Modern automakers follow that old advice to Go West

IRVINE, CA — Newspaper publisher Horace Greeley in the 1840's proclaimed “Go West, young man.” A lot of people are following that advice today.

Only this time, it's not young hardy males making the trek westward to find wealth. Instead, it's automakers migrating west to capitalize on what they claim is the car culture of the world. Of course, for Asian automakers, which likewise are heeding the call, it's “Go east!” Still, it's the same destination.

Many of those auto companies are locating and relocating in southern California. The city where many end up is Irvine, just south of Los Angeles, nestled comfortably in the Orange County area.

The migration began in the late 1980's when Mazda, by all accounts, became the first automotive company to establish roots in Irvine with a $23 million research and development center. Now, Mazda's North American headquarters are in Irvine Spectrum, the country's largest research and development park.

In 1990, Mercedes Benz established a state of the art design studio in northwest Irvine. Mercedes Benz Advanced Design (MBAD) started with three employees. It now it has 20, a testament to its growing influence on Mercedes design.

Kia Motors Corporation, once a Korean motorcycle and truck manufacturer, grew up as an automotive company in Irvine. The Korean company built its North American automotive headquarters in the city in 1994.

In 2000, the Premier Automotive Group (PAG), Ford Motor Company's luxury division, officially opened its North American headquarters in Irvine. All five PAG brands are now housed in a complex in the Irvine Spectrum. Volvo, Land Rover, Jaguar and Aston Martin, which were all located on the East Coast, made the move cross-country. Fittingly, several Volvo employees drove new Cross Countrys to their new digs.

Lincoln Mercury, meanwhile, moved its headquarters from Dearborn, MI to Irvine in 1998. The company also has a new design studio in the facility — the Lincoln Mercury Concept Center.

Just after PAG opened its new headquarters, Mong Koo Chung, chairman of Hyundai Motor Co. and Kia Motors Corp., gathered with elected officials in Irvine to break ground on the new Hyundai/Kia California Design and Technical Center.

The $25 million facility will house 150 auto designers, engineers, model makers and technicians, many who were responsible for design successes such as Hyundai's Santa Fe sport-utility vehicle and its HCD 6 concept vehicle.

Sixteen automakers now have a significant presence in Irvine, which city officials call “Motor City West,” or “Detroit West.” One civic booster, caught up in the moment, said at the PAG headquarters' grand opening that perhaps Detroit should start referring to itself as “Irvine East.”

What's spurred the Western migration?

One motivator is Irvine's aggressive plan to lure “attractive” companies. Irvine sees auto companies as attractive.

Paul Hiller, executive director for Destination Irvine, a group set up to attract new business, explains, “We're not looking for the manufacturing operations but the brains behind the operations — we want the headquarters, sales and marketing offices and the design studios.”

It isn't a tough sell. The 30-year old city has held to its goal of becoming one of the world's leading technological, research and development centers. Companies can have access to one of the more educated populations — 62% of the population hold some sort of college degree and 50% have a bachelor's degree or higher.

Asians comprise 30% of Irvine's population — giving the city plenty of technological expertise. Karlheinz Bernhard, the president of the Mercedes design studio, says one reason for building it in Irvine is that Orange County is the country's “newest emerging technology hub.”

Notes Hiller, “The more companies that move into an area, the more attractive it becomes for other companies.” He adds, “Irvine has nowhere the automotive critical mass of Detroit, but you never can tell what the future holds.”

Victor Doolan, PAG's director of North American Operations, says, “When we first started considering Irvine, our biggest question was, ‘Can we sell the move to our employees?’”

Tough sell? An average winter temperature of 50 degrees and an average summer temperature of 75 degrees, an unemployment rate of 2% and the lowest crime rate in the nation, according to the FBI. Who wouldn't want to live here?

The majority of PAG employees agreed to make the move. Likewise, Lincoln Mercury brought over 70% of its staff when the division relocated to Irvine four years ago.

But it takes a lot more than aggressive public relations and warm weather to lure automotive companies to the area. Automakers see it as a benefit having a presence in what is arguably the largest automotive market in the world.

For the PAG brands, which have done poorly in the southern California market, the move West represents a serious attempt to establish a beachhead in a market dominated by the Asians and Germans.

PAG's Volvo has had a very weak presence in southern California, says Roger Ormisher, Volvo's vice president of public affairs.

Regardless, he says, “It is the place to be. We realized we could learn a lot by being in the center of the world's largest luxury market.”

PAG President Wolfgang Reitzle agrees.

“The area between the Rocky Mountains and the Pacific comprises the largest luxury vehicle market in the world, and it makes terrific sense for us to be at the epicenter,” he says.

It comes down to product, though — who can design the next big hit? Automakers believe being in southern California will inspire them design the vehicles that people want.

Southern California is the trend-setting capital of the country, and the automakers hope their designers can tap into the next wave.

Kia President and CEO B.M. Ahn, at the groundbreaking ceremony for Kia and Hyundai's new design center, says, “The big benefit of this design center is having a California-based design staff that understands how to take automotive trends, and make them appealing to U.S. consumers on a bigger scale.”

Adds Reitzle, “California offers a trend-setting, diverse and consumer-focused culture and is the ideal location to plan the growth of our premium brands.”

The world's top design school is located in southern California, close to Irvine. In fact, over half of the world's automotive designers graduated from Pasadena's Art Center College of Design.

Says the school's Ken Okuyama, “Graduates would rather stay in southern California. No one wants to live in Detroit — really, who wants to shovel snow?”

As a result, the automakers find it easier to attract the top design talent by being in southern California.

“There is a lot of talent out here,” notes auto analyst Jim Hossack of AutoPacific. “The auto-makers find it liberating to have designers living and working in an exciting and invigorating environment.”

It is a culture that breeds design, styling and experimentation.

“Californians have a love affair with their vehicles. We know what we want from our vehicles,” says Jack Gerkin, public relations director for Saleen, a high performance vehicle manufacturer that just moved to Irvine.

“There is a strong car culture here,” agrees Bernhard. “But there is also cultural diversity. We are ethnically diverse, we have young and old here, rich and poor — this helps us know what people want.”

Bernhard also believes being close to Hollywood helps. “The design and entertainment industries offer a unique environment for cutting-edge design and trends.” He cites the movie “Out of Africa,” as an example. “The movie influenced colors dramatically — for a while, vehicles had more earth-tone type colors — all because of that movie.”