Companies Relocating to Texas News
75 Percent of Toyota Employees Want to Move with Company to Texas
by MERRILL HOPE11 Apr 2016316
In polling its employees, Toyota found that an exceptionally high number of its work staff in three states, affected by the automotive giant’s plans to leave California for Texas, want to relocate with the company – 75 percent, says Toyota North America CEO Jim Lentz.
On Friday, April 8, Lentz spoke to a packed house at the North Dallas Chamber of Commerce luncheon held at the Dallas Anatole Hotel. He divulged buy-in from approximately 75 percent of its California, New York, and Kentucky employees, all interested in receiving job offers to retain their positions once the company move to Texas, the Dallas Business Journal reported. Comparatively speaking, Lentz indicated this reflected a high number of people willing to consider a corporate relocation.
“We’ve lost some people already, but today, after we poll people, about 75 percent have said, ‘yeah, I’d like a job offer,’” said Lentz.
Toyota will consolidate 4,000 jobs from these three states in Plano, a suburb located north of Dallas where they continue to build a new campus. It is slated for completion in early 2017. Almost 500 of the Toyota’s employees already moved to temporary space in Plano. The company’s $1 billion price tag on this venture includes the construction of this new venue plus employees’ relocation expenses, retention bonuses, and other related moving expenditures.
Although three quarters of its workforce is ready to relocate to Dallas, Lentz said: “Now that doesn’t mean that 75 percent of them are coming.” He added that even if he gets two-thirds, that is a high number.
Lentz told the Dallas Business Journal: “If you look at not just Toyota but all of these businesses that are coming, you’ve created this tremendous environment that business can thrive here.”
The Toyota executive also shared that about 25 percent of Toyota’s employees declined relocation packages to the Lone Star State. This opens the door for the company to hire 800 to 1,000 new Texas employees.
In December, Breitbart Texas’ Bob Price reported that affordable Texas housing played a key role in Toyota’s decision to uproot from its Southern California home in Torrance, where it has been headquartered since 1982, to the facility under construction in Plano.
Albert Niemi, Jr., dean of the Cox School of Business at Southern Methodist University (SMU), told the Dallas Business Journal that Toyota held focus groups with its employees and found most said they were willing to move. “We just want to live the American Dream,” they said.
Toyota conducted a study which revealed their employees could live in Texas for about one-third of the cost of housing in the Los Angeles area that currently hosts the company’s headquarters. “So, in real terms they’re going to triple affordability of housing they can buy if they move to Texas,” Neimi added.
While these costs are lower in Texas, they are not as low as they used to be. The massive influx of people moving to the Dallas area set against available inventory means median home values shot up a record 13.7 percent in February 2016 from a year ago, according to Zillow Real Estate.
Other appealing factors about Texas are a friendly business regulatory climate and no state income tax. A major incentive, though, came from the state, which offered Toyota $40 million in tax breaks through the Texas Enterprise Fund (TEF) as well as local incentives that the state of California did not, according to the Southern California-based Chapman University School of Law’s Nexus Journal of Law and Policy.
The TEF, created by the Texas Legislature in 2003, is a tool used to attract new companies to Texas and to expand existing Texas companies with the goal of creating more state jobs and stirring economic growth. Since its creation, Texas lawmakers reauthorized its funding in five subsequent legislative sessions.
Recently, Breitbart Texas reported almost 500,000 people came to Texas in the one year period of July 1, 2014 to July 1, 2015. Between 2008 and 2014, California corporations accounted for 15 percent of the companies that either moved their headquarters or expanded their operations in Texas.
Jim Lentz, CEO of Toyota North America, stretches out in a model lounge area at Toyota’s temporary headquarters on Wednesday, July 22, 2015, in Plano. Several furniture suppliers are bidding for contracts on the Toyota’s new campus and have set up model work spaces at the company’s temporary quarters on Legacy Drive. (Smiley N. Pool/The Dallas Morning News)
Up to 75 percent of Toyota’s 4,000 employees may relocate to Plano if early, informal comments from workers prove accurate.
Jim Lentz, the high-profile automaker’s North American CEO, said Monday that the initial responses from some workers are encouraging.
The company asked all 4,000 of its employees in various divisions to make the move to West Plano, where Toyota is building a 2 million-square-foot headquarters on a 100-acre site.
The employees are now spread among offices in Southern California, Kentucky and New York.
“We had a planning number of around 60 percent [participation], so if this holds up, it could mean we would have 3,000 people moving here and another 1,000 new jobs,” Lentz said from the North American International Auto Show in Detroit.
Lentz has said the open jobs from the move will probably be filled by workers from North Texas.
The participation rate involves far more than pride. Toyota has many long-term employees with considerable experience, and it doesn’t want to lose that knowledge in the move.
When Nissan moved its headquarters from Southern California to Tennessee more than a decade ago, fewer than 50 percent of its workers followed.
Over the last year or so, Toyota has completed an organizational structure for the new headquarters in Plano, which will offer a different culture because all divisions of the company will be housed together for the first time.
Now it’s starting to ask employees whether they plan to move.
“As we have gone to team members, we are getting responses back at about 75 percent yes,” Lentz said.
The new headquarters, which has grown in size from an initial 1.3 million square feet to 2 million square feet as planning has proceeded, is rising on schedule from Toyota’s site just north of Legacy Drive.
“The structures of the front buildings — all five stories — are up,” Lentz said
Tight housing market
Of course, if 3,000 Toyota people do move to North Texas, they will probably find a tight housing market.
At the end of 2015, North Texas had only a 2.1-month supply of homes for sale — one of the lowest inventories on record and one of the lowest in the country.
Lentz said Toyota’s efforts to relocate workers have been helped by the company’s so-called pioneers, a group of about 400 employees who agreed to move to Texas two years before everyone else and settle into the Dallas area.
“One of the reasons the early numbers are going higher is the 400 here had great experiences in the area,” Lentz said. “They like the schools, they like the neighborhoods, and they like their commutes. They are good ambassadors for the area.”
While the Toyota employees saw things they liked about North Texas, their impressions of the area may be affected by the deadly tornadoes in December that raked Glenn Heights, Garland and Rowlett.
“I don’t know whether they will [have an effect] or not,” Lentz said. “I know early on that one of the biggest concerns people had about the area was tornadoes. Most had never experienced one.”
But Lentz, a native of the Midwest, contends that people have earlier, more accurate warnings of tornadoes than they do with earthquakes, a concern in California.
He noted that the new headquarters in Plano will have underground corridors that could house all of the company’s employees in an emergency.
“We always wanted underground corridors for moving the mail and other things,” Lentz said.
“We expanded the size of those hallways so we could get the entire campus into them if we had storms in the area,” he said.
February 2017 target
Lentz expects headquarters construction to be completed in February 2017 and workers to begin moving in large numbers by that April.
Toyota has estimated that the contemporary headquarters will cost about $350 million. As work has progressed, that has increased to “north of $350 million,” though Lentz can’t yet say by how much.
“We’re just about done with the final, final estimates,” he said. “In the next 90 days, we will nail that down.”
The headquarters has increased in size partly because Toyota expanded its tech center there, which will focus on finding and developing solutions for problems in new vehicles.
“We’re making progress,” Lentz said. “Last year, with the weather we had, that put us behind in construction a couple of weeks. But we have made that up.”