As widely expected, Nissan Motor announced on Thursday night (10 November) that it is moving its North American headquarters and nearly 1,300 jobs from California to the Nashville, Tennessee, area to take advantage of the lower cost of doing business in the southeast.

“The board of Nissan decided to relocate our North American headquarters, and we’re coming to Tennessee,” Nissan CEO Carlos Ghosn reportedly said at a news conference at the state capitol attended by state governor Phil Bredesen and other top officials.

According to The Associated Press (AP), Nissan headquarters, currently based in Gardena [south of Los Angeles], California, will relocate to Williamson County, a suburban area south of Nashville.

Industry analysts told the news agency the move could threaten Southern California’s dominance as a hub for Japanese automakers and strengthen the southeast’s standing as a major vehicle manufacturing centre.

Ghosn said the company will invest US$70 million to build a new headquarters building in Franklin, which is expected to be complete by 2008. The first employees will transfer to Tennessee next summer and work out of temporary offices in downtown Nashville.

AP said the nearly 1,300 people employed at Nissan’s Los Angeles-area headquarters work in management, marketing, advertising, sales and distribution and dealership development for North America. Ghosn said he expects about half the California employees will move to Tennessee, but was not sure of the exact number.
Ghosn cited lower real estate and business taxes as major reasons for the move.

“The costs of doing business in Southern California are much higher than the costs of doing business in Tennessee,” he said, according to The Associated Press.

Tennessee government officials said they offered Nissan an incentives package, which included tax breaks and other credits, but did not give a total amount.

California governor Arnold Schwarzenegger told AP he talked with Nissan officials two or three weeks ago when he heard of the potential relocation, but learned the company had been considering the move for two years.

“I wanted to find out `What is it that you need to stop you from moving to another state?'” he told The Associated Press on Thursday. “And they said ‘Look, the things that we need are so overwhelming that you can never provide them because you would need to change a tremendous amount of laws, the tax code and so on.’

“So it’s just, the other place, the other state is just so much more competitive, (Nissan) already made that determination,” he said.

Rumours of a Nissan headquarters relocation intensified over the last few weeks. There have been reports that as many as 80% of the California staff will refuse to relocate to Tennessee, and that many have approached other import-brand car companies with headquarters in the Los Angeles/Orange County area – these include Mazda, Nissan, Toyota, Honda, Mitsubishi, Hyundai and Kia.

The Associated Press noted that Nissan currently has a manufacturing headquarters in Smyrna and an engine plant in Decherd and employs more than 7,000 people in Tennessee. Nissan’s plant in Smyrna was built in 1980 as the company’s first factory outside Japan [– it initially built small pickup trucks]. Altima cars, Xterra and Pathfinder sport utility vehicles and Frontier pickups are currently made there.

AP said Nissan was one of the first of several major carmakers – Mercedes, BMW, Saturn, Toyota and Hyundai – to build plants in the southeast – the region remains one of the cheapest areas to do business in the country because of low taxes, wages and real estate costs.

JD Power and Associates automotive analyst Tom Libby told The Associated Press that Nissan’s relocation could make the other Japanese car makers in southern California.

Los Angeles Economic Development Corp. chief economist Jack Kyser told the news agency another 1,500 jobs would be lost outright or affected by the move, including accounting services, legal service, advertising and similar industries.