Here’s a hypothetical situation. Imagine that YOU are the governor of a state. How do you know you’re in trouble? Here’s how: Texas Governor Rick Perry shows up on television, standing outside your capitol building, wagging his finger at the audience, and saying, “We invite the major businesses from this state to see how much better they will fare in the great state of Texas.” Uh oh. Trouble.
Well, that’s what Governor Jerry Brown of California is experiencing right now. Toyota is moving its U.S. sales headquarters from the Golden State to the Lone Star State. Toyota currently maintains U.S. sales operations in Torrance, a suburb of Los Angeles, and will move most of that group to Plano, a suburb of Dallas.
Now, it may have been Perry’s financial tantalizations to the 16th largest company in the world by revenue that brought Toyota to the decision; Texas has no corporate or personal income tax, and has offered a $10,000-per-employee incentive, to be paid out over three years, to Toyota to sweeten the deal. And that’s pretty sweet, when you compare it to the incentives offered to Chevron ($6,800 for each of 1,700 employees that moved to Houston), and Apple ($5,800 for each of 3,600 employees that moved to Austin).
On the other hand, it may have been careful consideration and planning by Toyota CEO Okia Toyoda and Toyota North America CEO Jim Lentz that resulted in the decision to “Go East, young man, but not too far East.” Japanese auto brands, which have traditionally located their operations on the West Coast for logistical reasons, may be moving their offices toward Flyover Country because they see more green in the redder states, due to a combination of focused incentives, lower real estate costs, lower cost of living, strong talent pools and an opportunity to develop a collaborative environment that will make Toyota what Lentz calls “a stronger player.”
The news comes on the heels of the announcement that Toyota would be moving most of the employees from the engineering and manufacturing division of Toyota North America from Erlanger, KY to Plano.
Of course, any move to Texas is a little less surprising when considering the 2.2 billion-dollar Toyota manufacturing facility that was established in San Antonio in 2006 that employs almost 2,000 people. Combining sales and manufacturing in Texas may indeed make Texas, as Lentz has suggested, Toyota’s new collaborative environment.
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