In Toyota Restructuring, California's Loss Is Texas' Gain

Toyota Lawsuits
Reed Saxon/APToyota's North American headquarters in Torrance, Calif.
By Sneha Shankar

As part of a companywide overhaul, Toyota Motor (TM) is planning to move its sales and marketing headquarters to suburban Dallas from Torrance, Calif., according to reports.

The company will restructure its marketing arm, which currently is based in Torrance in southern California, and houses about 5,300 employees, who are being offered a redundancy package under the reorganization that is set to begin Thursday. The move would put Toyota's management closer to its operations that produce cars for the U.S. market and would reduce production costs. It is still unclear how many employees will be asked to move from the Torrance unit and how much time would elapse before the transition is complete.

Employees "whose positions are significantly different in the new organization have been provided with several options, including applying for opportunities within the new marketing organization or in other departments at [Toyota Motor Sales] or Toyota Financial Services," the company said, according to the Wall Street Journal.

The Japanese automaker has vehicle assembly plants in Kentucky, Indiana, Texas and Mississippi, along with technical centers in Michigan and California, while its manufacturing operations headquarters for the U.S. market is based in Erlanger, Ky. About 71 percent of the vehicles Toyota sells in the U.S. are manufactured at its 14 manufacturing facilities, up from 55 percent in 2008 and, last year, Toyota sold 2.24 million cars and light trucks, down from a record 2.62 million sold in 2007, reports said.

According to Los Angeles Times, Torrance's Mayor Frank Scotto didn't know of Toyota's plans to move base but added that he knew that the company was supposed to make a corporate announcement Monday.

"When any major corporation is courted by another state, it's very difficult to combat that," Scotto said, according to the Times. "We don't have the tools we need to keep major corporations here," he said.

States such as New York and Texas have been promising financial incentives to convince California-based companies to move, using the west coast state's higher cost of operations, such as higher labor compensation and liability insurance, as an incentive, according to Scotto.

Toyota Motor Sales U.S.A. and Toyota Financial Services, both of which are based in Torrance, together employ more than 9,400 people in the U.S.

Toyota isn't the first to desert California in search of lower operating costs. In 2006, Nissan Motor shifted its headquarters to Nashville, Tenn., from Gardena, Calif. while Honda Motor (HMC) moved a small number of top-level employees to Columbus, Ohio, from Torrance in 2013, reports said.

"We've done everything over the years to support Toyota," Scotto said, according to the Journal, adding: "But let's face it, this decision isn't something you make on a Friday afternoon and announce on Monday -- this has been going on for a while."

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Brek Randolph

All I can say is CA earned it. We have a 10% income tax and the (FTB) franchise tax board to enforce it. If the ftb determines you owe, you owe. I knew that in the long run the tactics of the FTB would devastate CA's tax base. One thing the FTB can't stop is someone moving! People also vote with their feet.

April 29 2014 at 11:29 AM Report abuse rate up rate down Reply

This should be a lesson learned for all states. If you want to tax the hell out of business's as a source of revenue, business's and jobs will seek greener pastures. They don't HAVE to stay in your tax crazy state!

April 29 2014 at 5:54 AM Report abuse -2 rate up rate down Reply

People you must understand, when you have the right to work laws it hurts everyone. Unions do not break companies, they help their workers and try to make the business to profit. They can work together to benefit everyone. In my lifetime I work both. We had more harmony in the union shops, rather than the back stabbing non union shops.

April 29 2014 at 5:27 AM Report abuse -2 rate up rate down Reply

When the wife gets her masters, we are applying to every company in Texas just to beat Illinois' 5% income taxes and 10.25% sales taxes. 20 years is 1 year's pay lost to income taxes alone.

April 29 2014 at 3:43 AM Report abuse +1 rate up rate down Reply
1 reply to standfordgrays's comment
Brek Randolph

Don't come to California or you will be going from the pot to the fire. 10% income tax here and a vicious tax agency. 8% sales tax in case you wondered.

April 29 2014 at 11:23 AM Report abuse rate up rate down Reply

While the majority of you seem to want to blame this on a party as if all Democrats want businesses to leave. We all pay taxes to provide services that we want in our society. If a business does not want to participate in that, then they need to leave. If people were true patriots and put the right things first, they would be able to sit down and come up with solutions that work for everyone. But unfortunately, we don't have too many level headed people which is why we can't seem to come up with solutions. The system was not set up to not work, it's the people that have gotten in charge that have forgotten why they are there and what they should be doing. If Texas wants to build Toyota a 300 million dollar factory and subsidize them then so be it. There has to be some give and take from both sides. Companies can't want to pollute the grounds, get big write off's, etc... only for the sake of making big profits. They may do well there, but give it time. Just as we are hearing about China, the government is starting to pass legislation aimed at companies because they are starting to see that their environment is suffering, and now that they have raised the standard of living for people they are starting to discover the problems that we have known for years. California needs to make some decisions true, but I don't want to be building facilities for owners and subsidizing their taxes just so they can dangle jobs over our heads. These are business people and don't think for one minute they care about the state. It's all about money and nothing else.

April 29 2014 at 3:35 AM Report abuse rate up rate down Reply
1 reply to ateht3's comment

You are beginning to grow up and realize what this world is about.... Your deluded beliefs about patriotism and statehood need to go. You are just fooling yourself.

April 29 2014 at 3:45 AM Report abuse rate up rate down Reply
1 reply to standfordgrays's comment

This country shouldn't be called the United States of America, and the US Constitution is now an antique. This country should be come a loose association of sovereign states, that will screw the other one for a dollar. The time for all fifty states to move on to being a country is now. The present and past governments under either political parties is not favorable to anyone except for the ubber rich. The American Dream is just what a dream implies, and that is a state of mind between reality and the inner self. It doesn't really exist for the individual, or the state. So move to Texas and get what you can, and when it is not available anymore, then go to another state and play it for what it is worth. The main thing is to never invest in what is good for the people of the state, but to use them as a source of money. This way it is all about the wonderful individual, and never about the core needs of the population. All of the above should work until intelligent machines takeover 90% of the workforce. Then the machine, or robot will decide whether you have anything to bring to the economy, If not, then say good bye. Don't feel bad if it turns out this way, because you should remember that it was just about the dollar, and nothing else matters!

April 29 2014 at 6:24 AM Report abuse rate up rate down
Garfield Whittak

jhrooney, ignorance is a bad/sad thing. Did you know that Texas also spent $40 million in tax money to entice Toyota to move to the Lone Star state??????

April 29 2014 at 3:29 AM Report abuse rate up rate down Reply
Garfield Whittak

munjibunga, the first priority of business is not jobs but rather profits (and at the expense of jobs too)! Thus, businesses will employ/use machines if they bring more profit and human workers (which is deflationary if not stagflationary)!

April 29 2014 at 3:26 AM Report abuse rate up rate down Reply
1 reply to Garfield Whittak's comment

Of course the purpose of any business is to increase the wealth of its shareholders, but that doesn't change the fact that businesses, not unions, create jobs. It also doesn't change the fact that 5,000 jobs are leaving California for parts where businesses are welcome.

April 29 2014 at 4:17 AM Report abuse rate up rate down Reply

You can thank those knuckleheads in Sacramento for making California one of the most user-belligerent states in the union. Those pinheads can't figure out that business creates jobs - unions do not. But the unions line their pockets with gold and get them re-elected, so how do you think they're going to vote? Now Texas will get those 5,000 jobs that California is losing. What are the unions going to do about that? I hope they're happy.

April 29 2014 at 2:27 AM Report abuse -1 rate up rate down Reply

California IS ON THE WAY OF Michigan and Detroit.

Our one party rule democrat legislature has sold out to the extreme environmentalists and UNIONS.

Like obama their only solution to a lack of jobs is HIGHER TAXES and more REGULATIONS.

Toyota is only the latest of MANY corporations and their jobs to flee California.
There is also a mass exodus of well educated, high earners and tax payers fleeing for more tax friendly states.

Like EVERY long term democrat controlled city and state California is rapidly going bankrupt.

Soon California state will truly be the porn, drug, welfare, illegal alien capital of the world.

April 29 2014 at 1:23 AM Report abuse +1 rate up rate down Reply

Real 100% AMERICAN buys AMERICAN Product only, True Patriot .

April 29 2014 at 1:10 AM Report abuse rate up rate down Reply
2 replies to flexireal's comment

Most Toyota's sold in America have MORE American content than their "American" counterparts AND LAST LONGER.

April 29 2014 at 1:13 AM Report abuse +1 rate up rate down Reply

Ford is built in Mexico... GM is built in Canada.... Chrysler is also being built in Mexico as the company relocates. Tesla Motors wants $80,000 for a simple car... What American company do you think people should be buying from ?

April 29 2014 at 3:47 AM Report abuse +1 rate up rate down Reply