Torrance - The industrial exodus from California struck Torrance Monday when the city's mayor received a call from Toyota, a major employer, bidding him adios.
Torrance Mayor Frank Scotto told reporters outside City Hall Monday that he was blindsided by Toyota's announcement that the carmaker would move headquarters to Plano, Texas, according to a Los Angeles Times report out Monday.
The community outside of Los Angeles was home to Toyota Motor Corp.'s North American sales headquarters.
Meanwhile, at 5.5 percent, Texas has the 17th lowest unemployment rate in the U.S.High corporate taxes and unionized labor in California have sent companies packing in recent years, and Toyota's exit is a major blow to Torrance autoworkers and associated local merchants and manufacturers.
According to Scotto, administrators from Toyota called him Thursday and told him to expect a call at 9:45 a.m. Monday regarding a key corporate decision affecting operations. They called, and the news was terrible for workers and families depending on good-paying jobs at Toyota headquarters.
Just feet away from Scotto, Pat Simpson, a Torrance resident for over 60 years, held her head in her hands. "Why do they want to tear this place apart?" Simpson, 72, asked, according to the Times report.
Some say Democratic leadership in California that includes control of the Senate, House and governor's mansion is disconnected from local issues like the troubling flow of jobs from the state.
Torrance is just the latest example of corporate bleed from blue states like California and New York, which was also affected by Toyota's pullout. The company is also cutting back operations in New York and relocating them to Texas.
"At first I thought it was about something else," Scotto said. "Even this morning, despite all the rumors this weekend, we thought it was only going to be part of Toyota moving - not just everything." The decision, he said, was "sad news."
It was unclear why the mayor was caught flat-footed on such an important industry decision.
To put the move in perspective, Torrance has a population of 147,000 and the two largest employers in the city are Toyota and Honda - each employee about 4000 people. According to city estimates, Toyota's move to Texas will cost the city about $1.2 million in annual tax revenues.
Beyond the obvious economic losses, Mayor Scotto says the emotional toll and wider economic impact is more far-reaching.The mayor's son-in-law works for Toyota and his decision about Toyota will determine whether Scotto's daughter and grandchildren will move to Texas. "It's going to affect tens of thousands of people," he said.
Toyota employs about 5% of the population and like many California municipalities, Torrance carries a relatively large long-term debt of $121 million versus an annual budget of $271 million.
The carmaker's impending move could affect taxpayer's ability to service such a relatively enormous government debt.
Scotto claims the city has a short list of companies similar to Toyota that could replace the Japanese carmaker, however, he did not give further information about any entity that might fill Toyota's 101–acre corporate headquarters.
The mayor left little hope that there was anything the city could do to prevent Toyota from pulling out.
"The train has already left the station," Scotto said, adding that the state of California, not a small city such as Torrance, was responsible for large manufacturers like Toyota, leaving the Golden State.
As high taxes and bureaucracy take their toll on industry in California, small business owners are hit hard.
Frank Portillo, part owner of Los Chilaquiles Mexican Grill that is located close to Toyota headquarters put it this way: "The taxes are lower in Texas. There are fewer regulations. It's cheaper for a company there. Why wouldn't they leave California?"