Toyota's Move from Torrance to Texas: California's Wake-Up Call?*

Toyota's April 30th announcement that it would take its headquarters from Torrance to Plano, Texas is proof-positive that California's high regulatory, high tax, and high cost of living environment is unfriendly to business. Or is it?

3 minute read

May 5, 2014, 8:00 AM PDT

By Irvin Dawid


(Updated 5/12/2014) Correction: The Los Angeles Times reported on April 28 a correction on this news story. "Although 2,300 Toyota employees will remain in California, none will be at the Torrance facility."

For Torrance, a city of 147,000 and eighth largest in Los Angeles County, the debate as to whether California is business-unfriendly or not is irrelevant now.

"Figuring out how Torrance can fill the 101-acre hole the giant auto maker will leave behind when it vacates its sprawling campus," write Tamara Audi and Mike Ramsey, is one of many new concerns that Mayor Frank Scotto must deal with now that the city's largest employer with 5,300 workers, unexpectedly announced their relocation to Plano, Texas, population 272,000, "located within the metropolitan area commonly referred to as the Dallas–Fort Worth metroplex" (per Wikipedia).

As to whether the Toyota relocation says anything about California's business climate, the answer is clear.

California was never considered in the search for a new headquarters site, these people said, but its location—far from Toyota's other operations in the U.S.—was a bigger factor than its business climate, which has been criticized by some for its high taxes and myriad regulations.

In fact, a more relevant question would be why Toyota chose Texas over Atlanta, Charlotte., N.C. and Denver, as those cities were Plano's competition, according to those familiar with the search.

I'm sure it didn't hurt that "Texas offered Toyota $40 million to move, part of a Texas Enterprise Fund incentive program run out of the governor's office. At $10,000 a job, it was one of the largest incentives handed out in the decade-old program and cost more per job created than any other large award," write the Journal's Mike Ramsey and Joseph B. White (article also available in MarketWatch).

But If we shift the discussion to Texas - whether it is "business friendly" and attractive to companies like Toyota, the answer is also clear.
(Jim Lentz, chief executive of Toyota's North American operations) has cited Texas' business-friendly climate, as well as no personal income tax. He also said California wasn't offered an opportunity to counter Texas' offer, saying to do so would have been "disingenuous" since the decision to leave that state had been made.
A May 1 Los Angeles Times editorial addresses the charge that California is unfriendly to business from a different angle. Noting that "the state continues to attract more manufacturers and create more jobs than almost any other," it advises "lawmakers to stop acting as if businesses have nowhere else to go."
Unlike Texas, however, California can no longer absorb the kind of growth that characterized the state through the 1980s. Its enormous population strains its infrastructure and safety-net programs, demanding ever-larger investments in roads, water, schools and healthcare. Its topography traps smog, requiring costlier efforts to clean emissions. The results are a cost of living [sixth highest in U.S. per CNBC rating] and a cost of doing business that are among the highest in the country.
The Tax Foundation map shows that California has a corporate income tax rate of 8.84%, tenth highest in the country, while Texas has none.
Many in Texas might take issue with the editorial's first assertion - not that California can't absorb the growth, but their claim that Texas can, as was made clear here earlier: Texas is not investing in the water and transportation infrastructure to accommodate the rapid growth in jobs and people.

Wednesday, April 30, 2014 in The Wall Street Journal - U.S. News

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 16, 2025 - Diana Ionescu

Green vintage Chicago streetcar from the 1940s parked at the Illinois Railroad Museum in 1988.

Chicago’s Ghost Rails

Just beneath the surface of the modern city lie the remnants of its expansive early 20th-century streetcar system.

July 13, 2025 - WTTV

Blue and silver Amtrak train with vibrant green and yellow foliage in background.

Amtrak Cutting Jobs, Funding to High-Speed Rail

The agency plans to cut 10 percent of its workforce and has confirmed it will not fund new high-speed rail projects.

July 14, 2025 - Smart Cities Dive

Worker in yellow safety vest and hard hat looks up at servers in data center.

Ohio Forces Data Centers to Prepay for Power

Utilities are calling on states to hold data center operators responsible for new energy demands to prevent leaving consumers on the hook for their bills.

July 18 - Inside Climate News

Former MARTA CEO Collie Greenwood standing in front of MARTA HQ with blurred MARTA sign visible in background.

MARTA CEO Steps Down Amid Citizenship Concerns

MARTA’s board announced Thursday that its chief, who is from Canada, is resigning due to questions about his immigration status.

July 18 - WABE

Rendering of proposed protected bikeway in Santa Clara, California.

Silicon Valley ‘Bike Superhighway’ Awarded $14M State Grant

A Caltrans grant brings the 10-mile Central Bikeway project connecting Santa Clara and East San Jose closer to fruition.

July 17 - San José Spotlight