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At least some companies that flee California come back.
The latest example is formerly La Jolla-based Kashi, which moved to Kellogg’s Battle Creek, Mich. hub last March. Kellogg’s, which owns the natural foods company, confirmed late last week that Kashi is headed back to its old neighborhood and will operate independently from the breakfast food giant.
Kellogg’s didn’t specify the advantages behind Kashi’s return to San Diego but hinted that the move will translate into more dynamic offerings.
“Re-establishing Kashi as a stand-alone business enables us to take a leadership role in industry trends and be much quicker to market with the progressive nutrition innovations Kashi consumers want,” Kellogg’s spokeswoman Kris Charles said.
She declined to say whether San Diego’s workforce offerings or regional connections with suppliers or developers played a role.
The move could signal Kellogg’s plans to eventually sell Kashi if sales don’t improve.
Kellogg’s CEO John Bryant said last year that the company wasn’t “happy with the performance of our Kashi business” and planned to work to “get it back in the right direction.”
Last week, Food Business News reported that Kellogg’s hired former Kashi chief David Denholm to once again lead the natural foods subsidiary, which has continued to perform below its peak.
“We’ll need to innovate, renovate and get back on our front foot on that business,” Bryant said in a July 31 earnings call. “I think we’ll be doing that through 2015 and 2016.”
Bryant said moving the company back to La Jolla would speed up that process.
One food industry expert suggested San Diego and other coastal cities’ tendency to be at the forefront of culinary innovations and trends may have partly inspired the move.
Fullerton-based consultant Barry M. Weinstein, who advises entrepreneurs who want to manufacture their food products, said the return to the company’s home base also signals a return to its roots – and perhaps an attempt to lure back innovators who weren’t interested in the move to Michigan.
“That’s the area where the individual product was formed, and where the individuals who came up with the product are,” Weinstein said.
Some Kashi staffers remained in La Jolla even after last year’s move. The company previously told U-T San Diego 12 sales employees would continue working there and in other sales offices. Another 14 workers reportedly received layoff notices and 14 others were asked to move to Battle Creek.
It’s not clear how many workers are headed back to San Diego or when they’ll move. Charles said discussions are still under way.
Kashi’s had a San Diego presence since it was founded here in 1984. Kellogg’s bought the company 16 years later. Charles said the move back to La Jolla will give California-based workers the freedom they enjoyed in the years immediately after Kellogg’s purchased it.
“The decision to restore Kashi to the greater La Jolla area returns the business to an operating model that was in place in the mid-2000s, providing more autonomy than was the case in 2010 to 2014,” Charles said.
Kashi appears to be one of at least a handful of formerly California-based companies that have decided to re-establish a presence here.
SoCal’s biotech expertise and its climate – namely, its ability to grow a crucial desert shrub – inspired rubber producer Yulex to open a branch office in San Diego earlier this year, seven years after the company moved from Carlsbad to Phoenix.
Holden Outerwear, moved its corporate headquarters in Los Angeles in 2012 after leaving for Portland, Ore., and Fairchild Semiconductor, which made San Jose its headquarters again in 2011 years after moving to South Portland, Maine.
Kashi and Fairchild Semiconductor share a common thread: They maintained a workforce here even after moving the bulk of the company out of state.
Most of the companies that have announced departure plans in the last year – including Active Network, American Specialty Health, Omnitracs and Fallbrook Technologies – have committed to maintaining a footprint here.
This is part of our quest digging into the difficulties – real or perceived – of doing business in San Diego. Check out the previous story in our series, The State That Lands the Most Departing SD Businesses? That’d Be California, and the next, San Diego Businesses, By the Numbers.