Toyota closing NKY headquarters; 1600 jobs lost – Cincinnati.com
Toyota is closing its Erlanger headquarters and moving almost 1,600 jobs out of Northern Kentucky as part of a nationwide consolidation of the company’s operations.
Company officials gathered employees at its Erlanger offices Monday afternoon to tell them the news. All workers there will be offered jobs either at Toyota’s new headquarters in Plano, Texas, or at an expanded technical center in Michigan.
A few hundred engineers also may move to the company’s manufacturing plant in Georgetown, Ky., where more than 7,000 people now work.
The Georgetown plant will not be affected by the moves announced Monday.
The decision to pull out of Erlanger, home to Toyota’s North American engineering and manufacturing headquarters since 1996, is a huge blow to the region and to the workers who will be displaced.
“We know this is tough news for our employees and the community,” said Toyota spokesman Mike Goss. “We recognize the impact. But at the same time, I know this is the right business decision.”
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The announcement blindsided many employees and local officials, who said they didn’t hear from the company until the announcement was made Monday and didn’t have an opportunity to make a case to keep Toyota here.
“I heard not a word, not a hint from the people we work with all the time out there,” said Erlanger Mayor Tom Rouse. “We’ll survive, but I’m more concerned about the local people who work for Toyota. It’s really tough.”
He said he’s optimistic the city can find another company to move into Toyota’s headquarters, which has been updated at least twice since it opened. But economic development officials said it will be tough to replace Toyota.
“It is shocking. It’s a significant loss to our region,” said Doug Moormann, vice president at Development Strategies Group, an economic consulting firm. “It’s a difficult loss. Those are high-caliber jobs. It’s a headquarters operation, and they’re tough jobs to replace.”
Gov. Steve Beshear said the state will do its best to help Northern Kentucky recover quickly from the loss and said he expects Toyota to offer top-notch severance packages to its employees. He said he’s confident Toyota’s operations in Georgetown are not in danger of relocation and will continue to expand.
“We will do everything possible to maintain and strengthen Kentucky’s position as one of the top states for the auto industry,” Beshear said.
Goss said Toyota will move about 1,000 administrative workers in accounting, finance and information systems to Plano, where a new headquarters is expected to open by early 2017. Another 300 engineers will move to Georgetown, and about 250 procurement employees will shift to a technical center in Ann Arbor, Mich.
Toyota also is moving jobs from California and New York to the new Plano headquarters. More than 4,000 workers nationwide will be affected by the moves.
Toyota is one of the largest employers in Erlanger and Kenton County, which has struggled to recover in the post-recession economy. Kenton County’s unemployment rate of 6.4 percent is the highest today among Greater Cincinnati’s seven largest counties.
The company also is a significant cultural presence in Northern Kentucky, where it routinely sponsors events and is active in philanthropy.
The decision to relocate came after years of studying how to make the company’s North American operations more efficient, Goss said.
He said Texas, which has pushed hard for years to lure companies from California and the Midwest, is a logical choice because of its central location and proximity to transportation hubs and international ports. He said company officials also wanted to start from scratch in a new location rather than move various administrative, procurement and sales offices into an existing facility.
Texas officials told the Associated Press on Monday that the state offered Toyota $40 million in incentives to move to Plano.
Construction of the new headquarters should begin soon and is expected to be complete in two to three years.
“This is the most significant change we’ve made to our North American operations in the past 50 years, and we are excited for what the future holds,” said Jim Lentz, CEO of Toyota’s North American region.
Plano also might be appealing to Toyota because it has no state income tax and is located just north of Dallas and that city’s international airport. When Toyota moved its headquarters to Erlanger almost 20 years ago, the company received tax breaks from the state and cited the importance of international flights out the nearby Cincinnati/Northern Kentucky Airport.
Many of those flights were lost when Delta Airlines closed its hub here and dramatically reduced operations at the airport.
Although they were caught flat-footed by Toyota’s announcement, state and local officials said they would get to work immediately on a recovery plan. They admitted it won’t be easy.
Rouse said Erlanger’s annual $17 million budget relies heavily on Toyota, and state officials said the loss of so many jobs would affect the entire region.
They said the skilled workforce Toyota will leave behind should help attract other companies to fill the void.
“Our human capital has been enhanced tremendously by Toyota’s ways of training, of instilling community involvement and of a commitment to continuous improvement,” said Dan Tobergte, CEO of the Tri-County Economic Development Corporation. “Those that stay will be quite sought after.”
Read the letter from Toyota to Gov. Steve Beshear:
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