Texas offers Toyota $40M for headquarters move to Plano

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WFAA and Associated Press

Posted on April 28, 2014 at 7:18 AM

Updated Monday, Apr 28 at 4:13 PM

PLANO -- Toyota announced plans Monday to move the auto maker's headquarters to Plano from its current location in Southern California.

A press release formally announcing the move said it is "designed to better serve customers and position Toyota for sustainable, long-term growth."

Toyota will move its North American headquarters for manufacturing, sales and marketing, and corporate operations to a single, "state-of-the-art" campus in Plano over the next three years, according to the release.

The new campus will bring together approximately 4,000 employees from sales, marketing, engineering, manufacturing and finance who are now scattered around the country. That includes 2,000 employees at the current headquarters in Torrance, Calif.; 1,000 employees at Toyota's engineering and manufacturing center in Erlanger, Ky.; and 1,000 employees at Toyota Financial Services.

The transition will begin "with initial small groups this summer," though the release notes the majority of the employees will not move until construction of the company's new headquarters is completed in late 2016 or early 2017. Groundbreaking will begin on the environmentally-sustainable headquarters this fall.

"This is the most significant change we’ve made to our North American operations in the past 50 years, and we are excited for what the future holds,” said Toyota North America CEO Jim Lentz.

Lentz said any employee who wants to move will be given a relocation package and retention bonus. The company is also offering to send employees and their spouses or partners to the new locations to look for new homes.

"Everything we are doing is encouraging people to go," he said.

With its worldwide headquarters in Japan, Toyota has operated in the U.S. for more than 50 years from Southern California. Most of the employees affected by the move work on a sprawling campus in Torrance.

Torrance Mayor Frank Scotto said he's "saddened" by the decision, adding that officials did everything they could to keep the Japanese car giant in the city.

Scotto said Toyota contacted him Thursday and said they wanted to speak with him at 9:45 a.m. Monday, but he did not know what it was about at the time. Over the weekend rumors circulated in the business media and he grew more and more concerned.

"We thought it was going to be part of Toyota, not everything," he said at a press conference. "They didn't mislead us; they just didn't answer the questions."

Scotto said he didn't believe there was anything Torrance could have done to dissuade Toyota, even if officials had known earlier.

The overarching issue, he said, was reforms needed at the state level to retain large businesses.

"We could offer up a lot of things, but we recognize that the deal they have is something that would take the state of California to match," he said.

The state of Texas has offered Toyota $40 million as the automaker begins the move. The state incentives for Toyota come from the Texas Enterprise Fund. The fund has been used to persuade firms to expand in Texas since 2003.

Gov. Rick Perry announced Monday that Toyota will invest more than $300 million in the Plano facility.

Perry has made two visits to California since last year, trying to convince top employers there to move to Texas. In a statement, he said Texas' low taxes and relaxed regulations can help Toyota thrive.

Toyota said it will continue to have about 2,300 employees in California and 8,200 employees in Kentucky after the moves are complete. Toyota makes the Avalon and Camry sedans in Kentucky.

The company will also maintain offices in New York and Washington. Plants in Mississippi, Texas and Indiana aren't affected by the moves.

Lentz, who became Toyota's first CEO for the North America region in 2013, said Toyota President Akio Toyoda encouraged him to think of ways to make North America more self-reliant. Lentz said he began working on the idea of a combined headquarters last April or May.

The company decided not to locate in California because it was too far from its plants in the Midwest. Kentucky was rejected because Erlanger wasn't big enough, and Ann Arbor was rejected because it was too close to Detroit rivals like General Motors and Ford.

Lentz said the company ultimately came up with a list of 100 possibilities that it whittled down to four.

"As we visited those four primary locations, it became quite clear that the Dallas metro area was far and above the best choice," Lentz said. He wouldn't disclose the other three finalists.

Toyota sold 2.2 million cars and trucks in the U.S. last year.

USA TODAY's Chris Woodyard and the Associated Press contributed to this story

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