(Adds details from Toyota CEO and former Nissan executive)
By Robin Respaut and Paul Lienert
NEW YORK/DETROIT, April 28 Toyota Motor Corp.
said it will move its U.S. sales headquarters from
southern California to suburban Dallas, delivering the latest
blow to California in a fight for jobs with arch-rival Texas,
whose Governor Rick Perry has been actively poaching businesses
from the Golden State.
The relocation from Torrance, a Los Angeles-area city of
about 150,000, will bring much of the Japanese automaker's U.S.
operations under one roof in Plano, Texas, including sales,
service, marketing, advertising and quality. Also moving to
Texas will be some manufacturing staff now based in Erlanger,
Kentucky, and corporate operations staff based in New York City.
Toyota is the largest employer in Torrance, accounting for
more than 5 percent of all jobs in the city with 3,837 workers
in 2013, according to the city's annual financial report. About
2,000 people from Toyota Motor Sales in Torrance will be
affected by the move, and about 4,000 U.S. employees in all, the
Toyota's move, which will take place in stages between this
summer and the end of 2016, is the latest by a major employer to
defect to the Lone Star State from California. Toyota has been
in California since 1957, when it set up shop at a former
Rambler dealership in Hollywood.
In February, Occidental Petroleum Corp. said it
would move from Los Angeles to Houston. In 2009, power company
Calpine Corp abandoned San Jose for Houston and in 2006
engineering company Fluor Corp. relocated to the Dallas
area from Orange County.
TRAVEL TO TEXAS
It's "sad news," Torrance mayor Frank Scotto said at a press
conference Monday. "Toyota has been an integral part of the
city." He said his son-in-law works for Toyota, so he faces the
prospect of having to travel to Texas to see his daughter and
Toyota's decision also means all three of the major Japanese
carmakers will have exited the state where they first got their
footholds in the United States. Nissan Motor Co in 2006
moved most of its operations from Gardena, California, to
Franklin, Tennessee, outside Nashville. Last year, Honda Motor
Co decided to move a number of executives from Torrance
to Columbus, Ohio.
Perry has made luring businesses from other states a
priority, making personal recruiting trips to sell what the
Republican touts as a superior business climate, particularly
lower taxes. California and New York State, both with Democratic
governors, have been particular targets for the effort.
On a poaching trip to New York last week, Perry challenged
New York Governor Andrew Cuomo to a debate over which of the two
states has a better business climate. There are about 50 people
working in Toyota's Manhattan office, and not all will be
required to move.
Toyota's chief executive for North America, Jim Lentz, said
Perry had no role in Toyota's decision to move.
Perry "is an interesting guy," Lentz said in an interview.
"I've never met him. I talked to him on the phone today for the
first time. This was never about Governor Perry courting us."
NEVER HAD A CHANCE
The company never gave California a chance to make a
counter-offer, Lentz said, adding that it weighed as many as 100
possible sites over the past year.
"California didn't work out for a number of reasons,
especially the distance from our U.S. manufacturing operations,"
he said. It would have been "disingenuous" to seek an
alternative proposal from California.
When it came time to decide on the site from the four
finalists, Plano "was clearly No. 1," Lentz said, but not
because of the incentives it offered the company.
"Our decision was not based on the dollar amount we
received," but rather on a friendly overall business climate and
certain advantages for Toyota employees, from affordable housing
and shorter commutes to the absence in Texas of a personal
Those supposed quality of life advantages don't ensure
success in a big corporate relocation, however.
Larry Dominique, a former Nissan executive, recalled how
Nissan lost about two-thirds of its California employees in the
move to suburban Nashville.
While some employees liked the lack of income tax in
Tennessee, which was akin to "getting a 20-percent raise,"
Dominique said many others couldn't be persuaded to go. That
included a sizeable number who were not their family's primary
Culture change is another challenge likely to be on Toyota's
horizon, said Dominique, who now heads an automotive research
and consulting firm in Santa Barbara.
"You lose centuries of institutional knowledge," he said.
"In some departments, like in planning or branding, you have to
retrain people on who you are."
Some employees will begin to move this summer, though most
won't until construction of a new headquarters in Texas is
completed in late 2016 or early 2017, the company said.
Toyota has a truck assembly plant in San Antonio, Texas, as
well as manufacturing and assembly plants in eight other states,
including Kentucky, Indiana and Mississippi.
Meanwhile, the departure from Torrance will leave more than
a gap in employment.
According to the city's Comprehensive Annual Financial
Report, the company was also Torrance's third-highest property
taxpayer, with a taxable assessed value of $473 million or over
2 percent of the city's total taxable assessed value last year.
Toyota also paid the city $203,037 in water revenue.
Torrance had a $271.5 million budget in 2013 and about
$121.5 million in long-term debt. In December 2012, credit
rating agency Moody's downgraded Torrance to Aa2 from Aa1,
citing a moderately weakened general fund compared to
pre-recession levels, increasing pension payments and public
The departure could also hurt efforts by Los Angeles to
regain its footing in the job market. The region's unemployment
rate stood at 8.1 percent in February, well above the national
rate of 6.7 percent.
(Additional reporting by Tim Reid in Torrance. Writing by Dan
Burns, editing by John Pickering)