Mitsubishi Motors announced on Tuesday that it is relocating its North America headquarters to Tennessee, becoming the latest Japanese automaker to leave the state and head to a Southern state looking for lower operating costs.
Mitsubishi, which employs 200 people in Cypress, told the Orange County Register in a statement that the Nashville area offers strong technology skills and “cost savings through the business-friendly work environment.”
The move will also bring the Japanese automaker closer to its sister company Nissan and strengthen Tennessee’s growing reputation as an epicenter of the automotive sector.
Tennessee Gov. Bill Lee and Department of Economic and Community Development Commissioner Bob Rolfe — who made the announcement with Mitsubishi Motors North America — say the headquarters move from Cypress to Franklin, Tennessee, will result in an $18.25 million investment in the region and approximately 200 jobs.
Lee and Rolfe added that they met with Mitsubishi’s global executives last week to convince them to move to Tennessee while in Japan during the Republican governor’s first trade mission. It is unclear what financial incentives state officials offered Mitsubishi to move to Tennessee.
“As we drive toward the future, this is the perfect time for us to move to a new home. While we say farewell to the Golden State with a heavy heart, we’re excited to say hello to Music City,” Fred Diaz, Mitsubishi Motors North America’s president and CEO, said in a statement.
Franklin is located just south of Nashville, also known as “Music City,” and is home to the state’s most powerful Republicans, ranging from Gov. Lee, U.S. Sen. Marsha Blackburn and House Speaker Glen Casada.
Mitsubishi’s relocation announcement is the latest move in an industry that has found a warm reception in recent years in the American South, where politicians tend to take a dim view of labor unions and aggressive regulation.
“Over the years, Tennessee has become the epicenter of the Southeast’s thriving automotive sector, and I’m proud Mitsubishi Motors will call Franklin its U.S. home and bring 200 high-quality jobs to Middle Tennessee,” Lee, who took over the office this year, said in a statement.
Mitsubishi Motors’ North America headquarters has been located in California since 1988. The company expects the relocation will begin in August and will be completed by the end of the year. Initially, a temporary office will handle operations to allow the company time to identify a permanent office.
Company officials say the move is part an ongoing effort to “reinvent every aspect of Mitsubishi Motors in the U.S.,” as well as strengthen the Renault-Nissan-Mitsubishi Alliance.
Nissan has a production plant in Smyrna, Tennessee, and owns a 34% stake in Mitsubishi Motors.
Last week, Mitsubishi Motors Corp. shareholders approved the ouster of Carlos Ghosn, who was pivotal in the Japanese automaker’s three-way partnership with Nissan and French automaker Renault until he was arrested on financial misconduct charges last year. Ghosn says he is innocent.
Mitsubishi shareholders then approved the appointment of Renault’s chairman Jean-Dominique Senard to replace Ghosn. Renault owns 43% of Nissan.
Mitsubishi has also faced its own scandals.
In 2016, the company disclosed it falsified mileage data. That followed a massive cover-up over decades of auto defects thought to have helped cause a fatal accident. In 2004, its president, Katsuhiko Kawasoe, was arrested. He was sentenced to three years in prison, suspended for five years, and did not serve time in jail.
Along with the Nissan plant, German automaker Volkswagen operates a plant in Chattanooga, Tennessee — the state’s fourth most-populated city. The company unveiled earlier this year an $800 million expansion at the Tennessee plant, which is expected to create 1,000 jobs for electric vehicle production beginning in 2022. It’s set to receive $50 million in state incentives.
Recently, Volkswagen workers voted against forming a factory-wide union — handing a blow to the United Auto Workers’ efforts to gain a foothold among foreign auto facilities in the South.
Meanwhile, General Motors also has a large manufacturing plant in Tennessee. Additionally, more than 900 auto suppliers, including large ones such as Hankook Tire and Bridgestone Americas, operate in Tennessee.
Tennessee officials say the state has the fastest rate of headquarter job growth among states in the Southeast.