Toyota Move Depended on Internal Study Rather Than Perry

Texas Governor Rick Perry has crisscrossed the U.S. to persuade big employers to bring jobs to the second most-populous state.

For all the Republican’s efforts, Toyota Motor Corp. (7203)’s North American chief executive officer, Jim Lentz, said the Japanese automaker relied on its own in-house analysis of 100 cities, rather than sales pitches, in deciding to move its headquarters to the Dallas area from Southern California.

Perry, 64, who touted Texas job growth as he sought the presidency in 2012, offered $40 million in incentives to help lure the world’s largest carmaker to bring as many as 4,000 jobs to a sprawling office park in suburban Plano. That may help the state’s longest-serving governor if he decides to run again for the White House in 2016.

“Perry has now got the proof in the pudding that Texas has become a huge jobs magnet,” Mark McKinnon, a former adviser to Republican President George W. Bush, said in an e-mail. “Every candidate for president needs a solid narrative. Perry now has one.”

It’s a narrative that Perry can contrast with higher costs and tougher regulations in California, where Governor Jerry Brown, a 76-year-old Democrat, won voter approval of income- and sales-tax increases in 2012.

Photographer: Scott Eells/Bloomberg

Rick Perry, governor of Texas. Perry offered $40 million in incentives to help lure Toyota Motor Corp, the world’s largest carmaker, to bring as many as 4,000 jobs to a sprawling office park in suburban Plano. Close

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Photographer: Scott Eells/Bloomberg

Rick Perry, governor of Texas. Perry offered $40 million in incentives to help lure Toyota Motor Corp, the world’s largest carmaker, to bring as many as 4,000 jobs to a sprawling office park in suburban Plano.

“The move reinforces the idea that California is a bad place to do business,” said John Pitney, a political science professor at Claremont McKenna College in Claremont, California. “Rick Perry will exploit the move. It is a great way to tout the Texas business climate, and it could give him a talking point in a 2016 presidential campaign.”

Missouri, Illinois

For Perry, who has taken publicized trips to California, Missouri, Illinois and New York to lure potential employers, Toyota’s move takes some of the air out of dismissive comments. Brown had mocked a Texas ad campaign to lure jobs from his state as a “burp, barely a fart.”

Toyota’s Lentz said the Plano location offered better proximity to manufacturing operations in Texas, Mississippi, Alabama and Kentucky.

Perry’s trips to recruit companies in California weren’t a factor in the move, Lentz said. He said he spoke to Perry for the first time yesterday, the same day he informed California officials of the decision.

“When we made the decision that we weren’t going to go to one of our three existing locations, our search started with about 100 different cities,” Lentz said in an interview. “We put together a decision matrix that put together economic considerations, business considerations, associate considerations.”

‘Aggressive Funnel’

“The first pass through that funnel eliminated 75 of those 100. We put a more aggressive funnel in place and that 25 went down to seven,” he said, without naming the other locations.

“Four of them we considered primary locations; three of them we considered secondary locations,” Lentz said. “We visited all four of those primary locations and it became quite clear that Texas, Dallas, Texas, was the primary choice.”

“So it really had nothing to do with a Texas-versus-California decision,” he said. “Once California was out of the decision, it was really Texas versus three other locations.”

Brown didn’t take questions yesterday at a public event in Lancaster, California.

Brook Taylor, a spokesman for the Governor’s Office of Business and Economic Development, defended Brown’s track record in a statement citing expansion by Roche Holding AG (ROG)’s Genentech unit and Amazon.com Inc. (AMZN) “in part, because of pro-job policies pushed by the administration.” Ford Motor Co. (F), Volkswagen AG (VOW) and Nissan Motor (7201) Co. continue to invest in California and the state is at “the center” of new electric vehicles, he said.

Consolidating Operations

Toyota, based in Toyota City, Japan, will be consolidating North American operations in a new headquarters in Plano, located 20 miles (32.2 kilometers) north of Dallas.

Plano officials became aware of the company’s interest and began working to win the deal three months ago after it was brought to them by Perry’s economic development officials, said Steve Stoler, a city spokesman. While the city was competing with others, Stoler said he didn’t know the names of those involved.

Stoler declined to detail the incentive package offered by the city, saying it would be voted on by the city council next month. He said he expected the plan would be approved.

‘Strong’ Relationship

Toyota’s corporate presence in the state got a jolt in 2006 when it opened a plant to build pickup trucks. Perry has maintained “a strong working relationship” with the company since then, said a Perry spokesman, Lucy Nashed.

Perry promotes the state’s policies for keeping taxes low, regulation limited and fostering a “workforce that is skilled and ready to do any job,” she said.

“The move accentuates some of the things that Perry says are generating results,” said Mike Berry, president of Ross Perot Jr.’s Hillwood Properties, a development firm based in Fort Worth. He cited the Dallas-Fort Worth International Airport, the region’s housing stock and work force as selling points for Toyota.

“You just don’t see economic development announcements of this size more than about once every decade,” Berry said.

To contact the reporters on this story: Darrell Preston in Dallas at dpreston@bloomberg.net; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Michael B. Marois in Lancaster, California at mmarois@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Pete Young, Alan Goldstein

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