Toyota is Moving its Head Quarters to Texas
 

More businesses seem to be fleeing California for the south. More detail in this Bloomberg article:

http://www.bloomberg.com/news/2014-0...-to-texas.html

And the concept of reaping what you sow is being proven yet again here.

Congrats, Texans. Y'all are doing quite well for businesses.

Makes sense to me!

Toyota leaving California for Texas
 

Not a surprise to anyone paying attention to Japan and American senior management statements over the past year, Toyota has had enough of a one-party politics state that pushed taxation and regulation too far.

This won't be the last shoe to drop. Expect something similar to happen with California port operations and their overpaid, strike prone workforce.

Sorry for all the Californians here. Having lived there, it was once my favorite state but their self-inflicted decline driven by ideological, politically driven economic and social decisions are accelerating the state's troubles and this is yet another example.

http://pressroom.toyota.com/article_...rticle_id=4447

If you ever dreamed of working for Toyota now's the time to apply, whenever companies leave California there's always a good number of employees who refuse to relocate.

Edit: There's a handful of members on this board who work for Toyota in Torrance, wonder what their take is...

If we were a one party politics state we would actually have gotten something done in the past five years other than a minor tax increase.

Why choose Plano, Texas? Is there already a factory there?

Why not move it all to Ann Arbor, Michigan if they are already expanding the Toyota Technical Center to accommodate some of the moves. With Detroit being bankrupt I'm sure they could build up at a good price.

i'm going to TX!

If by "Texans" you mean "Texas business owners" then yes congratulations. Because the majority of the those business friendly low corporate tax rates are being made up with astronomic property taxes. Texas now has the 3rd highest median property taxes in nation at 1.81%. California the 32nd (at .74%). The money has to come from someplace and it is, from homeowners (old and new).

These low corporate taxes and are no less than a transfer of tax expenses (and therefore wealth) from the middle class to the wealthy. Politicians spin it to sound good to the average job seeker, but it's a raw deal.

So yeah, before congratulating "Texans" on this, understand that your average Texas homeowner is getting stuck with the bill that your average corporation in a less "tax friendly" state would normally take up.

For Toyota, this is a move to keep increasing profit. Year after year, the profit % must improve. Don't be fooled into thinking this is about survival either. It's about more profit this year, than last, at the expense of homeowners in both Texas and California it stinks.

Source, I perform business analytics for the mortgage industry.

Because there is politics involved. I am sure there was some sort of a deal struck between that particular city/state that we are not privy to.

And it is a very business friendly State.

Yep, this is exactly what happens when one state has hostile policies towards businesses. Plano houses quite a few corporate headquarters for various companies and has the infrastructure and demograph deemed desireable to many of these corporations.

At least I can pump my own gas.

Texas = balanced budget, zero income tax, in-migration (legal), business friendly, production facilities (Tundra, Tacoma) in place, Port of Houston.

Plus, maybe most importantly, Japan staff likes Texans.

Living in one of two states where full service is mandated (i.e., no self-serve allowed), I'm grateful not to smell like unleaded after a fill.

Plus, our gas is cheaper than two miles North (as the crow flies) in Washington where they have self-serve. But then, you don't have to stand in cold rain and wind pumping your own gas six months of the year.

They're closing the office my dad works at here in Kentucky too. He'll probably be going back to Georgetown instead of to Texas.

Missed this post minutes before mine about the same thing.

This decision goes beyond profits to politics, regulation and of course economics. It can't have been made lightly. With 4,000 white collar, highly paid, highly taxed (and upwards of 15,000 people counting spouses and family members) displaced, it's a travesty considering that it was completely avoidable. It's the most radical change in Toyota organization in over 50 years.

But, California is a one-party state unfriendly to business that Sacramento believes must be taxed and regulated to redistribute income from producers to takers who vote. Sad.

To add to the OP's quote, TM actually close up 0.54% today, not down as Bloomberg said and although their price is down this year they just bought back a huge chunk showing confidence looking forward no doubt due in part to this decision to relocate HQ to Texas.

And as for property taxes, I'm paying 2.3% in Oregon counting state, county, metro (don't ask) and city taxes, above the highest amount listed that might not include local bond levies.

I'd like to see you pump gas...


http://stream1.gifsoup.com/view6/308...as-fight-o.gif
[ame="http://youtu.be/ZnZ2XdqGZWU?t=2m42s"][/ame]

Haha, c'mon out to a monthly track day and I'll let you re-fill my car from a 5 gal. can.

Been there, done that, still managed to come home not smelling of fuel (methanol in my case) if I was mindful. Still curious as to what you're doing...

About what?

everyone is coming to Texas we are badass..Exxon is relocating like 10k employees here as well

Are profits evil? I'd much rather a good company profit than a corrupt government. I am aware that Texas isn't perfect either but no doubt, California is becoming a very hostile environment for businesses and their taxes and regulations will only hurt themselves in the end.

Personally, I don't believe in evil because I find the concept too a simple way to hide from knowledge.

And who or what corrupts government?

Why do you think California has a hostile environment for business when it has the largest economy in the country? Are taxes levied on businesses who earn money from California's infrastructure hostile? What is the motivation for this hostility?

Who are these regulations intended to protect? If a business cares for its' community, why would these regulations hurt them?

I have to say, as an employee of Toyota in Texas, and a homeowner, this is a good thing. Sure, the property taxes will go up, but so will our property value, as it has been for the last 6 years. I have worked for Toyota for almost 8 years now as a Scion Director and Sales Manager. Toyota is one of the few good companies in the industry on a corporate level, both to it's employees, and to it's customers. I am glad that Toyota is moving HQ to Texas. Many of the employees will be offered to move with the company as well, and when I say many, I mean almost all.

When you look at the other side of the "property tax / housing cost" issue, you also have to think that they are making land more affordable in CA. I do feel bad for the employees that work at the HQ currently that do not wish to move, but do not be mistaken, they are definitely compensated for their loss of employment.

Yes, we do have some of the highest property tax rates in the United States, but do not forget that we also have the lowest average housing costs in the United States.... So I say, I can get a bigger/better house for my money, but I will have to pay the Man to keep it... I'm ok with that!

Refuse or can't? One reason I've heard a few times today is that so many are upside down on their mortgages that they'd have to declare bankruptcy to relocate.

I talked with some TMS associates tonight. Grief counselors were brought in to HQ today but there weren't enough to handle requests for help. So many of them also once dreamed of working for Toyota and relocated for the opportunity, and now this.

All very good points.

And I agree that if you already live in Texas then Toyota increasing the size of their operation in Texas is probably going to work toyour benefit. It's understandable that someone already employed by TMC in Texas might see personal benefit, however there is little good for the worker that comes of corporate relocation on a mass scale for companies that are already successful. There is no threat to Toyota's health here.

This move is to decrease operating expenses and tax liability for TMC. In order realize these savings 8k-10k California workers will have these costs shifted directly to them.

Yes, as noted housing is cheaper in TX. However those cheaper housing costs are offset by both much lower wages (for perhaps both the relocated worker and their spouse), higher property taxes and decreased property value over comparable properties in California. Who benefits here? TMC.

For those who must choose corporate relocation or joblessness (even with a severance) this will likely be expensive and at the very least disruptive. To move, selling ones home (perhaps on a time crunch) forces workers to take whatever offers they can get. Breaking leases for renters can also be a cost. Losing access to family, & friends can also have significant costs as childcare, housing and transportation costs are often spread in the terms of familial child care, roommates, and ride sharing. Pulling children out of school, loss of social networks (groups, churches, etc), access to cultural centers, diversity, even weather are ancillary changes shouldered by the worker in the name of profit for TMC.

Not referring to you Waukeen, but to those others that cheer lead corporate moves like this simply based on some form of state pride or political affiliation, those folks could probably spend some time walking in the shoes of those who will be soon forced into these life altering decisions that only further pad the pocket of a TMC and their investors. Compassion is something that we all will need some time or another.

Given California demographics, the reality is ongoing economic decline.

It is home to one-third of the nation's welfare recipients. It has the highest poverty rate of any state. There has been net domestic out migration for 18 of the past 20 years while even international in migration, legal and otherwise, has stalled. Mexico has a lower unemployment rate than California. The aging population will continue to drain social services while birth rates decline.

There won't be enough "compassion" to resolve these problems until conditions creating economic growth and jobs are in place but the opposite is happening.

How much "compassion" will it take? Already, budgets are unsustainable, unfunded liabilities are bankrupting cities around the state now, debt and deficits are rising while the tax base is leaving.

Toyota's announcement today should be a wakeup call, but some instead will demand yet more "compassion" that will only accelerate out migration.

As I said earlier, this is a shameful, completely avoidable travesty and violation of the public trust. Of course the same thing happens every day in Washington, the difference is that California can't print money, only raise taxes (of course they won't cut spending) and drive businesses and productive, self-reliant people away.

True point, however this is a simple economics. If everything is cheaper, you do not need to earn nearly as much. The average person that makes, let's say, $500,000 per year in California, can easily live the same lifestyle in Texas earning $250,000. So a 50% wage decrease is fairly acceptable, and completely normal. (don't get me wrong, I don't earn anywhere near that, but just using it as an example.) I know many people that now live in Texas that came from California for this specific reason. The average income to home value is much higher here in Texas than almost anywhere in the US. You do bring up some very valid points ->

One thing to keep in mind, there is much less profit than you would think in auto sales, especially if you compare the profit/economy of 20 years ago. This is actually very minimal now. The average implied profit margin for a toyota vehicle is $900 (based on profit IF a customer pays MSRP) and approximatly the same profit to Toyota. To keep things in perspective, the average profit margin for an "american" vehicle is $3k - $4k, and the same margin to the manufacturers. Toyota makes much less money than you would think with the actual auto sales. Most "import" manufacturers have had to adapt to the WalMart way of business. Toyota must minimize costs, and I do not completely agree with the way it is happening, but unfortunately for the people in Cali, it is a necessary move Toyota must make.

It is terrible that many jobs will be lost, and to be honest, most workers have known about this for quite some time, or at least saw this coming. This move has been almost 4 years in the making. Toyota is not a company known for pulling the rug out from underneath people.

With two children of my own, I do absolutely agree with you about having to pull out of school and move children, and of their church/social groups. This is the part of this move that I don't like. We must adapt. I have moved with this company for similar reasons. Once to Canada, and then back to the USA. It was a very hard thing to do to my wife and children...

I do not intend to state that this is an "all out" great thing. But it is unfortunately a necessary thing. It's hard to understand, and unfortunately I cannot tell you why it is necessary other than saying, there is a necessity for this move, and the reason it did not happen sooner is because Toyota did not want to cause any of their employees mental, or emotional trauma. They did try to stay. This move is non-political in nature, I can guarantee you that.

I mean in no way to contradict you DAEMANO. I am just trying to make sure that the correct information is brought to light. I do agree that some companies tend to make this type of move in a cold, and non compassionate way. The sole reason that I work for Toyota is because of the fact that they do, in every way, try to take care of their employees as well as their faithful clients.

I really do wish that it was possible to split this move between the two states to offer a dual HQ to keep the TMC employees that cannot move from Cali, and to be able to offer something new to those that can. This would be my wish in a perfect world...

I almost fell out of my chair when I read this post because I've read the EXACT (yes, word for word) verbiage posted on chain letters and right-wing political blogs time and time again.

I nearly didn't reply because it's so absurd that you would re-post these curated (e.g. cherry picked) "facts" without citation as if they were your own words. Don't know why you would. Understand that this copypasta is designed propaganda served up for those that would treat civil matters as team sports. This makes me sad.

Cheer up! No need for the personal attack, I posted (not cut and pasted) facts derived from readily available sources as an alternative to your purely emotional claims. Here, this may help you understand why Toyota is, after more than 50 years, leaving California for sound reasons:

https://www.google.com/search?q=out+...sm=93&ie=UTF-8

I would respectfully disagree. Economics are inseparable from politics and culture, another form of morality. It's not always apparent, but why else would Toyota make such a drastic move to a more business friendly state other than politics and culture more favorable to a pro-business agenda?

Good point. -> This statement cannot be denied. ( I only meant this in a way as it is not to support a specific political agenda. Purely a business agenda.)

@Waukeen
Once again thanks for the thoughtful personal discussion.

One thing I'd like to note - Toyota Motor Corporation is perhaps the healthiest auto mfg in the world. Toyota's fiscal 2013 ended in March. It was set to have it's highest profit in company history estimated at $18.8 billion and is sitting on up to $40 billion in cash. Toyota reported that profit came on cost cutting, a weaker yen, and strong national monetary policies. With especially strong results reporting from the United States.

Your numbers are accurate, and undeniable. There is a means to the companies direction, and it is not purely automotive! The global direction you will see Toyota taking in the next 10 years will benefit nearly everyone. (and this takes a bunch of cash)

You are obviously an intelligent person! (i meant that seriously and not in a sarcastic way)

DAEMANO, California has the biggest economy, but it also has the biggest population. Herp derp. Some business does well here in spite of the hostile environment; NYC is just as bad if not worse in some cases, and there's plenty of business there too. I guess there's nothing wrong with either place? Well, that's clearly not what the people who are leaving think.

This thread is full of funny. I moved from Orange County to Dallas. First, while property taxes are higher and wages are generally lower, let's not forget that there's no state income tax. Roll SIT into PT and CA clobbers TX in overall taxation.

TX has been historically weak at attracting business, DFW specifically. See Boeing Relocation. But the suburbs of DFW are getting skilled at this and this will be a major win for Plano and North Dallas.

Of course Toyota weighed the financial benefits of this move for themselves, if they hadn't, we'd call them GM.

A good point, but you didn't factor in cost of housing which is obviously relevant to the amount of tax you're going to pay. A nice house in Texas is going to cost a whole lot less - all other things being equal - than a similar nice house in Cali. While Texas does have high property taxes - more than double those of Cali - the median house value in Texas is about one third the value of a house in Cali. $139,400 in Texas vs. $408,300 in Cali.

http://www.zillow.com/tx/home-values/

http://www.zillow.com/ca/home-values/

As such, the average homeowner in Texas is still going to pay less in property taxes per year than the average homeowner in Cali. Using your tax rates and the Zillow values, it's a property tax of $2,523.14 Texas vs. $3,021.42 Cali. (it should be noted are probably different than the assessed value for taxes - I don't know how they do assessed tax values in those states, but where I live there's a formula that averages taxable value out to about 40% of actual assessed value).

Of course, we'd also need to compare average income in order to know the "real" cost (percentage of income) for property taxes in each state.

$51,563 Texas vs. $61,400 Cali (from census.gov). So the person in Texas makes about 84% of what the person in Cali makes. And the person in Texas pays about 83.5% of the amount of property taxes that the person in Cali pays. Which means, relative to income and cost of housing, the property tax rates are basically identical as a percentage of income in both states - even though Cali's rate is significant lower on it's face.

So the individual in Texas isn't, in fact, worse off re: property taxes and Toyota can make more profits. Win, win.

Funny but also a bit alarming. I hope Jim Lentz has beefed up security.

This. And see my post re: the property tax rates actually being basically identical in the two states for the individual homeowner relative to income and property values.

The point isn't what state has higher taxation for residents. It's that TMC is improving it's profitability by shifting taxation costs from itself to its U.S. headquarter employees. Why anyone defends this method (regardless if they live in CA or TX) is a commentary as to how disconnected folks have become from their communities and how connected they've become to corporations and their brands.

Your assertion that if Toyota didn't opt to relocate its 8-10k workers, they would become GM (which btw is also quite profitable) is also incorrect. No, Toyota's financial position is so outrageously positive, it would still be both the world's most profitable automaker and the world's largest no matter what they did with their U.S. corporate headquarters. Toyota isn't some sinking ship needing dire moves to stay afloat, they're simply improving their position on the backs of their workers and communities. Yep, full of funny.