It Makes Sense For Toyota To Leave California For Texas
4/27/2014 @ 9:28PM
For Japanese auto brands, the logic of keeping their U.S. sales and administrative arms in California is breaking down under the outrageous penalties of conducting business in the Golden State and the changing dynamics of the North American automotive industry. So Toyota is leaving, according to Automotive News.
And where is Japan’s biggest automaker relocating its sales and marketing operations in America? Why, North Texas, of course. The move to Plano, Texas, will involve most of the 5,000 managers and employees at Toyota’s current Torrance, Calif., headquarters, the magazine said.
Texas Gov. Rick Perry apparently didn’t even have to make a recruiting trip to southern California to get Toyota to do this, although he has helped lure plenty of companies with that gambit over the last several years.
And yet Texas has scored one of the biggest prizes so far in its very focused, state-on-state battle with the administration of Gov. Jerry Brown to get plum companies now headquartered in California to abandon the bluest state for the reddest one.
The Forbes article continues to note that there are solid business reasons which have nothing to do with the business-unfriendly climate in the Pyrite State, but when you pile on those additional government burdens, the incentives for companies which can move to move increase.
In the annual Chief Executive magazine “Best States / Worst States” ranking that surveys CEOs for their opinions, Texas has been holding on to the No. 1 spot for a while; California seems permanently relegated to No. 50.
As Automotive News put it, “Despite the deep, creative talent pool in greater Los Angeles, doing business in California has become more expensive for companies and their workers.” Bestplaces.net said that the cost of living for employees is 39 percent higher in Torrance than in Plano, and housing costs are 63 percent lower in Plano.
What does that mean? Well, it means that, for Toyota executives who have to move from southern California to the Lone Star State, they will see what is, in real terms, a 39% raise. When they sell their houses in California, they’ll wind up being able to by a house 2/3 larger for what they have been spending, or, looked at another way, be able to simply buy, with cash, just as good a home in Plano as the one on which they were making mortgage payments in California.
Of course, some won’t be able to make the move, due to family commitments or spouses’ careers, and that’s tough on them. Some will wind up losing their jobs due to this.
Would it be uncivil of us to point out that we told you so?
We have said before that if liberals really understood economics, they wouldn’t be liberals. Businesses exist to make money for their owners and shareholders, and states and cities which view businesses as milch cows for taxes rather than creators of jobs for their citizens are going to, eventually, cause businesses which can leave for friendlier areas to leave, and inhibit the creation of new businesses. Eventually this will have a negative effect on the number of jobs available for the public.
And you can see the effects in hard numbers: the March unemployment rate for Texas was 5.5%, well below the national average, while California’s was 8.1% and Illinois’ was 8.4%.1 It doesn’t take a PhD in economics, like Paul Krugman has, to understand this, yet the left keep ignoring it. It’s almost as though they kind of, sort of, understand that capitalism provides jobs, but want socialism anyway.