Toyota’s Not Just Moving To Texas; It’s Beefing Up In Michigan – Forbes
Mainly lost amid the uproar in California over the planned move of Toyota’s headquarters operations to Texas has been news of the other big state beneficiary in the reorganization of the company’s U.S. operations: Michigan.
Toyota also is moving 250 direct-procurement jobs from its Erlanger, Ky., operations to its Toyota Technical Center research-and-development complex near Ann Arbor, Mich., as part of the overall restructuring under which Toyota will uproot about 4,000 sales, marketing and administrative jobs from Torrance, Calif., and set them down in Plano, Texas, over the next few years. It just formalized the Michigan move after receiving guarantees of $4 million in state incentives.
“To have everyone under one roof and working together – suppliers and engineers and purchasing people – allows for greater efficiency and better communications and ultimately a much stronger R&D activity,” Bruce Brownlee, general manager of external affairs for Toyota Motor Toyota Motor Engineering and Manufacturing in Ann Arbor, told me.
Toyota will invest $32.5 million to construct a new office building on its 690-acre engineering and testing campus in Michigan, where it already employs 1,100 people, mostly engineers and designers. Toyota houses five chief global engineers in the facility, where it oversees engineering worldwide for important vehicles including the Camry, Sienna, Avalon and Tundra.
The plan to move the 250 procurement jobs to Michigan is just the latest augmentation of the massive base of white-collar automotive activity in southeastern Michigan, the biggest such brain trust in the world – and a crucial economic asset that is often overlooked in the focus on actual vehicle-manufacturing activity in the state.
In addition to the thousands of researchers and product developers employed by each of the Detroit Three automakers in the area, other foreign-owned automakers such as Hyundai and Kia have established R&D operations in Michigan as well. Also, major suppliers house their own technical centers; Robert Bosch, for instance, just broke ground on an expansion of its technical center in Plymouth Township, Mich., that will nearly double its size and add as many as 200 jobs in the next three years.
Toyota has had research-and-development operations in Michigan for more than 30 years. “The synergy we already have in Michigan is unique around the world,” Brownlee said. “No other place in the world has such a high concentration of engineering talent. It’s not easily duplicated; things don’t work that way. It makes a whole lot of sense for us to be moving these [procurement] jobs here too.”
Brownlee also praised the improving business climate in Michigan that has occurred under Gov. Rick Snyder, former CEO of Gateway Computer, since his election in 2010. It has included elimination of an omnibus tax on companies that vexed nearly every business chief in the state, as well as a recognition that fostering its unique edge in automotive engineering is important for the economic future of the state.
“Michigan now is a very excellent place to do business,” Brownlee said. “The administration has been very positive in terms of some of its policies related to business. Those are all pieces of the puzzle.”
The potential hangup for Michigan’s continued growth in this area is a shortage of qualified college graduates in engineering and related disciplines, which is blamed on many factors including a lack of focus in lower education on science, technology and math. Michigan isn’t alone in facing this challenge — but because of the importance of the auto industry to the state, the challenge is more important to Michigan than to most other states.
“It’s an issue we’re all contending with,” Brownlee said, “and we’ve appreciated the direction the state is taking in trying to address this as an important issue. A lot of very intentional efforts are being made, and it’s a huge area of concentration for all of us.”