Toyota looks to Nissan's move – with some concern

NASHVILLE -- In moving its U.S. headquarters out of California, Toyota hopes to avoid some of the problems that Nissan encountered when it did the same thing in 2006.

Sources inside Toyota say they already dissected Nissan North America’s move and were particularly dismayed to see that their Japanese rival lost roughly 60 percent of its 1,300 Los Angeles headquarters staffers and executives when it relocated to Nashville.

Toyota concedes that some personnel loss is unavoidable. Corporate relocation consultants say Nissan’s loss rate was not unusual. Atlas Van Lines, which surveys corporations on the topic every year, reported last year that the average relocation saw 54 percent of employees decline to move, and that number has decreased slightly in recent years.

But Nissan, along with one former executive who made the 2006 move, counters that the trainwreck scenario critics at the time predicted for Nissan proved to be wrong.

“I came to Nashville with only two of my product planners,” recalls Larry Dominique, who relocated with Nissan North America as vice president of product planning but returned to California in 2011 to become executive vice president of TrueCar.

Seven of his department’s top nine vehicle planners opted not to stay with Nissan.

Dominique himself had been promoted to the top spot after his own boss, Jack Collins, took the relocation as an opportunity to retire. Twelve high-level executives opted to leave Nissan, including Jed Connelly the senior vice president of sales and marketing at the time.

“People said we’d never be able to recruit the new talent we needed to replace everyone,” Dominique recalls of his product-planning team. “And that did take some work. But we did it. We assembled a great staff.”

Nissan growth

Indeed, Nissan hardly suffered. Since 2006, the headcount at its Nashville headquarters has grown to 1,700 — compared with the 1,300 who had worked in Gardena, Calif. Nissan brand’s U.S. sales and market share have grown to record highs since the move. And its North American manufacturing footprint continues to expand.

Nissan has attracted management and automotive r&d personnel from other import brands and the Detroit 3 to Tennessee, as well as an international staff of managers from Spain, France, Portugal, Britain and Australia.

“There was an attitude that you had to be in California to find certain skill sets, and that’s just not the case,” Dominique says. “Nissan’s doing just fine eight years later.

“Relocations are very emotional personal experiences, and no matter what they do, Toyota is going to lose some people. But Nissan did a lot of things right when we moved, and I predict Toyota will, too.”

The $197 million relocation incentive package Nissan received from Tennessee included significant human resources provisions. They paid for employees and their spouses to travel to Nashville before the move to meet community representatives about real estate costs and schools. Employees received moving expenses and in some cases financial assistance in selling their houses in California.

Some Toyota staffers were privately critical of Nissan’s move at the time, dismissing it as a misstep that Toyota would never make.

Culture change

But eight years later there is one key difference in Toyota’s planned move. Nissan’s primary motivations were to reduce operating overhead and to improve efficiency. Toyota’s management team wants to change the culture of the North American company.

“I always saw Nissan’s relocation as a chance to improve their costs,” says a former senior Toyota executive who asked not to be identified. “Toyota is trying to fix a cultural problem, which is that they operate in silos here. There are turf issues between the sales company and the manufacturing company, and they really want to correct that.

“That’s why they’re going to Dallas — it’s neutral territory,” the former executive observes. “Had they relocated all the manufacturing executives to California or moved all the sales and marketing people to Kentucky, it would have been one side winning and the other side losing.

“I really see this as Toyota finally making a fresh start in America where everyone will be on the same team.”