Toyota move yields political fallout in Calif.

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Toyota Motor Corp.’s decision to move its North American headquarters to Texas is causing political fallout in California.

A representative on the California Economic Development Commission criticized officials in Torrance, Calif., for “having lost the world’s largest automotive company,” the city’s newspaper reported Wednesday.

Jonathan Kaji, in an e-mail to the Daily Breeze, said that “the city staff was fully aware of ongoing recruitment and outreach efforts,” he said. “I believe that due to complacency, arrogance, laziness and the belief that Toyota Motor Sales was too big to leave.”

Kaji called it an “embarrassing failure” that city officials “missed all of the clear and obvious signals and failed in their mission to serve as the tripwire and to proactively ensure that Toyota Motor Sales would not leave.” He added, “As a result, the city of Torrance is now the ‘biggest loser,’ having lost the world’s largest automotive company.”

California's loss

The shift marks the second high-profile move of a Japanese automaker from Southern California. In 2006, Nissan moved its North American headquarters to Nashville, Tenn. As much as $197 million in relocation assistance from Tennessee helped incentivize the deal.

Kaji, whose father was Toyota’s first U.S. accountant when the automaker entered the market in 1957, told the Torrance paper he warned city council members and other city officials weeks prior to the company’s departure.

But an official in California said he was taken aback by the move.

Don Knabe, the Los Angeles County supervisor from the 4th District, told the Los Angeles Times in April that he first learned of the move over the weekend from rumors on social media. He e-mailed contacts at Toyota, but no one responded, he said.

Knabe told the paper he was “very shocked” and that Toyota was “such a great corporate citizen."

Toyota spokeswoman Carly Schaffner told Automotive News in an e-mail today that the decision was based on a broad range of motives, including “geographic location, availability of suitable building site, direct flight connections, quality of life and cost of living for our associates, time zones and proximity to our manufacturing base.”

Toyota also is moving its manufacturing offices from Erlanger, Ky., to Plano.

“Nearly 100 locations were considered. No single criteria determined the final decision,” Schaffner said. “We needed a site that was closer to our manufacturing operations, in a neutral location, one without an existing Toyota presence. When considering whether to make an investment decision of this magnitude, economic incentives are one of many factors we consider,” she said.

Texas also handed out an initial $40 million incentive that is expected to grow by the time Toyota completes the move in 2017.

Squandered relationship

But Kaji maintains Torrance squandered the relationship built up over generations that came from the Los Angeles suburb, which is home to large Asian-American populations. “That culture, in turn, served as a business incubator that helped companies from those nations successfully compete in the U.S., which is why Torrance has become an economic hub for Asian-based companies,” the Daily Breeze reported.

Toyota said its 10 manufacturing plants in the United States will not be impacted by the changes.

About 2,300 California employees that work at parts distribution operations, port facilities, field offices and Calty Design Research will not be part of the relocation.

Mark Rechtin contributed to this report.

You can reach Andrew Thurlow at athurlow@crain.com.


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