April 28, 2014 / 7:57 PM / 4 years ago

Toyota move to Texas is latest blow to Southern California

NEW YORK/DETROIT, April 28 (Reuters) - 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 company said.

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.

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 grandchildren.

Toyota’s decision also means all three of the major Japanese carmakers will have stepped back from 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.”


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 safety costs.

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.

The region has not kept pace with the nation in job creation. A report by the Los Angeles 2020 Commission released in December said Los Angeles is the only one of the seven largest U.S. cities to lose jobs since 1990, and Los Angeles County ranks last in California for creating jobs.

The commission chastised Los Angeles for repeatedly ignoring or fumbling opportunities to foster job growth in the intersection of science and engineering, a major growth industry in the last era. Over a 30-year period ending in 2010, the city added 823,000 residents but lost more than 165,000 jobs, the Los Angeles County Economic Development Corporation highlighted in 2012. (Additional reporting by Tim Reid in Torrance. Writing by Dan Burns, editing by John Pickering)

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