Toyota is moving its U.S. headquarters from California to Texas in a bid to improve communication between units now spread over several states.
Toyota will break ground this year on a new environmentally-friendly headquarters in Plano, about 25 miles north of Dallas. Small groups of employees will start moving to temporary office space there this year, but most will not move until late 2016 or early 2017 when a new headquarters is completed.
Texas Gov. Rick Perry said the state offered Toyota $40 million in incentives from the taxpayer-funded Texas Enterprise Fund. Perry, who made two visits to California to lure Toyota, said Texas expects Toyota to invest $300 million in the new headquarters.
“Over the past decade, Texas and Toyota have developed a strong partnership that has resulted in good-paying jobs for thousands of Texans,” Texas Gov. Rick Perry said in a statement. “Toyota understands that Texas’ employer-friendly combination of low taxes, fair courts, smart regulations and world-class workforce can help businesses of any size succeed and thrive. We’re proud that both the Tundra and Tacoma bear the words ‘Made in Texas,’ and we’re excited our state will be the nexus for Toyota’s North American operations moving forward.”
The new campus will bring together approximately 4,000 employees from sales, marketing, engineering, manufacturing and finance. 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.
Toyota also plans to expand its technical center near Ann Arbor, Mich., and move approximately 250 parts procurement positions there from Georgetown, Ky., where the Camry and Avalon sedans are made. That will free up space for approximately 300 production engineers to move from Erlanger to Georgetown.
Jim Lentz, Toyota's CEO for North America, said the new headquarters will enable faster decision making. Lentz told The Associated Press that the move is one of the most significant changes in Toyota's 57-year history in the U.S.
"We needed to be much more collaborative," said 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.
Toyota will continue to have about 2,300 employees in California and 8,200 employees in Kentucky after the moves are complete. The company will also maintain offices in New York and Washington. Plants in Mississippi, Texas and Indiana aren't affected by the moves.
Toyota has had a presence in California since 1957, when it opened its first U.S. headquarters in a former Rambler dealership in Hollywood. The following year -- Toyota's first in the U.S. market -- it sold 287 Toyopet Crown sedans and one Land Cruiser.
By 1975, Toyota had become the top import brand in the U.S. It opened its current U.S. headquarters in Torrance in 1982. Toyota sold 2.2 million cars and trucks in the U.S. last year.
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.