For Japanese auto brands, the logic of keeping their U.S. sales and administrative arms in California is breaking down under the outsized penalties of conducting business in the Golden State and the changing dynamics of the North American automotive industry. So Toyota is leaving, according to Automotive News.
And where is Japan’s biggest automaker relocating its sales and marketing operations in America? Why, North Texas, of course. The move to Plano, Texas, will involve most of the 5,000 managers and employees at Toyota’s current Torrance, Calif., headquarters, the magazine said. Texas has scored one of the biggest prizes so far in its very focused, state-on-state battle with the administration of Gov. Jerry Brown to get plum companies now headquartered in California to abandon the bluest state for the reddest one. Clearly, Perry caressed a trump card in the fact that Toyota has enjoyed a deep relationship with Texas through its $2.2-billion truck-assembly complex near San Antonio.
Toyota’s oldest U.S. manufacturing operations are in Georgetown, Ky. The company now is making Corollas in Mississippi and exporting them to Latin America. It produces vehicles from Indiana to Alabama. And Toyota performs much of its engineering work in Michigan.
The Toyota move mirrors the decision made by Nissan – leaving its U.S. sales headquarters in California and relocating Nissan North America to Nashville in 2006.
According to the story in Forbes, California’s business climate is becoming an even bigger downer. California has become infamous with business executives and owners there not only for high tax rates and complex taxing schemes but also for overzealous regulations and regulators that have managed to stifle the entrepreneurial energy of thousands of companies.
Even Hollywood movie studios have been souring about producing flicks in California, increasingly reckoning that the sweet tax breaks and assistance packages now offered by so many other states offset the legacy advantages and ideal production climate in California.
About the only vast remaining pocket of dynamism in the California economy is Silicon Valley, where the mastery of the global digital economy by companies ranging from Google GOOG -1.35% to Hewlett-Packard HPQ +1.39% has become so complete that they have been able to succeed despite the home-state business landscape.
In the annual Chief Executive magazine “Best States / Worst States” ranking that surveys CEOs for their opinions, Texas has been holding on to the No. 1 spot for a while; California seems permanently relegated to No. 50.