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Toyota withdrawal an economic blow to California city

Toyota Motor Corp dealership in Richmond, California.
David Paul Morris | Bloomberg | Getty Images
Toyota Motor Corp dealership in Richmond, California.

Toyota Motor's decision to move its North American sales headquarters from California to Texas was met by disbelief in Torrance, this Los Angeles exurb where the Japanese car manufacturer has run its U.S. operations since 1982.

Torrance Mayor Frank Scotto, looking grim, said outside city hall on Monday that he had been blindsided by the move. A few feet away sat Pat Simpson, a Torrance resident for over 60 years, with her head in her hands. "Why do they want to tear this place apart?" Simpson, 72, asked.

Scotto said his first inkling of Toyota's decision to move to Plano, Texas, came last Thursday, when he was told by Toyota to expect a phone call at 9.45 a.m. on Monday - just before the company was to make its decision official.

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"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".

The two biggest employers in Torrance, which has a population of 147,000 according to city figures, are Toyota and Honda. Both have about 4,000 employees. Losing Toyota will mean an annual loss of $1.2 million in tax revenue, Scotto said, but the emotional toll and wider economic impact will be much bigger, he said.

Scotto's son-in-law works for Toyota so the mayor faces the prospect of his daughter and grandchildren moving to Texas. "It's going to affect tens of thousands of people," he said.

About five percent of the city's workforce is employed by Toyota. Last year the city had an annual budget of $271 million, and $121 million of long-term debt.

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Scotto, mayor since 2006, thanked Toyota for all it had contributed to the city, including a recent $500,000 donation to help build a new sports complex a few blocks from city hall. Scotto said it is to be called the Toyota Sports Complex, although the sign hasn't been put up yet.

As he spoke to reporters and a small crowd of residents, his words were interrupted by the sound of breaking glass and crunching metal from an auto accident 50 feet away. It was that kind of morning in Torrance.

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Whether the city can replace Toyota, and fill the 101-acre business park and headquarters it will leave behind, remains to be seen. Scotto said the city had a short list of companies similar to Toyota that are being courted to replace the Japanese car maker.

But conceding that the battle to keep Toyota was lost before it had even begun - "the train has already left the station," Scotto said - he also said it takes the state of California, not a small city such as Torrance, to stop large manufacturers from leaving the Golden State.

Frank Portillo, a co-owner of Los Chilaquiles Mexican Grill next to the Toyota headquarters said he did not blame Toyota, although he might lose business himself. "The taxes are lower in Texas. There are fewer regulations. It's cheaper for a company there. Why wouldn't they leave California?"