On April 28, Texas Governor Rick Perry announced Toyota Motor's decision to relocate its North American headquarters from the California coast to a new campus in Plano, Texas. Although the move to Plano will give Toyota numerous cost savings, CEO of Toyota North America Jim Lentz explained that it has more to do with improvements in overall efficiency. “This is probably the most significant change we’ve ever had [in North America],” said Lentz. “In the next three years we are going to bring three separate entities to the same headquarters for the first time.” The consolidation of Toyota’s sales, engineering, and corporate divisions into one location will hugely benefit the company’s overall operational effectiveness, as well as create new jobs and other benefits for the Plano community.
The original reasons for headquartering in Southern California are no longer as relevant as they were back in 1957. Most of Toyota’s US automobiles today are manufactured in Texas or nearby states, and moving the headquarters to Plano will put them much closer to their product. San Antonio, for instance, has a large Toyota truck facility that supports 2,900 jobs and controls the company’s entire production of pickup trucks in the US. Toyota also has other large manufacturing plants in Mississippi, Kentucky, and Indiana, as well as numerous supplier sites in the Southern and Midwestern US. As LMC Automotive analyst Jeff Schuster explained, “it doesn’t make as much sense as it did initially to be in California, when it set itself up to be closest to Japan and the ports.” Although Toyota has thousands of California workers that will be affected by the transition, CEO Jim Lentz has guaranteed jobs in Texas for all of the affected employees.
On July 14, Toyota chose KDC Real Estate Development & Investments to develop the new campus which should take about three years to complete. By that time, Texas Governor Rick Perry expects the site to employ 4,000 workers and to further stimulate Texas’s economy. Toyota already supports nearly 18,000 jobs in Texas—both directly and indirectly—according to the company’s 2013 US operations data brochure, and the addition of the headquarters will grow these figures even further. In exchange for Toyota’s $300 million investment, Texas will invest $40 million back into Toyota using the Texas Enterprise Fund (TEF), an account that was created in 2003 with the goal of attracting outside investment and new jobs.
Toyota, however, is not the only Japanese company that has recently made big moves to the Lone Star state. In 2013, Japanese security software company Trend Micro Inc. announced that it would relocate its US headquarters from California to Irving, Texas, a move that would bring 220 jobs to the area. Like Toyota, Trend Micro received a monetary incentive for relocating, a package of around $85,000 from the city. Furthermore, Toshiba International Corp, a wholly owned subsidiary of Toshiba Corporation in Japan, announced in 2010 that it would construct a 620,000 sq. ft. manufacturing facility near its industrial division headquarters in Houston. The plant produces motors for electric cars and provides nearly 1,200 jobs to the local community.
Texas-Japan ties go well beyond corporate investments. Texas currently has 15 sister city relationships with Japan and nearly 40,000 Japanese-American residents. In Texas’s 3rd district—which includes Plano—Asian-Americans make up 14% of the population and over 2,200 of them are Japanese. To support these residents’ cultural education, the city of Carrollton hosts a Japanese language school that teaches about Japanese customs and culture. Many of the school’s students have parents that are in Texas temporarily for business, and the school can be a great way for such students to continue their Japanese education. After Toyota’s announcement in April, the Japanese school received hundreds of calls from the affected families and is expecting an additional 150 students over the next few years.
Andy Nguyen is a research intern at the East-West Center in Washington and a graduate student at Georgetown University.