In Toyota relocation, houses mattered

PLANO, Texas — Five years ago this month, Toyota sprung a $1 billion surprise on the auto industry and economic development officials across the U.S.: The North American arm of one of the world's largest automakers would strike its historic tent in Southern California and move to a palace near Dallas.

The whole thing was a secret to all but a handful of high-ranking Toyota officials who had been on a yearlong scouting team. The happiness — and productivity — of thousands of Toyota employees and their families hung in the balance before the announcement, as did the company's culture.

The Dallas area won. But who lost? And why?

The answers reveal what's important in choosing a centralized U.S. location for a large-scale auto industry corporate project.

According to Jim Lentz, CEO of Toyota Motor North America and the man who started the relocation ball rolling in a conversation with Toyota President Akio Toyoda, north-central Texas edged Atlanta and Charlotte, N.C., in a high-stakes economic development contest none of the areas knew they were in.

The main factors in the final decision? Housing availability, logistics and quality of life.

"Charlotte was No. 2," Lentz told Automotive News last month in an exclusive interview. "It was a great location. Not as centrally located. Eastern time zone. No direct flights from Japan.

"But to me, the toughest part about that was housing — there just weren't enough homes."

Lentz said his survey team began its search considering the top 100 urban areas in the country and whittled from there. He said there were so few available homes in the Charlotte area that "I think our people would have been fighting over the same homes."

In its move from the Los Angeles area, Toyota persuaded 65 percent of its corporate work force to go to Texas. That level of participation was unusually high for a corporate move, which typically causes half or more of employees to leave their jobs. Even Toyota originally estimated that it would lose 75 percent of its employees in the move. That would have triggered the need for massive retraining.

Such a large relocation of employees — Toyota's final tally was 3,500 people — required significant attention to the available inventory of homes. Dallas-Fort Worth had ample housing available.

"People have choice living here," said Lentz, who was one of the first 50 employees to move to the Dallas area in 2014. "If you draw a 30-minute radius, you can be living on a lake, you can have a ranch with horses, you can be uptown, you can be in the suburbs; it really gave people a choice. That's unique to this area. It's really worked out well."

No. 3 on Toyota's list was Atlanta, Lentz revealed. The area offered nonstop flights to Japan, just as Dallas did. But it lacked an escape from the traffic problems and quality-of-life concerns that prompted Toyota to leave suburban Los Angeles, Lentz said.

"It would have been a lot of the same California issues, and you would have traded traffic for traffic," Lentz said. The move couldn't just trade one set of problems for another, he said. It had to make life better for its employees.

"California is a great place to be, but it's really expensive, and the commute times are rough. That's because a lot of people want to live there. So you can't knock California," Lentz said.

"But I think life is a little bit easier for people here, and as a result, I think the work-life balance is much better," Lentz said. "I think people, as a result, have a lot more energy being here. If you live in Southern California, and you're driving 2 or 2.5 hours each way, you're leaving at 5 a.m. and you're getting home at 8 or 9 — that kind of wears on you."

Asked if there was any part of the move that Toyota might have done differently, Lentz was calm and confident.

"Yes," he said. "We should have done it 10 years earlier."