Shortly after Nissan Motor Co. announced Thursday that it would relocate its North American headquarters from Gardena to Tennessee, the challenges facing the Japanese automaker became evident.
Several employees said that they had no intention of moving and that few of their co-workers would leave either.
“I’m not going to Tennessee,” one woman said.
A few hours after the 9 a.m. announcement, a dozen workers from Nissan’s marketing department gathered at the nearby Paradise Restaurant, some sipping Bloody Marys and nibbling from plates of fresh fruit.
“I really think what we’re doing here is sort of mourning the brand,” one said. “We hope that everything we’ve worked for here will not be lost.”
Nissan Chief Executive Carlos Ghosn said the Japanese automaker, which set up shop in Southern California in 1958, would spend more than $70 million to build a corporate headquarters complex in Franklin, about 15 miles southwest of Nashville.
Ghosn said the widely anticipated decision was prompted chiefly by cheaper real estate and lower business taxes.
“The costs of doing business in Southern California are much higher than the costs of doing business in Tennessee,” he said.
Ghosn announced the move in a Nashville news conference with Tennessee Gov. Phil Bredesen, a Democrat, who had been wooing the automaker for months. Tennessee officials offered Nissan an incentive package, probably including tax breaks and other credits, but did not reveal details.
“Automakers cheer if they can cut even $1 from the cost of building a car, so any savings from a move like this helps it make sense,” said Kim Hill, an analyst at the Center for Automotive Research in Ann Arbor, Mich.
A California “strike team” attempted to persuade Nissan to stay put, offering income tax credits, an expanded enterprise zone, favorable utility rates and a state grant for training current employees.
“This is a big loss,” said Los Angeles County Supervisor Yvonne Brathwaite Burke, a member of the team.
Nissan employees will start moving to Tennessee in May or June.
Workers at Nissan’s 43-acre corporate headquarters in Gardena heard the announcement on a closed-circuit television broadcast.
“It was spooky silent for the first few minutes” as Ghosn spoke, said one mid-level manager who -- like other employees who spoke about the move -- asked to remain unidentified for fear of job repercussions. “We’ve been expecting this for a couple of months now, so it wasn’t a shock, but it wasn’t good news.”
As employees filtered out of headquarters after the morning meetings, they carried manila folders that contained information about the relocation.
Jed Connelly, Nissan’s senior vice president for sales and marketing, acknowledged that not all employees would relocate, a prospect he said troubled him.
In recent years, Nissan has been one of the big automotive sales success stories, rising from near bankruptcy in 1999 to become one of the most profitable companies last year. Nissan North America is a big part of the turnaround, thanks to a spate of new models such as the full-size Titan pickup and the Altima and Maxima sedans.
“Like the general manager of any championship team, I’d like to keep everyone together,” Connelly said. He added that Nissan did not plan to ask workers to accept lower wages or reduced benefits if they agreed to relocate.
Nissan already has a major presence in Tennessee, with a 6,500-employee assembly plant in the Nashville suburb of Smyrna and an engine plant with 1,300 employees in Decherd, about 90 miles to the south.
Ghosn said Nissan would benefit from having its main marketing, finance, distribution and manufacturing operations in the same place.
A local real estate agent described the Cool Springs area of Franklin, where Nissan will move, as an upscale business and residential community with -- by California standards -- low housing costs.
A 3,500-square-foot brick residence in Cool Springs, with four bedrooms, three bathrooms, a three-car garage and a wooded 1-acre lot, costs about $500,000, said Grant Hammond of Realty Executives Fine Homes. The median home price in the Nashville area is $159,700, compared with $475,000 in Southern California.
Nissan will keep its North America design center and 100 employees in La Jolla, plus a regional sales and marketing office in Costa Mesa, a port facility in Long Beach and a parts depot in Compton that together employ another 100.
Not everyone accepted Ghosn’s reasoning.
“They will lose a lot of talented people who won’t want to go to Tennessee,” said Joe Langley, a market analyst at CSM Worldwide in Farmington Hills, Mich.
Toyota Motor Corp. and Honda Motor Co. both have U.S. headquarters in Torrance and are likely to pick the cream of Nissan’s stay-behinds, analysts said.
Eric Noble, president of CarLab automotive consulting in Orange, said the regional auto industry could absorb only about 10% of Nissan’s employees. “Detroit is contracting and there’s a glut of resumes out there,” he said.
Nissan’s ties to Southern California date to 1958 when the tiny automaker opened a distribution office in North Hollywood to sell its budget-priced Datsun 1000 four-door sedan. Sales were modest -- in 1960 Datsun sold 1,640 cars and trucks in the U.S.
But in 1969 the Datsun 240Z sports car won rave reviews, and the company’s fuel-sipping models sold well after the 1970s oil embargo. In 1981 the company changed its U.S. brand name to Nissan, and in 1989 it introduced its Infiniti luxury line.
One Nissan worker in Gardena said the move was tough to stomach for those who helped rebuild “an underdog company.”
The woman, at Nissan for four years, said she and others “bought into the brand” and were proud of their accomplishments. “We were the ones who turned this company around.”