To move or not to move. That is the question facing 1,300 people at Nissan North America's headquarters in Gardena, Calif. Next summer staffers will begin relocating from Gardena, Calif., to Franklin, Tenn., a suburb of Nashville.
Here are some pros and cons of the move.
1. Nissan will save loads of money.
Nissan will get a windfall from selling its 13 buildings and 43-acre corporate campus in Gardena. Real estate is cheaper in Tennessee. Taxes will be lower, and so will salaries.
One former Nissan executive says the company hopes to pocket $240 million from the sale of real estate and other one-time gains. A Nissan spokesperson declined to detail the potential gains.
Daniel Gorrell, an analyst with Strategic Vision, a San Diego marketing and research company, says: "I don't think there's anything magical about where your headquarters is. This will give other companies a reason to consider similar moves for cost savings themselves. It is very disruptive, but it shows that (CEO) Carlos Ghosn will make the hard decisions."
2. Tennessee is central. Los Angeles is not.
Nissan spokesman Fred Standish says 60 percent of the U.S. vehicle market is within a two-hour flight of Nashville.
Nissan's design studio will stay in California. But marketing, sales, finance and manufacturing employees will be together after the move, easing communication.
Nissan employs 6,700 at its Smyrna manufacturing complex. In addition, the Nissan Technical Center in Farmington Hills, Mich., a one-hour flight from Nashville, employs 500.
3. Goodbye, California!
Yes, Nissan expects up to half of its staffers to quit and stay in California. But plenty of people will line up to replace them.
Jobs at the new headquarters may look desirable to disaffected Big 3 employees.
"There will be an exodus of good people from Detroit," says Strategic Vision's Gorrell.
For some Nissan employees in the sprawling and expensive Los Angeles area, balancing life and work is difficult.
"I couldn't afford a house there, and I made great money," says Joe LaMuraglia, a former member of Nissan's strategy and advance planning group in Gardena. LaMuraglia now edits an online automotive information service for gays called gaywheels.com.
"I know guys who lived and worked in Orange County and traveled two hours each day to work because they couldn't afford a house close by."
The Los Angeles Times reported that the median home price in Nashville is $159,700. In Southern California it is $475,000.
1. Valuable and experienced staffers will bail out.
Many staffers are bitter, saying the company is abandoning them after they helped turn Nissan around. The United States accounted for 31 percent of Nissan's global unit sales in the fiscal year that ended March 31.
Companies typically lose half of their employees in a distant move. Ghosn says Nissan can do better.
But insiders predict that the loss will be much greater.
"I would bet only 25 percent go with them," said the former Nissan executive. "Guys I know are not going to go." Ghosn "is going to replace his work force at what they say is 15 percent lower wages."
LaMuraglia thinks Nissan will save even more.
"A senior manager in California makes $125,000," he says. "They're going to be able to pay them $60,000 to $70,000 in Nashville."
Nissan declined to comment on how it will pay employees at the new headquarters.
2. Nissan will leave California's trend-setting car culture.
Los Angeles is the nation's second-largest city and one of the most diverse cities anywhere. Automotive trends begin there and spread around the world.
Nashville is "not the center of diversity and globalism that L.A. is," says Strategic Vision's Gorrell.
Moreover, California is America's biggest import market, which means Nissan's top marketing strategists will lose some contact with their prime customers.
3. Important product launches could be disrupted.
Nissan is moving just as key products are coming to market. The redesigned Nissan Sentra and Altima and the new Versa small car are coming in 2006.
Former Nissan employee LaMuraglia says Nissan lags Japanese rivals Toyota and Honda in perception of quality.
"Nissan's niche is design and performance," he says. "They need to start backing it up with quality."
Nissan has been in Southern California since 1958, when a distributor began selling Datsuns there.
You may e-mail Bradford Wernle at [email protected]