By Keith Crain, Crain News Service
DETROIT (May 19, 2014) — The recent announcement that Toyota Motor Corp. will move most of its North American operations to a suburb of Dallas leaves just a couple of Asian car companies in Southern California.
First it was Nissan North America Inc. to Nashville and now Toyota to Texas.
You can debate how much impact California’s regulations and taxes had on Toyota’s decision, but, regardless, the company is leaving in a couple of years.
It probably is a good thing and certainly will help foster innovation.
I have always wondered whether having General Motors Co., Ford Motor Co. and Chrysler Group L.L.C. clustered in Detroit is a good thing. I have no doubt that it is good for the community and particularly philanthropy. The Detroit 3 are generous corporate citizens, and many area charities benefit.
But I am not sure that having the three companies in the same area is good for creativity and innovation.
It is probably an academic question since the likelihood of any of them leaving Southeastern Michigan is remote. And in today’s environment, many of the disciplines of those car companies are scattered around the globe so they are able to take advantage of all sorts of regional talent.
California has its drawbacks. Probably no place in the country has so many onerous regulations, not to mention high corporate and personal taxes. There are few, if any, incentives to locate or remain in California.
Texas seems to encourage business and corporate success. Tennessee attracted Nissan with the same sort of climate. My guess is that it will be easier to attract and keep top talent in Texas than in Tennessee, but the turnover at Nissan hasn’t been horrific.
It wasn’t too long ago that automobile companies in America were clustered in three places: New Jersey, Detroit and Southern California. Now car companies are spread throughout the country. Southern California has lost much of its luster in the past decade.
Although it may be difficult for suppliers from time to time, I don’t think it’s bad that car companies will be located all across this country. It allows different points of view and different economic drivers.
I doubt if it is particularly difficult to attract talent in most locations. It’s more about the company than the location.
It does make attendance at national conventions and auto shows more important for executives who have fewer opportunities to mingle with their peers on a regular basis.
Detroit still has the largest number of engineers, designers and manufacturing executives, even if their plants are all over the country.
When the Chinese inevitably arrive, it will be interesting to see where they locate.
This opinion column appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business. Keith Crain is editor-in-chief of Automotive News and chairman of Crain Communications Inc., TB’s parent company. He can be reached at firstname.lastname@example.org.
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