Texas to Pay $10,000 for Each Toyota Job

State Incentive Helps Land Car Maker’s North American Headquarters.

Toyota Motor Corp. is starting a multiyear overhaul of its North American operations, consolidating several units at new headquarters in Plano, Texas, that will house 4,000 employees now spread across separate marketing, manufacturing and finance locations.

The moves disclosed on Monday will be the most significant changes in decades to the way the world’s largest auto maker does business in its single biggest market. The decision also has political and economic repercussions for the states of California, which will lose as many as 3,000 jobs, and Texas, which will gain roughly 4,000 jobs.

Jim Lentz, chief executive of Toyota’s North American operations, said the decision to consolidate in the Dallas suburb stemmed from conversations he had with Toyota CEO Akio Toyoda about a year ago, soon after Mr. Lentz got his current job.

Toyota’s current sales and marketing unit headquarters in Torrance, Calif., was too far from the auto maker’s factories in Kentucky, Indiana, Mississippi and Texas and from its engineering center in Ann Arbor, Mich., Mr. Lentz said. Erlanger, Ky., where Toyota’s North American manufacturing operations are now based, was too small, he said.

Toyota narrowed its preferred locations to Denver, Atlanta and Charlotte, N.C., before choosing the Dallas-Plano area, a person familiar with the matter said. Real-estate firm Jones Lang LaSalle JLL +1.54% handled the search.

“We weren’t pursued by Texas,” Mr. Lentz said. “It isn’t a Texas versus California discussion.”

California’s business climate and costs of living have become sensitive topics in the state, especially in light of Texas Gov. Rick Perry’s efforts to woo employers from the Golden State with promises of lighter regulation and lower taxes.

Japanese auto maker Nissan Motor Co. moved its U.S. headquarters to Nashville, Tenn., from California in 2006. Some high-level Honda Motor Co. employees left the state last year for Ohio. Honda said the company had no plans to move its U.S. sales and marketing headquarters out of the Los Angeles area.

Texas offered Toyota $40 million to move, part of a Texas Enterprise Fund incentive program run out of the governor’s office. At $10,000 a job, it was one of the largest incentives handed out in the decade-old program and cost more per job created than any other large award. Last year, Texas spent about $6,800 to lure each of 1,700 Chevron Corp. positions to Houston and $5,800 for each of 3,600 Apple Inc. jobs shifted to Austin.

“It is the biggest win we’ve had in a decade,” Mr. Perry said in an interview. “Ten years of tax, regulatory, legal and educational policies have now put Texas at the top of the heap.”

California Gov. Jerry Brown didn’t address the Toyota decision specifically but took note of criticism directed at the state. “We’ve got a few problems, we have lots of little burdens and regulations and taxes, but smart people figure out how to make it” in the state, he said at an event in Lancaster, Calif., with Chinese electric-vehicle maker BYD Co.

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