Canadian Manufacturing

N.C. offered Toyota $100M incentive deal to woo carmaker

North Carolina's failed attempt to attract Toyota highlights the high stakes game of attracting automakers, but sometimes money isn't enough



RALEIGH, N.C.—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 last week 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 a 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, according to Mike Michels, a spokesman for Toyota Motor Sales U.S.A. Inc. 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,” Michels said.

The availability of direct flights between the U.S. 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 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.

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