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Why is Toyota centralizing in Texas?

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Taken from Automotive News

Toyota has recently moved all its different parts of the firm that were spread in the US, having its main site in Southern California, to Plano, Texas. There are several advantages for Toyota to make such a big change and concentrate all their operations under the same roof, and that indicate the change the company has had in the last couple decades from being just an importer, to being a producer with a larger market in the US than in Japan; some of these are increased effectiveness and efficiency, added to the cut in jobs (fixed costs) from the people that are not willing to transfer.

But, why Texas?

The answer is as simple as: zero state income tax, lower housing and living costs, more favorable labor laws, the chance for every employee to arrive under the same circumstances, and a non-redundant $40 million incentive from the government.

This moving also shows how firm that do not have their roots attached to Michigan, like Ford or GM, are not only not choosing git to settle down, but they are also starting to move away from this area that once was the world’s capital of the auto industry.

It would be interesting to see what other firms such as Federal Mogul do in the next years if the industry starts moving away from Michigan.

Would Texas and its economic advantages for firms become the new motor state?

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  1. Peter Wittwer
    Peter Wittwer

    I don’t think other firms will start to move away from Detroit. Ford, Chrysler, and GM, which have historic roots in Detroit will not leave their roots. As was illustrated by the Federal Mogul employees today, the company has hundreds of millions of dollars invested in its Detroit factory. It is hard to imagine a profitable, industry-leading company like Federal Mogul would abandon all the equipment and research facilities they’ve established in Detroit. Also, the big 3 represent the pulse and lifeblood of Detroit, if they were to leave the city any for Detroit to recover economically would be abandoned. I can’t imagine a company like Ford with historic, and familial ties in the city to give up on an area that has meant so much to them.

    May 6, 2014
  2. Alexander Dawejko
    Alexander Dawejko

    Do you think Texas would ever change their laws because of the potential revenue from the auto industry? If you are right and Texas is an environment that is suitable to become the new Motor City then it would be hard for them to ignore the money they COULD be making. Just something to chew on.

    May 6, 2014
  3. Louis Ike
    Louis Ike

    I remember one of our speakers mentioning that Toyota’s move into Texas also had to do with the fact that it is the nation’s largest market for light trucks. As Toyota looks to penetrate into some of the market share of Ford’s F-150, they believe that situating themselves in the heart of truck country will prove to consumers how serious they are about their truck lines. I agree with Peter in that companies like Ford, GM, and Chrysler will not be moving to Texas, but the most recent trend in the auto industry deals with transplants. Translpants are foreign auto manufacturers locating themselves in the US and in particular the Southeast United States. I know that there are large BMW and VW plants in South Carolina and Tennessee, with many more of the likes scattered throughout Georgia, Alabama, and Florida. Texas may be looking into attracting some of the foreign auto manufacturers to locate plants within their state.

    May 15, 2014

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