"The board of Nissan decided to relocate our North American headquarters, and we're coming to Tennessee," Nissan CEO Carlos Ghosn said at a news conference at the state Capitol attended by Gov. Phil Bredesen and other top state officials.
The headquarters, which has been based in Gardena, Calif., will relocate to Williamson County, a suburban area south of Nashville.
Industry analysts say the move could threaten Southern California's dominance as a hub for Japanese automakers and strengthen the Southeast's standing as a major vehicle manufacturing center.
Ghosn said the company will invest $70 million to build a new headquarters building in Franklin, which is expected to be complete by 2008. The first employees will transfer to Tennessee next summer and work out of temporary offices in downtown Nashville.
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.
Ghosn cited lower real estate and business taxes as major reasons for the move.
"The costs of doing business in Southern California are much higher than the costs of doing business in Tennessee," 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.
California Gov. Arnold Schwarzenegger said he talked with Nissan officials two or three weeks ago when he heard of the potential relocation, but learned the company had been considering the move for two years.
"I wanted to find out `What is it that you need to stop you from moving to another state?"' he said Thursday. "And they said 'Look, the things that we need are so overwhelming that you can never provide them because you would need to change a tremendous amount of laws, the tax code and so on.'
"So it's just, the other place, the other state is just so much more competitive, (Nissan) already made that determination," he said.
Nissan currently has a manufacturing headquarters in Smyrna and an engine plant in Decherd and employs more than 7,000 people in Tennessee. Nissan's plant in Smyrna was built in 1980 as the company's first factory outside Japan. Altima cars, Xterra and Pathfinder sport utility vehicles and Frontier pickups are manufactured there.
Nissan was one of the first of several major carmakers — DaimlerChrysler AG's Mercedes division, BMW AG, General Motoros Corp.'s Saturn unit, Toyota Motor Corp. and Hyundai Motor Co. — 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.
Tom Libby, an automotive analyst with JD Power and Associates, said Nissan's relocation could make other Japanese automakers in Southern California — Honda Motor Co., Mitsubishi Motors Corp. and Mazda Motor Corp. — consider moving.
Jack Kyser, chief economist at the Los Angeles Economic Development Corp., said another 1,500 jobs would be lost outright or affected by the move, including accounting services, legal service, advertising and similar industries.
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.