The exodus from the Bay Area, Northern California continues. With some of the most expensive real estate in the nation, the area has struggled with enabling its workforce to afford rent and housing. With 2-bedroom apartment rents hovering around $3000 and median housing costing over $1 million, the area has experienced an exodus of residents and companies.
Fox Factory Holding Corp. (NASDAQ: FOXF) (“FOX” or the “Company”) is the latest casualty as it announced that it has agreed to purchase a 23-acre site in Hall County, Georgia to diversify its manufacturing platform and provide additional long-term capacity to support growth in its Powered Vehicles Group. FOX also plans to relocate its corporate headquarters from Scotts Valley, California to its existing offices in Georgia by the end of the year. Additionally, FOX plans to relocate its aftermarket bike products distribution, sales, and service operations from Watsonville and Scotts Valley, California to Reno, Nevada to better serve its customers.
The first phase of the Hall County, Georgia project is expected to be completed in early 2020, and will be used for manufacturing, warehousing, distribution, and office space. The Company’s Scotts Valley, California location will remain an essential shared services facility housing certain corporate functions.
If one is an employee of Apple, Facebook and Google with dual incomes and stock options, purchasing a house may be within reach with household incomes approaching $400k/year. But folks not in this line of work are really challenged with affording area rates. Housing is insane and livng expenses are more expensive. Companies like Fox feel the pain as few of their workforce can afford a home in the area.
FOX believes the creation of a campus environment in Hall County, Georgia will allow its Powered Vehicle Group to continue to grow efficiently and foster increased innovation and collaboration between its teams and customers. FOX plans to invest up to $50 million in capital expenditures and employ up to 800 personnel over the next five years, dependent on market and general economic conditions in Georgia. This planned capital investment is consistent with the Company’s previously announced capital expenditure expectations in the range of 5% to 6% of sales for 2018 and 2019 to support the demand and strength of its business.
“Georgia provides the business environment and skilled workforce for innovative companies like Fox Factory Holding Corp. to enjoy long-term success and compete worldwide,” said Georgia’s Governor, Nathan Deal. “By relocating its headquarters to Georgia and expanding its facilities in Hall County, the company will continue to enjoy the benefits of the No. 1 state for business, including our expansive logistics infrastructure and a low-tax climate conducive to manufacturing. I am encouraged to see yet another industry leader choose to expand operations here, as Fox Factory Holding Corp.’s investment will produce meaningful results and create even more opportunities in the Hall County community. I congratulate Fox Factory Holding Corp. on its growth and we look forward to many more years of this successful partnership.”
Many of Fox Factory’s bike division employees have been relocating to their facility in North Carolina where they have a few dozen employees.
Fox plans to invest up to $50 million in the facility in Georgia, according to the release.
“The main driver is the ability to recruit top-notch talent. There are a lot of good schools out on the east coast, but trying to get a new college graduate to come to California where houses cost a lot of money, versus Georgia, is hard. We’re also right next to Silicon Valley, so there is a lot of competition for good engineering talent. It just gives us the opportunity to expand.
— Dan S. Robbins, Head of Corporate Marketing
Additionally, FOX plans to relocate its aftermarket bike products distribution, sales, and service operations from Watsonville and Scotts Valley, California to Reno, Nevada to better serve its customers. Bike Marketing, OEM Sales, Engineering and bike development teams will remain in the Scotts Valley location.