Prior to the mid-1990s to the early 2000s Santa Cruz had a strong and thriving manufacturing sector. Major Companies like Lipton, Wrigley, Santa Cruz Operation (SCO), and Texas Instruments were all based in Santa Cruz or had production plants in Santa Cruz. However, due to the high cost of labor, housing, and energy in California relative to the rest of the country, these Santa Cruz locations decided to relocate or shut down.
Lipton Tea's Santa Cruz manufacturing plant opened in 1970 and continued operation for more than forty years. Unfortunately in 2002 the Lipton production plant shut down because of the high labor, housing, and energy costs in California. After the closure of Lipton's Santa Cruz facility, the head office moved the equipment and production back east to Suffolk, Virginia. Lipton continued production in Suffolk after the move. The 2002 closure came only a few years after a large round of layoffs in 1996 in an attempt to reduce the company's production costs.
Wrigley was one of the largest employers in Santa Cruz and operated in the city for nearly forty years. Despite their size and history in Santa Cruz the company decided to stop production at their Santa Cruz facility in 1996. At the time of the Santa Cruz facility's closure the company announced their plans for a new production plant in St. Petersburg, Russia According to Wrigley's spokesperson their Santa Cruz facility had been operating at less than sixty percent for several years. This was part of the cause for the closure of the plant the other reasons for that plant's closure were the high labor costs which were fifteen dollars an hour on average and the high energy costs in the state of California.
Santa Cruz Operations (SCO)
The SCO company was a software company founded in 1979 best known for their UNIX pieces used in Intel processors. In the early 2000s the company renamed themselves Tarantella Inc. due to the sale of their UNIX line and the success of their newer Tarantella product line. However, the rebranding of the company and sale of their Unix line did not help the company avoid being bought out. In the early to mid-2000s the companies profitability declined causing financial problems for the company which contributed to them being bought out by Sun Microsystems in 2005. After Sun Microsystems acquired the company they sold off the Tarantella product line to ProPalms, eventually leading to the closure of Tarantella Inc.'s Santa Cruz location.
In 1996 Texas Instruments acquired a production plant in Santa Cruz where they began building semiconductors that would be used in a variety of their products. However, in 2001 the Texas Instruments plant shut down laying off a workforce of 600 workers. This shift was a part of the companies plan to reduce production costs while switching to what the company considered "higher-growth opportunities." A likely cause for the California production plant closure is the fact energy prices, labor, and housing prices in California were quite high compared to the rest of the country. Texas Instruments moved their semiconductor production to their preexisting plants in Houston and Dallas, Texas.