in the "Black Community".

LadiesLoveCoolJames's picture

I'm Ok with this as long as it doesn't affect Ashley Shaffer BMW. "I can feel it in my plumbs!"

freddymercury's picture

Plenty of cheese in WI at least

Colonel Klink's picture

Killary has plenty of cheese too, you just need to check the folds.

espirit's picture

Damn, mindbleach time again just before bed!

Déjà view's picture

'Blue Waffles' disease...matches her attire...

BabaLooey's picture

Change you can be in disbelief of.

skinwalker's picture

I foolishly bought a bed from assley's and it collapsed. Thank god for ammo cans, they make great reinforcements.

FireBrander's picture

Ashley furniture is complete shit...nothing but OS Board and staples...junk, junk, junk....instead of moving to Wisconsin, they should move to China..actually, the Made in China Walmart furniture I've bought is better than the shit Ashley makes in the USA! USA! USA!

Make_Mine_A_Double's picture

Ashley is almost 100% sourced from PRC - they just play the duty rates and do final 'assembly' (read no value) in the USSA.

That said anyone trying to be seriously competitive left Commiefornia a long time ago. North Korea has a more predictable regulatory and liability climate than the Golden Shower State.

Colonel Klink's picture

Fuck Commiefornia, socialist hell hole of a state much like Shitcongo is as a city.

yogibear's picture

LOL, 10.50 in DC. Leech capital of the country. Do-nothing politicians must pay the surfs something.

2banana's picture

The people in Venezuela said the same thing...

 

But they keep voting for more socialists.

Anopheles's picture

Some people in Venezuela are starting to realize their mistakes. But look at the extreme circumstances its taken for that message to begin to get through to them.  Of course a lot will never learn.

 

BlissPoint's picture

Blessed be the California lawmakers who better know the value of their citizens' time than the citizens themselves. All this time, the silly little California low-wage workers thought it was worth it to work for less than $15/hour. Sorry, you're wrong. You're better off with no job, so sayeth the State.

cart00ner's picture

No doubt this will have a domino effect on local busines also.

Seen it happen here when a copper mine folded - killed 1/2 the trade

in the community. 

Anopheles's picture

People don't understand the full consequences unless they are directly affected.  But yes, all the local suppliers and contractors that provided services and goods to support that business will also lose.  (things like office supplies, cleaning services, tool suppliers, building maintenance contractors, and trucking and delivery)

dchang0's picture

More pro-gov't voters dependent on welfare--Big Gov't can't lose with this move. They know exactly what they're doing, and the State is winning.

Lost in translation's picture

Comedy gold.

Good job, Governor Brownstone!

Golden Showers's picture

Oh, no! Ashley Furniture!

IKEA, Bitchez.

AARONS? RTO?

840 jobs. That's a laugh. Califiornia. Ha Ha.

Don't blame it on Obama you fucks. Blame it on the reign.

https://www.youtube.com/watch?v=vRg1nTUJFo8

Yeah. Yeah. WHOOO!

gregga777's picture

The policies that Kalifornia is using to drive out businesses and citizens is really appreciated by the freedom-loving states benefitting from those policies.

just the tip's picture

hussein should do to this company what he did to gibson guitar.  shut the company down and start an audit.  then do another audit.  then reluctantly let the company resume operations.  i think hussein should put the entire management of the company in a fema camp.

Father ¢hristmas's picture

Ashley Furniture is shit cause they have the worst safety record in America.  Workers are obliged to not give a shit if they don't wanna lose an arm for no reason.

They need to raise the minimum wage to $20/hr so all these Commies can pay the full unsubsidized Obamacare premiums lol.

Execs should just instantly raise prices on goods and services in proportion to min. wage increases in these cities and states.  $15/hr, $12 value meal.  $5/gallon gas. $13 pack of cigarettes.

Shit, bro, this is a munneymaking oppurtooniddy. We cud all sell are stuff in Kaleefornia!  Oh wait, nevar mind.  Greedy ass state officials will levy taxes in proportion to price increases as well.  Probably even higher rofl.  Motherless fucks.

To Infinity And Beyond's picture

And yet the guy at the end is blaming the employer. Will they never learn?

Father ¢hristmas's picture

No.  They are junkies addicted to graft so they need votes to get those envelopes.  This is how communism starta.

joego1's picture

Let's see thats 840*30k in welfare so the magic bag of money gets to come up with about 25 million on that gig.

Mustafa Kemal's picture

At leat they stayed in the US.

The Anti-_-Sheep's picture

Until TPP is passed. "Yo, you down with TPP? Yeah, you know me!" -Globalist Puppet 

Nothing-to-See-Here, Just-Move-Along...