Chevron's announcement last week that it would relocate its corporate headquarters from California to Texas occurred in part because it was becoming increasingly difficult to do business in California, a Chevron executive said Thursday.
Andy Walz, Chevron's president of Americas products, told reporters that the headquarters move comes after the company had gradually moved a number of employees from the San Ramon headquarters to the new headquarters in Texas in recent years as keeping them in the Golden State was becoming unsustainable.
"We've been doing that because California is a tough place to do business," he said. "It's a tough place to recruit people. It's a tough place to move employees – a lot of our employees move up through the company, they gain experience in different geographies, different locations and we have a lot of people who will not move to California. That makes it difficult."
"We have been moving the company's employee base to Houston for a long time. This is another step on that journey," Walz said. "We're doing that because it's going to drive better performance for Chevron. Today, our leadership teams are spread across two different states, we're not together as much, so there's efficiencies, there's effectiveness by doing that."
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"California's a tough place to have a big employee base. It's tough. Cost of living is expensive. And we were not able to get employees that didn't live there to move there and that's not sustainable for us, to be honest," he explained.
Chevron's plan for its headquarters transition is for all corporate functions to move to Houston over the next five years, with the Chairman and CEO Mike Wirth and Vice Chairman Mark Nelson moving to Houston before the end of this year to be closer to other senior leaders.
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Walz emphasized that the company will continue to have a substantial presence in California even after the headquarters relocation is completed over the next five years.
"Chevron has a long history in California, we have a proud history. And we are going to stay there, we're not going away – we have two big refineries, we have a large retail network, we have infrastructure all over the place and we still have an upstream business in the San Joaquin Valley. So we will still have a lot of employees there, they will remain there supporting that business," Walz said.
He added that the move was an emotional one for some employees and that the company will offer moving packages and work with employees around their personal circumstances, but that employees in roles supporting Chevron's global operations will be in Houston at the end of the transition.
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Walz explained the move wasn't driven by political considerations given California's tough regulations on companies in the oil and gas business, saying that, "This isn't politically motivated, we're trying to drive better business outcomes."
He did note that Texas has embraced the company's move and that having the headquarters located in a state that plays a leadership role in the U.S. energy industry brings advantages from a corporate standpoint, while also giving employees an opportunity for a more affordable cost of living.
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"I will tell you, in Texas, we're welcome. Our industry is welcome," Walz explained. "This is where a lot of our competitors are, a lot of our suppliers, a lot of the people we do business with are here. It's easy to walk across the street and talk to somebody that you're doing business with. The policies are welcoming of energy companies. And quite frankly, it's lower cost of living, and it works well here."
