Thursday, August 10, 2006

Nissan LA vs. Nashville, and what it means for Houston

The LA Times recently had an interesting piece on the workers at Nissan's North American headquarters and their decision to either move to Nashville with HQ or quit and stay in LA.
With so many workers opting to relocate to Tennessee, the message may be that California's charms aren't what they used to be.
...
"I wanted to move. I was frustrated with L.A. It's too crowded, there's not enough greenery. It was overwhelming. There's so much stress there. I wanted to get out,"
...
Whatever workers' reasons for going, Nissan's 42% employee retention rate sends a message to businesses in California: The Golden State's charms aren't what they used to be.

"There is a bit of that attitude, especially at the state level, that California is just so great that no one would ever want to leave — that its natural features, creative services and the quality of its higher education system are so good they're enough to get the job done," said Greg Whitney, vice president of business development for the Los Angeles County Economic Development Corp.

Nissan's experience argues against that conceit, he said. Typically, a company moving its headquarters 2,000 miles, especially from a major urban center to a smaller, more rural region, is fortunate to hang on to 25% to 30% of its workforce.

These days, though, California's schools are no longer among the nation's best, its infrastructure is deteriorating from a lack of funds for upkeep, and an ever-increasing population is crowding its cities and jamming its highways.

Companies usually decide to move for one reason — to save money — whereas employees have individual, often complex reasons, Whitney said.

"But the world is becoming more homogenized," he said, "and the fact that Starbucks are everywhere helps make moving a lot easier these days."
...
California employees who chose to make the move are relocating to an area that has an international airport and 19 colleges, including Vanderbilt University. It is within 700 miles of 60% of the U.S. population and is closer to Nissan operations in Canada and Mexico than is the Gardena site.

"This whole Nashville area is about where Atlanta was 20 years ago, so people moving here now are getting in on the front end of a big boom," said Grant Hammond, a broker and relocation specialist with Cindy Jasper's HummerHomes Realtors in Franklin.

For single mother Johnston and her three daughters, ages 11 to 17, the move was a chance to start a new life in vastly improved surroundings.

In Torrance, her family was squeezed into a 1,064-square-foot home she rented from her mother, who has moved to Tennessee as well.

In Franklin, the family was able to trade up to a 4,000-square-foot, two-story, all-brick home with five bedrooms, four bathrooms and a quarter-acre lot. Instead of power lines and neighbors' fences, the views are of tree-covered hillsides.

And at $449,000, Johnston said, the house cost $217,000 less than what her mom received for selling the Torrance place.

What made the case for Hedrick, the product manager, was turning off Interstate 65 and onto the Cool Springs offramp "and realizing that you could really be anywhere USA."

"There's a great, big regional shopping mall, and most of the stores and restaurants are the same ones we see in California," he said. "Yet a few miles away you're in downtown and there's lots of local color too."

Hedrick said several visits during the winter also helped him and life partner Kevin Rogers make the decision to move to Franklin — as it turns out, to the same development as Johnston — from the Fairfax Avenue area of Los Angeles.

"We're giving up dim sum and first-run independent films, 24-hour grocery stores. There'll be no more morning coffee at the Newsroom with Robert Downey Jr. sitting at the next table, and we'll miss sunset walks along the strand in Manhattan Beach," Hedrick said.

"But we're going to a place with spectacular scenery, rivers that don't have concrete banks, much more affordable housing, a lot less traffic and pretty close proximity to a lot of major cities, like Atlanta and Chicago, that are just a few hours away by car or an hour by plane."

Hedrick said he and Rogers — who quit his job as a scheduler and planner for a small manufacturer — were a little apprehensive about moving because of Tennessee's location in the heart of the so-called Bible Belt.

"But we have been there a lot now, and we've found the people to be — I know it sounds trite — but, well, just really friendly."
Virginia Postrel gives her opinion here, expanding on the point about the world becoming homogenized, where even small towns have access to all sorts of chains and amenities.
When big cities no longer have a monopoly on amenities and niche retailing, whether because of chains or the Internet, they have to worry about quality of life issues they've previously ignored. Los Angeles discourages new housing and road construction, while the rest of the Sunbelt generally encourages both. People will move. The weather is great in L.A., but Nashville and Dallas aren't Buffalo.
We're probably not quite as scenic as Nashville, but I think a lot of the points could also apply to Houston, including the friendly people. While the run-up in housing prices on the coasts has been a boon to the homeowners, I think it's cut off wide swaths of the U.S. from consideration by expanding or relocating companies. You almost never hear of a company moving to a place where it will be significantly more expensive for their employees. I believe our continuing affordability along with some great revitalization in the last few years (like downtown) have made Houston substantially more competitive in attracting new jobs, especially those energy holdouts like Citgo from Tulsa. The Port expansion seems to be pulling in its share too. And companies that may have feared leaving the coast in the past because too many employees might not come along, might reconsider with the Nissan example and the powerful carrot they can now dangle to employees: cash out half your home equity and get a bigger, nicer place in the new location with the other half. Nissan might just be the beginning of a very large, growing wave...

14 Comments:

At 9:31 AM, August 11, 2006, Anonymous Anonymous said...

We have our own challenges too, of course. Let's not forget that many of the talented people from Enron got the heck out of Houston when that company went under. And while maybe not many companies are relocating to California, many continue to be formed there, as your recent post on patents suggests.

 
At 11:19 AM, August 11, 2006, Blogger Andrew said...

Houston has alot of challenges is an understatement.
Since I have relocated to Central Florida, I have noticed news stories on Houston and Katrina's crime after effects and it doesn't put Houston in a good light.

We have a long way to go to get people to overlook, our hot and humid weather, crime and air pollution issues.

 
At 3:29 PM, August 11, 2006, Anonymous Anonymous said...

As far as bad press for Houston involving Katrina-related crime, I believe its time for our local media to act more responsible and stop reporting a person's residence from a year ago.

It doesn't really matter how a US citizen came to live in Houston. If they committed a crime, then they are a criminal. If they used to live in NOLA, Dallas, NYC or a lifelong Houstonian, who cares.

I'm sure many people across the country have a belief that NOLA gangs are roaming our city killing 5, 10, 15 people per day. And the quick-to-scare-you media plays that image up.

 
At 8:01 PM, August 11, 2006, Anonymous RedScare said...

"Let's not forget that many of the talented people from Enron got the heck out of Houston when that company went under."

I seem to recall many former Enron employees lamenting that they were tainted by their Enron employment in looking for work in Houston. Further, their was a recession about that time. Houston only added a couple of thousand jobs the entire year in 2001.

I don't think as many talented people left as may have been run off by circumstances.

As for the weather, it has only exceeded 96 degrees here once all year. In contrast, most of the country has been baking at over 100 all summer. Just how many days does Dallas have to exceed our daily high by 10 to 12 degrees before Houstonians quit whining about the heat?

There ARE hotter places, people...much hotter.

 
At 1:32 AM, August 13, 2006, Anonymous Mike said...

I don't think it's the heat or the lack of scenery that pushes most people away from Houston. I just got back here from spending two months in Boston, and the thing that blew me away through my whole ride from Hobby Airport to Spring was the utter trashiness of the place.

Litter, graffiti, billboards, crumbling, dilapidated buildings, chain-link fences, overgrown sidewalks... except in a few isolated spots, this whole city has a tawdry feel that you become immune to while living here, but that is startlingly apparent from the outside.

If I were a foreign visitor who knew nothing about this city, I would think that it was inhabited by people who had no concern for their city's appearance, and lived only for themselves. Don't take my word for it - ask any visitor whom you have ever brought here if this was not their initial impression.

 
At 10:04 AM, August 13, 2006, Blogger Tory Gattis said...

I think you see pretty much the same thing driving from the airports around large parts of NYC, Chicago, and LA.

 
At 11:48 PM, August 13, 2006, Anonymous Mike said...

No you don't - the freeways of all three of those cities are much nicer than what we have in Houston, to say nothing of the nightmare that one encounters on the local streets leaving Hobby. That is why we have an image problem, and those cities don't - because they care what they look like, and are willing to do something about it, even if it means curbing the anarchic freedom of property owners.

 
At 8:28 AM, August 14, 2006, Blogger Tory Gattis said...

I'm not sure you and I have visited the same cities. Have you driven down Cicero at Chicago Midway? Or how about past the industrial zone from Newark to Manhattan? LA freeways are lined with concrete sound walls, bland commercial development (not on feeders, but you can see it), and sickly, brown vegetation. I'm not saying we're more attractive, but we're certainly not worse.

 
At 10:34 AM, August 14, 2006, Anonymous Mike said...

I was on Cicero the other day, as well as 55th St., and while they are commercial thoroughfares, they are a lot tidier than the likes of Telephone Rd., Airport Blvd., or Broadway.

I was also on the Stevenson Expressway, and that along with every other Chicago freeway except possibly the Dan Ryan is much more aesthetically appealing than any of Houston's freeways, except for certain short stretches like the Galleria or Westchase areas.

What I remember from LA's freeways are palm trees and a total lack of the signage, weeds, and dilapidated buildings that line most Houston freeways.

Look, I'm not making this up, nor are the countless other people who have commented on this concerning Houston. We can either cover our ears and ignore it, wondering why we have such an image problem, or we can face it and do something about it.

 
At 4:22 PM, August 15, 2006, Anonymous Anonymous said...

I personally don't give a darn what the freeways look like. Should we spend our money planting palm trees next to our freeway or should we use it in ways that are actually ocnstructive to the people and the economy. Freeway aesthetics is far from my mind.

Not only that, but while the feeders may be ugly, they are very convenient and far exceed the utility of freeways in New York, Chicago, and the like.

By the way, Mike, although I've never been to LA, I've made the drive from Newark to Manhattan and O'Hare to Chicago several times, and both are nothing to write home about. Newark's chemical plants are far more heinous than any of Houston's billboards, and the drive from O'Hare is through a barren landscape.

 
At 6:27 PM, August 15, 2006, Anonymous Mike said...

Anonymous,

You are welcome to neglect freeway aesthetics if all you're interested in is utility. But for a lot of other people, the impression they give is very important.

I'm not sure if you're aware of it, but the city of Houston has this image problem that Tory has spent a lot of posts writing about. Part of the reason why we have this problem is that our roadways look tawdry and junked up. They make one feel as if they're in a city whose residents wouldn't lift a finger for the aesthetics of anything outside their private lawn. In fact, the planning committee for Super Bowl 2004 spent a lot of time trying to figure out how to direct visitors to downtown without having to see our trashy freeways, then decided it wasn't possible.

The Kennedy Expressway in Chicago is not beautiful (though I wouldn't call Chicago's northside "barren"), but it is tidy. It doesn't give one the feeling that he or she has arrived in a slovenly city the way our freeways do. I haven't been through Newark in awhile, but most New York freeways are a far cry from ours in appearance.

 
At 9:33 AM, August 16, 2006, Anonymous Anonymous said...

All right, forget Chicago. I was there once a long time ago. Barren wasn't a good word to describe it, but certainly bedraggled and industrial could apply. Either way, Newark is crap.

 
At 8:22 PM, August 16, 2006, Anonymous Mike said...

Anonymous, you seem to have little knowledge or interest in what makes attractive cities work, and instead are fighting this great war for the cause of free markets. If I felt like the few regulations needed to substantially improve Houston's image were a threat to free society, believe me, I would not be in favor of them.

I read Hayek's Road to Serfdom and was moved by the threats that he depicted. This is not that battle. I think if you lived for a time in cities that have these kinds of regulations, you would find your fears unsubstantiated.

Once upon a time, the most recognizable building in our skyline had a giant, 56 foot, lit up, rotating sign on top of it. Our city was embarrassed for 15 years, and then City Council did something about it - it outlawed signage on downtown buildings. Now our downtown looks very tasteful, much better than LA's, which is full of corporate logos.

Did we hurt the market? No. Did we sacrifice freedom? Not really. Did we improve the city? Absolutely. All I'm arguing for is the same type of thing applied in other problem areas.

 
At 8:04 PM, August 17, 2006, Anonymous Anonymous said...

Mike,

And how would you apply regulations to make out freeways nicer? Besides disallowing billboards, there are few regulations that would improve the airport-to-downtown freeway. It would involve spending tax dollars. And if you don't want to argue about the freedom issues there, merely think about the much more appropriate ways we could spend that money to actually improve people's lives rather than improve the "ambiance" of the freeway.

 

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