Tensions at Toyota ahead of big move

LOS ANGELES -- For Toyota and its workers, the road to Texas is paved with uncertainties.

As the automaker prepares to consolidate its far-flung engineering, sales, marketing, finance and corporate operations into a new North American headquarters near Dallas over the next few years, it's wrestling with a knotty set of challenges: retaining enough of its employees to ensure a smooth transition, realigning job functions across various divisions and keeping up morale as anxious workers await word on their new job descriptions and pay scales.

Toyota, known for a corporate culture that encourages salaried employees to consider their jobs lifelong careers, is offering what many call a generous lump sum as an incentive to workers who agree to make the move and stay in Plano, Texas, for two years.

Those who agree to stay on until their departments move "will be provided with a generous retention package that will recognize and reward the value of their much-needed talents through our years-long transition," Toyota spokesman Steven Curtis wrote in an email.

People familiar with the matter say Toyota is taking pains to avoid the continuity problems that Nissan faced when it relocated its North American offices from Southern California to Tennessee several years ago as part of a cost-cutting drive. Nissan says it retained about 42 percent of its work force at the time of the move.

Toyota is "rewarding people for staying and rewarding them again for going," said a consultant who is helping the automaker with the move to Texas.

"HR was very clear that they were blown away by how generous it was."

Toyota said that it has budgeted to retain 50 percent of its work force -- a rough estimate of the number needed to stanch losses in productivity during the transition -- but internally, said one person familiar with the matter, management fears that number will be closer to 30 percent.

"They would be happy to have 50 percent," said that person, who asked not to be identified. "It's hard to tell [how many people will go] because nobody has been offered their jobs yet."

The automaker welcomed its first employees to a temporary office in Plano this summer; the rest are scheduled to arrive in waves through 2017.

The move ultimately will bring together most of Toyota’s North American operations, including 2,000 positions at Toyota Motor Sales U.S.A. and 1,000 positions at Toyota Financial Services in Torrance, Calif.; 1,000 positions at Toyota Motor Engineering & Manufacturing North America in Erlanger, Ky.; and about 50 positions at Toyota Motor North America in New York. (Toyota’s Technical Center in Ann Arbor, Mich., will not relocate; instead, 250 direct procurement jobs are moving from Kentucky to Ann Arbor to be closer to supplier headquarters locations and engineering.)

Toyota announced the move in April, after a site search that was shrouded in secrecy.

It told workers this past summer that it would rewrite job descriptions companywide and release them during the first half of next year starting in January in an effort to restructure its work force and unite most of its U.S. employees under one set of guidelines. Until now, each division has had its own culture and standards that governed how employees were promoted and paid.

"This is a way in one fell swoop to rejuvenate human resources," a former Toyota executive told Automotive News. "You're going to lose some good people but overall you're going to have a better atmosphere."

The new job classifications ultimately will affect benefits and bonuses as well as job descriptions, responsibilities and reporting structure. The restructuring will effectively thin the ranks of Torrance's low-level and midlevel employees and will align salaries with new hires and other departments, according to people familiar with the matter.

"We have to be competitive," Toyota North America CEO Jim Lentz told The Dallas Morning News in an interview late last month that, according to one person familiar with the company, riled the Torrance work force. "But if we have two people sitting side by side and doing the same work, we don't want a two-tier pay system. We will have to find a way to blend those over time."

In Torrance, the long wait for word on new job structures has shaken morale and productivity, said one person familiar with the matter.

"Associates are dying to put the pieces together, to figure things out," the person said.

"Productivity was starting to slow because people were gossiping about it. It wasn't unusual to run into someone in the stairwell or bathroom and end up in a 20-minute conversation about it."

Meanwhile, Toyota's Torrance neighbor, American Honda Motor Co., said it has received an influx of job applications from Toyota workers.

Toyota workers have seen such a realignment before. Earlier this year, Toyota Division restructured its marketing department and asked affected employees to reapply for their jobs as it assembled teams based on vehicle lines rather than marketing discipline. Workers who didn't make the cut were demoted or assigned to time-capped special projects. Some left the company, but a majority stayed, the person said.

Ahead of the Texas move, Toyota has embarked on a robust campaign to persuade workers to stay with the company, hosting three-day, all-expenses-paid reconnaissance trips to Plano and putting employees up at one of the area's best hotels, The Westin Stonebriar. Toyota's internal website features articles such as "99 Things About North Texas" -- hailing attributes from fried pickles to pristine roads -- as well as a series of profiles on Toyota employees who already have decided whether to make the move.

The automaker is hoping the money spent on the trips and the incentives will safeguard against the issues that hurt Nissan when it moved its U.S. headquarters from Gardena, Calif., to Franklin, Tenn., in 2006.

Nissan's strategy to reduce overhead and offload higher priced talent by offering few incentives was a "huge mistake," said the consultant who is helping with Toyota's move. "It was an absolute brain drain."

Nissan North America declined to comment.

Losing top executives cost the company, according to a former Nissan employee who made the move to Tennessee. "It took a while for the new leadership to understand the culture and the market," this person said. "We were re-creating the wheel. I would call it 'The Lost Years.'"

Hans Greimel contributed to this report.

Editor's note: An earlier version of this story gave the incorrect municipality for Nissan's North American headquarters. It is in Franklin, Tenn.