North Carolina offered $100M to lure Toyota headquarters
Automaker says it's decision to move to a Dallas suburb was about much more than state incentives.
RALEIGH, NC — North Carolina business recruiters offered Toyota more than $100 million in incentives for the world’s largest carmaker to move its North American headquarters to Charlotte rather than a Dallas suburb, but still lost out to a Texas offer half that size.
Only about a quarter of the nearly 3,000 jobs paying an average of $105,000 a year were expected to move from Southern California, meaning a golden but missed job-creating opportunity for the region, according to North Carolina recruiting documents and emails released to The Associated Press in response to a public records request.
State law requires the release of recruiting documents after a company has announced a decision on its preferred location, which Toyota did four months ago. Since Gov. Pat McCrory took office last year, state agencies often take many months to comply.
North Carolina’s offer had to be significantly larger than Texas to be competitive because the Lone Star State has no corporate or income tax, Commerce Secretary Sharon Decker said in an interview last week. Companies on the move compare the total cost of its new site and the total financial package offered to coax them, Decker said.
“Incentives were just one of many considerations” Toyota considered including geography, transportation, the cost of living and educational opportunities, Mike Michels, a spokesman for Torrance, California-based Toyota Motor Sales U.S.A. Inc., said in an emailed statement. Toyota’s manufacturing plants are in Texas, Kentucky, Mississippi and Indiana.
“We chose a location that better supports our diverse geographic footprint, in a time zone that allows us to communicate better with most of our operations, and has direct flights to all our operations,” Michaels said.
The availability of direct flights between the US and Japan was a key element. Toyota executives travel to and from Asia hundreds of times a year, Decker said. Charlotte Douglas International Airport has no direct flights to Asia. Toyota’s new headquarters in Plano, Texas, is near the Dallas/Fort Worth airport, where American Airlines has direct flights to Tokyo from its largest hub and headquarters.
“It just underscores it’s not just about incentives,” Decker said.
But Decker and other business boosters are calling for McCrory to call back the General Assembly, which concluded its two-year meeting session less than two weeks ago, to consider expanded incentives that weren’t approved by lawmakers this year. That includes a $20 million “Job Catalyst Fund” of upfront taxpayer money that could be disbursed to selected corporations solely at Decker’s discretion.
Texas Gov. Rick Perry touted the role that $40 million offered to Toyota from the taxpayer-funded Texas Enterprise Fund played in the deal. Plano officials kicked in an additional $6.75 million incentive package.
The fund, a Perry pet project, and another one like it have given selected businesses a combined $600 million. But the funds have been criticized by Texas conservatives who object to state officials picking winners and losers. North Carolina conservatives inside and outside government have voiced similar complaints.
The conservative interest group Americans for Prosperity last week urged McCrory to ignore requests to call the General Assembly into a special session to consider legislation increasing business incentives, which the group calls “corporate welfare.”
But state business recruiters say they’ve learned from other efforts to lure corporate HQs that “personnel relocation expense and severance costs are one of the largest expenses for the company. Thus ‘up front’ cash becomes a major item in negotiations and we will have to address that,” Stewart Dickinson, who directs the state office putting together money to lure jobs to the state, wrote to Decker in February.
Decker said she can’t say whether North Carolina might have landed the Toyota jobs if she had authority to give upfront money to companies looking for the best deal. But North Carolina business recruiters need the option because other states have similar programs, Decker said.
“Maybe it would help to throw into the pot (in situations) when we’re close,” Decker said.
The new Toyota headquarters will bring together about 2,900 employees and up to another 1,000 contract workers from sales, marketing, engineering, manufacturing and finance.
Toyota’s headquarters search started with a list of 100 possibilities that it trimmed to four, Jim Lentz, Toyota’s CEO for North America, said in April. The final four locations were visited, but “it became quite clear that the Dallas metro area was far and above the best choice,” Lentz said. He wouldn’t disclose the other three finalists.
It’s not clear if McCrory, Decker or other North Carolina recruiters were ever told the company they were courting was Toyota. Bennett, the real estate consultants, said his firm’s client was “extremely cautious about confidentiality.” Decker said the choice finally came down to Plano versus Charlotte.
“Crap but not earthshaking,” Dickinson wrote on the day Toyota’s move to Texas was announced.
© 2014 The Canadian Press