Fleeing California: Toyota takes its business (and its jobs) to Texas

Posted by: Phineas on April 28, 2014 at 6:38 pm

**Posted by Phineas

Moving

Oh, man, this is just a gut punch to the Southern California economy:

Toyota Motor Corp. plans to move large numbers of jobs from its sales and marketing headquarters in Torrance to suburban Dallas, according to a person familiar with the automaker’s plans.

The move, creating a new North American headquarters, would put management of Toyota’s U.S. business close to where it builds most cars for this market.

North American Chief Executive Jim Lentz is expected to brief employees Monday, said the person, who was not authorized to speak publicly. Toyota declined to detail its plans. About 5,300 people work at Toyota’s Torrance complex. It is unclear how many workers will be asked to move to Texas. The move is expected to take several years.

I don’t know how many will move to Texas, but I bet several thousand won’t. And that doesn’t even address the ripple effects in the region’s economy, all sorts of support businesses that would lose the revenue spent by those employees — restaurants, dry cleaners, janitorial companies, you name it. Those people won’t be heading for Texas; they’ll be stuck here. And it’s going to hurt.

Toyota originally came to LA in the late 1950s, and staying here made sense for them for a long time, in spite of increasingly burdensome taxes and regulations. After all, most of their cars entered the US through the huge Port Of Los Angeles, so it made sense to have the North American HQ nearby.

But, with the passage of time, Toyota, like so many foreign car manufacturers, built more and more of their cars here in the US, mostly choosing to construct their facilities in business-friendly Southern states… such as Texas. The last auto manufacturing plant in California, coincidentally Toyota’s, closed in 2010. Eventually, economic logic (1) lead the company to decide that the cost of living and business in California wasn’t worth staying in California, not when their manufacturing operations had all shifted to Texas and nearby states.

As Dale Buss writes at Forbes. After talking about the structural shift in Toyota’s business, he looks at the once-Golden State:

Besides, California’s business climate is becoming an even bigger downer. California has become infamous with business executives and owners there not only for high tax rates and complex taxing schemes but also for overzealous regulations and regulators that have managed to stifle the entrepreneurial energy of thousands of companies.

Even Hollywood movie studios have been souring about producing flicks in California, increasingly reckoning that the sweet tax breaks and assistance packages now offered by so many other states offset the legacy advantages and ideal production climate in California.

About the only vast remaining pocket of dynamism in the California economy is Silicon Valley, where the mastery of the global digital economy by companies ranging from Google to Hewlett-Packard has become so complete that they have been able to succeed despite the home-state business landscape.

In the annual Chief Executive magazine “Best States / Worst States” ranking that surveys CEOs for their opinions, Texas has been holding on to the No. 1 spot for a while; California seems permanently relegated to No. 50.

As Automotive News put it, “Despite the deep, creative talent pool in greater Los Angeles, doing business in California has become more expensive for companies and their workers.” Bestplaces.net said that the cost of living for employees is 39 percent higher in Torrance than in Plano, and housing costs are 63 percent lower in Plano.

Thus, over the last 10 years, the Lone Star State has stolen so many jobs from the paragon of the Pacific Coast that Toyota’s reported move should come as no big surprise.

No, it’s no surprise, but it is maddening because it is a largely self-inflicted wound. Business flight has been going on for a few years, now, and, no, “Green jobs” just aren’t going to fill the gap. Heck, a businessman even set up a consulting firm to help companies “abandon ship.”

Losing Toyota should be a loud, blaring alarm for Governor Brown and the progressive oligarchs who dominate our legislature, for it’s their policies, piling on regulations and taxes year after year, decade after decade, that have made it nearly impossible to build a business here. (Just read this “Dear California” letter from a small businesswoman who’d had enough.) And for those companies that had been successful, the incentive to move finally grows too great to resist. But they won’t learn, not until it gets much worse. Like all good oligarchs, they’re isolated in their ivory tower of safe seats and unaccountability (2).

Keep watch at the I-10 crossing into Arizona: pretty soon, a lot of those taillights you see  heading East are going to be on the back of Toyotas.

And they ain’t coming back.

Footnote:
(1) Something progressives should acquaint themselves with, sometime.
(2) And, before anyone else can say it, yes, that’s our fault as voters.

(Crossposted at Public Secrets)

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5 Responses to “Fleeing California: Toyota takes its business (and its jobs) to Texas”

Comments

  1. Mwalimu Daudi says:

    Even Hollywood movie studios have been souring about producing flicks in California, increasingly reckoning that the sweet tax breaks and assistance packages now offered by so many other states offset the legacy advantages and ideal production climate in California.

    And yet many – probably most – of those same studios will continue to churn out cinematic love letters to socialism every year. Ah, the lives of the 0.0000000000000000000000000000001% !

  2. Drew the Infidel says:

    Each of the major towns here in TX have as part of their local governmental structure an entity to recruit the film business. Several notable productions have been shot here(“Giant”, “The Alamo”).

    If nothing else, the LA residents who are transplanted to Plano will have an NFL team (Cowboys) nearby, something LA has not had for some time. They may not be much of a team right now but something beats nothing.

  3. Mwalimu Daudi says:

    Drew:

    If the LA residents see the Cowbags* in action, they will flee back to the Peoples Democratic Republic of Kalifornia. Best not to mention it.

    (* – Growing up in Texas I was a fan since 1970, in the heyday of Tom Landry, Bob Lilly, Walt Garrison, Bob Hayes, Cliff Harris, Charlie Waters, Jethro Pugh, and Roger Staubach. But last season the team was so crappy – and the owner totally oblivous – that I quit watching altogether. And even if Dallas was going to do well in the coming season I can’t stand the sissy pink crap the players are forced to wear for a month every season, and the descent of the NFL into the hell of political correctness. I am waiting for the day that the NFL decides to ban tackling and decree all teams finish 8-8 so that no one has hurt feelings.)

  4. Drew the Infidel says:

    Mwalimu: Agreed. I have been a Cowboys fan since 1960 (year of inception) and not just since they started winning. JJ, though trying to portray himself as some sort of “maverick” owner, has played right along with the league in its decline, showing complicity by taking a winner to the very depths.

  5. Sefton says:

    I hope those that do end up moving here with the businesses that are relocating remember WHY that business is relocating and vote likewise.

    Liberalism being a disease, I can only hope they’ve sought treatment before they pack their bags.