Should Detroit’s Carmakers Follow Toyota To Texas? – Forbes
Carmakers are to Detroit what the movie business is to Hollywood, or the Pentagon to Washington. It’s not just an industry, it’s a culture.
For that reason, it’s hard to imagine the Motor City without the automakers. And yet, would Detroit carmakers be better off if they followed Toyota to Texas?
Over the years, it was clear that Detroit’s tunnel vision kept it from understanding the threat posed by German, Korean and Japanese automakers until it was far too late. In Detroit, the competition is down the street, not across the oceans, no matter how important the companies’ international operations have become.
Chevrolet still fights Ford for the title of the number one selling pickup truck. Lincoln still battles Cadillac. Jeep remains the dominant brand in sport utility vehicles.
Frustrated analysts have long argued the industry would be better off moving to someplace like Iowa, where the car companies could get a clearer view of what American consumers wanted, free of the history and traditions that weigh them down.
And yet, the companies seem inextricably woven into the fabric of metropolitan Detroit, where General Motors General Motors reigns downtown, Ford Motor Ford Motor has its foothold in Dearborn, and Chrysler claims the northern suburb of Auburn Hills.
None of them could be expected to make a bold move like the one announced by Toyota on Monday, as much as they might secretly like to do so.
Over the next few years, Toyota will move the bulk of its American operations from California and Kentucky to Plano, Texas, outside Dallas. All together, the action will affect about 4,000 employees, merely the latest to join hundreds of thousands from dozens of other companies making that same exodus to Texas.
Toyota isn’t the first carmaker to make such a dramatic step. A few years ago, Nissan also uprooted its North American operations in California and took off for Nashville. Other foreign car companies have been scattered in various cities, while their factories dot the southern states.
Toyota’s move doesn’t come as a complete shock, since rumors have abounded for years that it might move its headquarters out of California. But the most likely destination always seemed to be Erlanger, Kentucky, outside Cincinnati, the home of its North American manufacturing and engineering operations.
Now, the engineers will head to Ann Arbor, Michigan, while pretty much everyone else goes to Texas (there still will be some finance operations in New York and a few people left in California, like car designers).
It will be an adjustment for the West Coast oriented company, and as with Nissan, there will probably be Toyota staffers who don’t make the transition. However, by selecting Texas, Toyota is planting its headquarters firmly in the heart of where its focus has shifted, to the American South.
If anyone doubts how important Toyota has become there, just visit places like Huntsville, Alabama or Tupelo, Mississippi. Its engine and car plants are among the stars of the local economy, and that’s in addition to the sprawling complex the company built in Georgetown, Kentucky, outside Lexington, its other engine plant in West Virginia, and its Indiana plant.
To be sure, GM has been building vehicles in Texas for years and no one is likely to forget that. But Texans are known for their hospitality and it’s likely the Toyota newcomers will receive a typical warm welcome, along with economic considerations that any company would find appealing.