You are here

Toyota Takes Root In Texas, Offsetting Some Of U.S. Industry's Drift To California

by Dale Buss | Forbes | 10-14-2016

Even as it’s going smoothly, Toyota’s move of its North American headquarters to Texas from California is taking on added importance for the U.S. auto industry: It’s one of the few places where a company’s balance of investment is shifting toward Flyover Country and away from the West Coast.

In fact, Toyota Motor North American CEO Jim Lentz was so eager to support the company’s move to Plano, Texas, from Torrance, Calif., that he and his wife were among the first people with the company to move physically from Southern California to the Lone Star State. About 200 Toyota folks in total comprised that first wave about two years ago, he said, and they set down an important marker for the ongoing transition.

“If you’re a Toyota team member living in California and you hear about this great idea of moving the company to Texas,” Lentz told me, “your first thought is based on the demonization that’s gone on in California about Texas. You have a negative, or at best neutral, view of what this is all about. That’s why I wanted to be one of the first to move to Texas: I wanted to show people that this is a good place. And the first 200 people who did it with me have been a huge influence on everyone else.”

Toyota stunned the auto industry and big swaths of America a couple of years ago when the Japanese automaker announced that it was going to pick up all of its sales, marketing and administrative operations in Southern California — along with about 4,000 jobs — and move them lock, stock and barrel to … Texas?

But now after moving more than 1,200 tons of Texas limestone into place in the new digs still under construction in Plano, as well as 12 acres of glass and 17,000 tons of reinforcing steel, “there’s no place like home” in the Lone Star State, Toyota has announced.

“Our new state-of-the-art North American headquarters is designed to stimulate ever better ways to serve our team members, customers, and community,” Lentz said  in a press release. “As we get closer to completion, we look to recruit people who want to challenge what’s possible at Toyota and within the auto industry.”

A big focus for the new North American headquarters, as Toyota hires more than 1,000 new people, is to “address mobility challenges” as the industry shifts more heavily toward self-driven automobiles, and ride-sharing and other services, as well as electrified vehicles, he said.

Lentz said that internally, Toyota’s various cultures — most notably, the sales side and the engineering side — are integrating “quickly” in the new state even as the new headquarters campus is still taking shape.

“The strange things you heard about one culture versus the other really don’t exist,” he said. “And while they still talk about ‘the Toyota effect’ here in Plano, to me there’s been a Plano effect on us. We looked at almost 100 different locations to relocate to, and there is no better one in the country than the North Texas-Plano area. There’s a great campus, and great opportunities for our team members and their families to live in all sorts of different types of places. And they’ve got work-life balance and quality of life figured out here. Add on top of that a business-friendly environment.”

Speaking of that, Californians made quite a bit out of the fact that Toyota was moving to Texas, of all places. Their anti-business environment already had led to the bleeding of hundreds of companies from the Golden State, many of them relocating to Texas, and Toyota’s affront became the biggest of them all.

Lentz noted that ”Texas didn’t poach us, which is what most people believe. But there’s still this friendly, sometimes not-so-friendly, competition going on between California and Texas.”

One thing that has changed in the last two years: Oil prices have slid dramatically, and that is starting to nick the Texas economy. But Lentz said that factor hasn’t helped Toyota much in Dallas, where demand and competition for white-collar workers of all stripes continues to be torrid. “Had we located in Houston or San Antonio, we would have felt that a bit more,” he explained. And in San Antonio, where Toyota builds pickup trucks, “a number of team members who had left manufacturing and went to the oil patch now are coming back to the manufacturing sector again.”

In any event, Toyota’s continued buildup in Flyover Country is running counter to what is occurring as the self-driving phenomenon builds: Just about every automaker now is investing more in non-manufacturing operations in Silicon Valley than in the traditional home of the U.S. industry, in the Midwest, Mid-South and Southeast. Toyota Research Institute has three offices: one at Stanford University, one at MIT — and one in Ann Arbor, Michigan.

The mobility thrust also is shaking up traditional notions of what an auto show is. The International Consumer Electronics Show just announced that Nissan CEO Carlos Ghosn, for example, will be delivering a keynote at its show in January in Las Vegas, and CES has grown as a forum for auto companies announcing tech advances. Meanwhile, however, both the Detroit and Los Angeles auto shows have launched mobility exhibits to coincide with their traditional auto shows.

How does Toyota handle this plethora of marketing opportunities? “There are also shows in Asia and Europe,” Lentz said. “So frankly you have to think about what it is you’re going to showcase. If it’s tech-driven, CES may get more ink for you than a traditional auto show. Part of it also depends on when the ‘cakes’ you’re baking come out of the oven — when they do may determine where you show your new products. So to have something new and newsworthy at every major auto show in the world, and at CES and at the [Specialty Equipment Manufacturers Association] show, no longer works out.

“You have to pick and choose. And as this industry shifts more toward mobility, the bets may be off on where things take place.”