Tennessee Foots Bill to Move Nissan

Times Staff Writer

Tennessee may not match California when it comes to beaches and celebrities, but it bested the Golden State when it anted-up to woo Nissan Corp.

The Volunteer State used a relocation assistance package worth $197 million to persuade Nissan to move its North American headquarters from Gardena to the hills just south of Nashville, according to Tennessee’s Economic and Community Development Department.

For the record:

12:00 AM, Dec. 09, 2005 For The Record
Los Angeles Times Friday December 09, 2005 Home Edition Main News Part A Page 2 National Desk 2 inches; 63 words Type of Material: Correction
Nissan relocation -- An article in Thursday’s Business section about Nissan Motor Co.'s relocation of its North American headquarters from Gardena to Tennessee said California’s package of incentives to keep the automaker included a $20-million reduction in utility bills. In fact, $20 million was the approximate total value of California’s failed offer, which included tax breaks, job training funds and reduced utility bills.

The best California could come up with to keep Nissan was a package of tax breaks, job training funds and $20 million of reduced utility bills.

Nissan, which opened its U.S. operations in Southern California in 1958, said last month that it would relocate its domestic headquarters and 1,300 jobs to Franklin, Tenn., next summer as a cost-cutting move


“We did what we could,” but didn’t have the clout to beat Tennessee’s offer, said Greg Whitney, vice president of business development for the nonprofit Los Angeles County Economic Development Corp.

Tennessee’s incentive package is one of the largest relocation deals to date, said Michael Cutri, head of business incentives at Cushman & Wakefield Valuation Services in Los Angeles.

The new headquarters will benefit Tennessee’s economy by generating $527 million a year in added income and ultimately bring 11,000 other jobs as supplier and service companies move in to handle Nissan-related business, according to the University of Tennessee Center for Business and Economic Research.

“If I can invest $1 and get back $2.50, I’m going to do it every time,” said Matt Kisber, commissioner of Tennessee’s economic development unit.

Tennessee began aggressively courting the automaker after losing a bid in 1998 to secure a second Nissan assembly plant. In 1982, the company built its first domestic assembly plant in Smyrna, Tenn., and later added its North American manufacturing headquarters and an engine plant nearby.

But the carmaker decided to build its second vehicle assembly plant in Canton, Miss.

That was a blow to Tennessee officials, who had seen the state’s economic well-being swell along with Nissan’s payroll. The automaker has about 8,000 employees in Tennessee.

The benefits package put together to lure Nissan’s California operation was approved by the Tennessee Legislature this summer as part of a broader state tax bill. Although the measure never mentioned the automaker by name, it was tailored to the company’s needs.


The measure allows the state to reimburse a business up to $50,000 per employee for relocation costs if a company moves its headquarters to Tennessee and has already invested more than $1 billion in the state.

In Nissan’s case, that could be worth $65 million if all its Gardena employees make the move.

Nissan, which has invested more than $3 billion in Tennessee, also will receive a tax credit of $5,000 a year for 20 years for each new job created by its relocation. The Nashville Tennessean recently reported that Nissan is the only company so far that qualifies for the relocation reimbursement.

Another part of the incentive package calls for the city of Franklin’s industrial development board to spend $15 million to purchase a 50-acre parcel for Nissan’s new headquarters and then lease it to the automaker. Nissan plans to spend $70 million to build a headquarters with about 500,000 square feet of office space within a developing business complex in Franklin.


Bloomberg News was used in compiling this report.