Civic leaders and local officials working to keep Nissan Motor Co.’s U.S. headquarters and its 1,300 jobs in Gardena appear to face an uphill battle.
Nissan has been paring back costs since 1999, when France’s Renault SA bought a $5.4 billion stake in the Tokyo-based automaker and installed Chief Executive Carlos Ghosn to turn things around. Ghosn’s two-pronged approach reinvigorating the product lineup while searching for inefficiencies has brought Nissan from the brink of bankruptcy to become the fastest-growing Japanese car maker.
“There is a study going on right now involving the possible move of Nissan’s headquarters,” spokesman Fred Standish confirmed last week. “We’re not leaving any stone unturned.”
The incentive package taking shape will likely be in the tens of millions of dollars in tax and energy rebates, traffic improvements and work training. But auto analysts question whether it will be enough to keep Nissan from moving to Smyrna, Tenn.
Nissan has its finance company in Dallas, and its purchasing division and biggest plant already are in Smyrna. Nissan’s design center, the key element in keeping up with Southern California’s auto industry trends, is in La Jolla.
“Even if they move the corporate headquarters out, they won’t lose that,” said Bob Kurilko, vice president of corporate strategy at Santa Monica-based automotive research firm Edmunds.com.
Locally, there is concern that other Asian carmakers with U.S. headquarters in Southern California might find Nissan’s strategy a desirable model. “The Japanese business community in Southern California is watching this closely,” said Jack Kyser, senior economist for the Los Angeles County Economic Development Corp., which is leading the effort to keep Nissan in place.
Other players in the effort include the L.A. County Board of Supervisors, Southern California Edison Co., the City of Carson and the Workforce Investment Board, which administers funds locally for the U.S. Department of Labor. The group plans to present the package to Nissan this week.
Nissan established its Gardena center in 1960, two years after it started selling Datsun cars in the U.S. It became Nissan’s U.S. headquarters in 1990. There are 12 buildings on a campus that sits at the crossroads of Gardena, Carson and Los Angeles.
Beyond bottom-line considerations, a move out of Southern California could have long-term impacts. “They’d be taking away this amazing, creative, forward-thinking office,” said Rebecca Lindland, associate director of North American auto sales at research firm Global Insights Inc. in Boston. “They would lose so many people who could go anywhere else Hyundai, Kia, Mazda, Toyota, Honda, Mitsubishi. There are countless opportunities in L.A. I really think they’ll stop and re-evaluate.”
When Nissan first confirmed that it was considering a shutdown of its Gardena operations, several executives offered their resignations, and representatives of other Asian car manufacturers quickly began calling Nissan employees they wanted to recruit, according to several analysts and an official of the LAEDC.
Nissan officials would not comment. Officials at both Toyota Motor Corp. and Honda Motor Co.’s U.S. units said they maintain steady employment year over year and are not actively recruiting.
Kurilko downplayed any concerns surrounding the loss of valuable Nissan personnel. He said that most top-level executives in Gardena have so much of their careers vested with the corporation that they would likely move with the headquarters or take a retirement package.
He also dismissed the idea that Nissan would be followed by Honda or Toyota, which have finance units here, or Korean carmakers, which are tied to L.A.’s port complex.
Nissan’s possible move comes at a time when its vehicle sales are growing faster than any other major car manufacturer. For the first quarter ended June 30, worldwide vehicle sales rose to $19.3 billion from $17 billion for the like period a year earlier.
In September, Nissan sold 93,540 vehicles in the United States, its strongest market, up 16.4 percent from the year-earlier period. Passenger car sales rose 26.5 percent.
Ghosn wants to lower costs. In 1999, when Renault bought its 38.8 percent equity stake, Nissan was near bankruptcy. It had an uninspired line of cars, and only three of the 48 models were profitable. Nissan lost $6.46 billion in the U.S. that year; one year later, the U.S. unit earned $2.7 billion.
Ghosn’s revival efforts brought the company back into the black within 18 months by, among other things, the elimination of 23,000 jobs in Japan.
Nissan began investing heavily in design and introduced more stylish cars. Among the hot sellers: its luxury Infiniti sedans, its performance 350Z sports car and its full-sized Titan pickup.
Brazilian-born Ghosn, who also was named Renault chief executive last April, is now aiming to increase global vehicle sales to 4.2 million units and maintain the highest profit margins among major carmakers. He also wants to achieve an average return on invested capital of 20 percent or more.
That provides plenty of motivation to consider Tennessee, which in addition to lower labor costs, offers corporate relocation benefits that include property tax credits, a state tax credit and funds for training employees.
