Toyota to uproot from California, move to ‘macho’ Texas

<i>This post has been updated with new developments.</i>

Toyota Motor Corp. says it will move 3,000 jobs from Torrance, Calif., to new North American headquarters in Plano, Texas, over the next three years.

The move, announced Monday, will affect 2,000 workers in Toyota’s U.S. sales and marketing arm and 1,000 positions in its financial services business. That will leave about 2,300 Toyota employees in California.

No Toyota workers will remain at the company’s 2-million-square-foot office complex in Torrance. The company said it had not yet determined what it would do with the property.


The shift is part of a corporate strategy to locate the employees running its engineering and manufacturing, sales and marketing, financial services and certain corporate functions all in one complex.

“Enabling greater collaboration and efficiencies across Toyota will help us become a more dynamic, innovative and successful organization in North America,” said Jim Lentz, chief executive of Toyota’s North America region.

“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,” he said.

The Torrance campus was jammed Monday morning for Lentz’s announcement. The parking lots in the complex were overflowing, and parking spaces on the street were full. Torrance police officers were stationed at the entrance to the headquarters, and private security also was monitoring the buildings. Altogether, the moves will affect about 4,000 employees nationally.

Toyota will shut its engineering and manufacturing office in Erlanger, Ky. -- near the Cincinnati-area airport -- with the personnel being distributed to a tech center in Ann Arbor, Mich., the new Plano headquarters and a new facility at the automaker’s Georgetown, Ky., factory.

Toyota officials said that creating a more efficient corporate structure, not cutting costs, was the primary motivation in deciding to build a centralized headquarters in Texas.

Toyota has long been a Southern California fixture. Its first U.S. office opened in a closed Rambler dealership in Hollywood in 1957. The site is now a Toyota dealership. In 1958, its first year of sales, Toyota sold just 288 vehicles in the country: 287 Toyopet Crown sedans and one Land Cruiser. Last year, Toyota sold more than 2.2 million vehicles in the United States.

The U.S. branch picked Los Angeles for its first headquarters because of proximity to the port complex — where it imported cars — and easy airline access to Tokyo.

As Toyota grew, it opened its national sales and marketing headquarters in Torrance in 1982. The complex was built where its parts distribution warehouse was once located.

But today, about 75% of Toyota-brand vehicles sold in the U.S. are built in North America — many of them at plants in Texas, Mississippi and Kentucky. Moving the U.S. corporate headquarters to Texas puts senior management closer to those factories.

The company said it had committed to providing $10 million in continued funding for local nonprofits and community organizations in California and Kentucky over a five-year period beginning in 2017.

Putting a headquarters in suburban Dallas cements the company’s “Southern” strategy, an auto industry analyst said.

It builds the Camry and Avalon in Kentucky, the Corolla in Mississippi and the Tundra and Tacoma pickup trucks in Texas. It also has a big engine plant in Alabama.

“They feel their future is in Dixie,” said James Rubenstein, an auto industry analyst and geography professor at Miami University in Oxford, Ohio. “They have figured out how to build vehicles in Dixie, but they haven’t figured out how to sell them there.”

Although the company is successful at selling passenger cars in the U.S., it has never gained the traction in the truck market it has hoped for, Rubenstein said. Toyota’s sales are also too heavily weighted to women, he added.

“Texas is the most male, macho state in the country,” Rubenstein said. “Texas is where they think they can learn more about what big truck buyers want in their vehicles.”

California has long played a pivotal role in the new auto industry, said Harley Shaiken, a UC Berkeley labor professor.

Companies such as Toyota located their marketing, management and design in California because the state was seen as setting the trends nationally, he said.

“Having your headquarters in California would put you close to all those social and cultural factors that were setting the trends across the country,” he said. “And you were in the largest single market for cars in the U.S.” As Toyota repositions itself as a Southern-based automaker, it could become less in touch with California consumers, and that could hurt sales, Shaiken said.

But Toyota might not think severing ties to the Golden State will have any negative effect on its business. “They already have California in its back pocket,” Rubenstein said. “Priuses are next to godliness in California.”

[For the Record, 12:24 p.m. April 28: A previous version of this post incorrectly said about 2,300 Toyota employees would remain in Torrance. Toyota will retain that number of employees in California, but not in Torrance.]


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