Nissan moving North American headquarters to Tennessee

NASHVILLE, Tenn. -- Nissan Motor Co. announced Thursday it is moving its North American headquarters and nearly 1,300 jobs from California to the Nashville area to take advantage of the lower cost of doing business in the South.

"We're coming to Tennessee," Nissan CEO Carlos Ghosn told a state Capitol news conference attended by Gov. Phil Bredesen and other top state officials.

Industry analysts say the move from Gardena, Calif., to the fast-growing suburb of Franklin, Tenn., will bolster the South's standing as auto center and save the company money from favorable tax incentives and the low cost of living. It could also threaten Southern California's dominance as the American hub for Japanese automakers.

"What it does is break the monopoly Southern California has had on the Asian operations. I think it will cause them to consider 'Do we have to be here, given the high cost?'" said Tom Libby, an automotive analyst with JD Power and Associates.

Nissan's Ghosn said the first employees will transfer to Tennessee next summer and work out of temporary offices in downtown Nashville until the $70 million headquarters is completed, expected by 2008.

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 he's not sure of the exact number.

"Make no mistake about it, this is a great day for all of us in Tennessee," Bredesen said.

Nissan already employs some 7,000 people in Tennessee, most at a plant in Smyrna that was its first outside Japan when built in 1980. It builds Altima cars, Xterra and Pathfinder sport utility vehicles and Frontier pickups there, and also has an engine plant in Decherd.

Ghosn said at least five sites had been considered by Nissan before the company decided on Tennessee. Dallas, where Nissan employs about 800 people in a finance operations center, also had been mentioned as a potential new headquarters site.

A former Nissan executive who led the Japanese carmaker's U.S. expansion in the 1950s had advised the company it would be making a big mistake to leave California. Yutaka Katayama, known as "Mr. K", said in a recent letter to Ghosn that a move would hurt the company's image and prestige.

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.

Jack Kyser, chief economist at the Los Angeles Economic Development Corp., called the move a sad day for Southern California.

He said another 1,500 jobs would be lost outright or affected by the move, including accounting services, legal service, advertising and similar industries.

A significant number of current Nissan workers might not make the move to Nashville, Kyser said. Two-income families, for instance, might find it hard to find comparably high-paying jobs in the Nashville area, he said.

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

The relocation announcement comes as Nissan continues a robust growth track after losing money for several years.

Before setting up an alliance with Renault SA of France in 1999, Nissan was on the verge of collapse but has since come back under the leadership of Ghosn, sent in by Renault, who closed plants and cut costs.

Nissan has forecast a sixth straight year of record profit for the full fiscal year through March 2006.

The company is expecting about $4.6 billion net profit for the fiscal year ending March 31, 2006, on $80.8 billion in sales.