Toyota Is the Latest Business to Bolt California for Texas
Japanese auto giant Toyota has broken ground at its new North American headquarters on a 100-acre section of land near the Dallas suburb of Plano, Texas. The design process on the planned facility is underway with construction activity slated to begin within the next month. Completion of the $350 million “campus,” which will serve as home to all of Toyota’s North American management and administrative activities, is expected by late 2016 or early 2017.
“The support and encouragement we’ve received from the community, civic leaders, business partners and nearby corporations has been nothing short of tremendous,” says Jim Lentz, Toyota Motor North America chief executive officer. “Our goal is to build an environmentally sustainable campus that our new neighbors will welcome and our team members and associates will be proud to call home.”
Texas’ gain is California’s loss. Last April, the world’s largest car maker made public its decision to relocate from the Southern California community of Torrance, its home for the past 50 years, to suburban Dallas. Toyota was the largest employer in Torrance, accounting for more than 5 percent of all jobs in the city with nearly 4,000 workers in 2013, according to the city’s annual financial report. Roughly 2,000 Toyota employees in Torrance have been affected by the move, and about 4,000 nationwide, including some management staff now based at the Toyota manufacturing plant in Erlanger, Kentucky, and corporate operations staff based in New York City.
Why the move? The bottom line matters, figures don’t lie, and business is business.
California has the highest state income tax in the country, with a top rate of 13 percent, as well as high utility and worker’s compensation costs and a regulatory environment seen by many as institutionally unfriendly to businesses, especially manufacturers. By comparison, Texas has no state income tax and an effusive approach to luring businesses, including regional and local economic-development assistance and tax incentives, help with site-location and relocation, and liaison with state agencies.
All that and more combine for an attractive package that has motivated close to 200 California companies since 2011 to pull up stakes and move some or all of their administrative headquarters and/or production operations to the Lone Star State, thus reducing business costs by as much as 20 percent to 45 percent. The list of migrating companies that have shaken the dust off their sandals and left California entirely or partially for Texas over the past four years range a wide swath of industries and sizes.
Included in the mix are international giants Chevron, e-Bay, and Occidental Petroleum; as well as Claim Jumper Restaurant, home healthcare provider LeMaitre Vascular, canopy tent maker Abadak Inc., pharmaceuticals supplier Allergan, sonar developer R2Sonic, noodle maker Maruchan, web-data-protection provider WebSense, laser manufacturer Med-Logics, and online legal-services provider LegalZoom.
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