Rafu Wire and Staff Reports
Toyota confirmed Monday that the company will move its North American headquarters to Plano, Texas, meaning a major loss of jobs in Torrance, where the mayor expressed sadness but said he hoped the city would be able to attract another major employer.
About 5,300 people work at Toyota’s Torrance complex on Western Avenue and 190th Street, handling sales, finance, marketing, engineering and product planning.
According to Toyota, the move — which will be made over the next three years — will consolidate operations from three states.
“The transition to Plano from three current headquarters locations – affecting approximately 2,000 employees at Toyota Motor Sales U.S.A. Inc. (TMS) in Torrance, Calif.; about 1,000 employees at Toyota Motor Engineering & Manufacturing North America Inc. (TEMA) in Erlanger, Ky.; and certain employees at Toyota Motor North America (TMA) in New York, N.Y. – will begin with initial small groups this summer,” the company said in a statement.
“However, the majority of these employees will not move until construction of Toyota’s new headquarters is completed in late 2016 or early 2017. Toyota Financial Services (TFS) is not expected to transition to Plano from its current headquarters in Torrance, Calif., until 2017, which will affect around 1,000 employees.”
“With our major North American business affiliates and leaders together in one location for the first time, we will be better equipped to speed decision-making, share best practices and leverage the combined strength of our employees,” said Jim Lentz, Toyota CEO for the North American region. “This, in turn, will strengthen our ability to put customers first and to continue making great products that exceed their expectations.
“Ultimately, enabling greater collaboration and efficiencies across Toyota will help us become a more dynamic, innovative and successful organization in North America,” he said. “This is the most significant change we’ve made to our North American operations in the past 50 years, and we are excited for what the future holds.”
Toyota will expand the Toyota Technical Center (TTC) in Michigan to accommodate the relocation of direct procurement from Erlanger, Ky., to its campus in York Township near Ann Arbor. This expansion is part of an increased investment in engineering capabilities and will accommodate future growth in product development.
Toyota will also build a new facility on TTC’s York campus (subject to final approval of state and local incentives) to accommodate approximately 250 direct procurement positions currently based at TEMA in Erlanger.
About 300 production engineering positions based in Erlanger will be relocated to a new facility to be built at Toyota Motor Manufacturing Kentucky (TMMK) in Georgetown, Ky., while approximately 1,000 TEMA administrative positions will transition to Plano.
The company said that it will continue to have about 2,300 employees in California and 8,200 employees in Kentucky. This includes 750 new jobs being added at TMMK for production of the Lexus ES, which begins in 2015. Toyota will also continue to maintain offices in the New York City area and Washington, D.C.
The company also announced a $10 million “philanthropic commitment” for nonprofit and community organizations over the next five years in the states affected by the job losses, beginning in 2017.
Toyota’s 10 manufacturing plants in the U.S. will not be impacted by these changes. Also, the following Toyota units will not be impacted at this time:
• Toyota regional field offices and Lexus area offices
• Operating units in Canada, Mexico and Puerto Rico
• Toyota Financial Service’s regional offices, sales offices, service centers and its bank
• Calty Design Research facilities
• Toyota InfoTechnology Center
• Toyota Racing Development
• AirFlite Inc.
• Logistics services field locations
• Distribution centers
The move will not impact Toyota’s relationship with Gulf States Toyota Inc. (GST), a private distributor of Toyota vehicles based in Houston.
Torrance Mayor Frank Scotto said he had no warning of Toyota’s decision and was “saddened about the news.”
“We hope that everybody understands that Torrance has done everything we can to keep them here,” he said. “And we hope that we attract another company like that.”
Scotto said businesses bear higher costs in California for workers’ compensation and liability insurance, among other expenses. Both New York and Texas have aggressively pursued major California corporations by promising a number of financial incentives to get them to relocate, he said.
The mayor said Toyota “has been a great partner with the city of Torrance.”
“We look forward to working with Toyota, making it a good transition for them,” he said, adding that the city will be looking for another major corporation to move in. He said the Toyota campus covers 101 acres.
“Torrance has been known (as) a business-friendly city for years, and we do a number of things in this city to make the environment in Torrance a great place,” he said.
Assemblymember Al Muratsuchi (D-Torrance) said in a statement, “I am extremely disappointed by Toyota leaving Torrance. As your assemblymember representing Torrance, and as a longtime Torrance resident, my number one concern is all of my friends and neighbors at Toyota and their families affected by this decision. I will do everything I can to support them.
“Toyota representatives have personally informed me that this is strictly a business decision that has nothing to do with California’s business climate. This is a nationwide corporate decision to consolidate their operations in one location. As part of this consolidation, Toyota will be moving manufacturing jobs from Kentucky as well as sales and financial jobs from Torrance.
“Nonetheless, I will continue to work to improve California’s business climate. As chairman of the Assembly Aerospace Select Committee, I have authored legislation and supported policies to provide tax incentives, cut down on regulations, and curb frivolous lawsuits. As chairman of the Assembly Budget Subcommittee on Education Funding, I am fighting to reinvest in California’s public schools, community colleges, and universities, so that we will continue to have a competitive workforce. In sum, I will continue to work to make California more competitive for business.”
State Sen. Ted Lieu (D-Torrance) said, “I am really angry. Nothing prepared any of us for this surprise announcement by Toyota. The fact is thousands of families in our community are directly impacted by this decision – families who depend on Toyota for their livelihoods. I’ve spent this morning (April 28) acquiring as much information as I can and am preparing my office to do everything it can to help these families and friends during this difficult transition for our community.”
Los Angeles County Supervisor Don Knabe wrote in his blog: “Toyota’s decision to relocate from Southern California, where it has operated for over 50 years, to Texas is extremely disappointing and concerning for Los Angeles County. Not only are we directly losing nearly 3,000 individual jobs, but also the small businesses, like dry cleaners and restaurants, that will be impacted. There is a huge multiplier effect and we just can’t replace jobs like these overnight.
“For years, we’ve seen businesses flee California’s high taxes and strict regulations for more business-friendly states like Texas. This mass exodus should have sent a message to our state leaders that something needs to change, and fast. This is a textbook case and we need to do an ‘exit interview’ with Toyota to learn what we can, as a state, do better, so that we stop being a target for other states.
“Our only sell cannot be the great weather! We need to come together, quickly and aggressively, and work across state, county, and city borders to improve the business climate. California has an unmatched entrepreneurial spirit and an historically strong education system. We must work together across sectors to sell our strong workforce, create business-friendly policies, and make California a place people want to do business again.”
Some readers of The Daily Breeze placed the blame on Torrance’s leaders. Clint Paulson wrote, “Our current leadership is out of touch. It’s time for some fresh blood with a true business background … How did the mayor and the Chamber (of Commerce) not have any idea about this? My heart goes out to all my neighbors and friends who are now looking for work or facing a forced relocation to Texas. It’s a very sad day here in Torrance.”
Toyota originally selected the Greater Los Angeles area for its first North American headquarters because of proximity to the port complex, through which it imported cars, and easy airline access to Tokyo, The Los Angeles Times reported. As Toyota grew, it opened its national sales and marketing headquarters in Torrance in 1982. The complex now has 2 million square feet of office space.
Today, about 75 percent of Toyota vehicles sold in the United States are built not in Japan but at plants in Texas, Mississippi and Kentucky. Moving corporate headquarters to Texas will put senior management closer to those factories.
In 2005, Nissan announced it was moving its North American headquarters from Gardena to Franklin, Tenn., outside of Nashville. About 550 employees left for Tennessee; an additional 750 left jobs at Nissan to stay in Southern California.
“The costs of doing business in Southern California are much higher than the costs of doing business in Tennessee,” Nissan Chief Executive Carlos Ghosn said at the time. He cited cheaper real estate and lower business taxes as key reasons for the move.
Toyota is not the first big California-based company to announce a move to Texas. In February, Occidental Petroleum Corp. said it was relocating from Los Angeles to Houston — one of around 60 companies that have moved to Texas since July 2012, according to Texas Gov. Rick Perry, who last month visited California to recruit companies.
The group Americans for Economic Freedom also recently launched a $300,000 advertising campaign in which Perry contends 50 California companies have plans to expand or relocate in Texas because it offers a better business climate, The Times reported.