Public works projects in Japan are notorious for bloated spending and inefficient management, but Toyota involvement in the development of Chubu International Airport (Centrair) helped to ensure it was completed on time and about 15% under budget. Some of these cost savings have been passed on to airlines in the form of competitive landing fees, which has enabled the airport avoid the debt plight of mismanaged schemes like Osakafs Kansai Airport.

Throw in a geographically central location, a well-established port, improved rail services and a relentless program of highway expansion, some of which was piggybacked on plans for the 2005 World Expo, and Nagoya is well placed to support a global manufacturing giant such as Toyota.

Hiroki Matsumoto, Chief Director of JETROfs (Japan External Trade Organization) Nagoya branch, arrived in the city in July 2006 following a five-year stint in New York, and is impressed by what he has seen and learned. gI was surprised to find Nagoya very well-balanced in terms of software and hardware. By 'hardware' I mean the infrastructure - transportation, shopping, leisure facilities and so on. 'Software' includes the culture, industry and tradition.h

But why has Toyota chosen this time to refocus its operations in the Chubu area? Members of the local business community cite a variety of possible reasons and implications.

According to James Hanna, COO of vehicle exporter Motorworld and a long-term Nagoya resident, gthe cost factorh is key. Hanna adds that, gas a businessman, I can't understand why Toyota set up its Head Office in Tokyo in the first place. It didn't seem logical to me. Being close to the main operations is important for management.h

This point is echoed by Steve Burson, COO of relocation experts H&R Consultants and another well-established Nagoyan. He says the main benefit for the company is that gthe Chubu area is cheaper to operate in and they can be near their suppliers in Aichi prefecture.h

Besides this balance sheet issue, Burson suggests that as the company gfeels more attached to the Aichi area than to Tokyo, and knows that any large building they put up would be of great economic benefit to that particular area, they were happier to build in Nagoya. It also centralizes their operations in Chubu, which is part of a big plan that has seen a new Honsha (Head Office) building go up, and a lot of money go into Centrair and new highways from the airport, across the south of Nagoya and through Toyota.h

So the move ticks all the right boxes in any businessfs list of priorities - cheaper overheads, closer coordination between different parts of the organization and improved logistics. Given Nagoyafs comparatively low cost of living and the convenient size of the city, James Hanna says that one potential side benefit is gthe better quality lifestyle for employees.h

As for the advantages for Nagoya, opinions range from optimistic to sceptical.

Steve Burson foresees ghuge economic benefits, as all of Toyota's suppliers and business partners will meet, stay, eat and drink in Nagoya. More international businesses [will come to] Nagoya, and eventually more corporate financial institutions.h

Such a scenario would present great opportunities for service companies like H&R Consultants, and Burson anticipates a significant impact on his business gif people choose to stay in Nagoya for medium to long periods of time,h although he admits gthis is hard to read at this time.h

The possibility of Toyota acting as a magnet to attract other major companies to Nagoya is also raised by James Hanna. gI'm sure many companies in Japan are watching Toyota's move and Nagoya may see an influx of major companies setting up headquarters here. The Nagoya City Council need to keep this in mind and ensure facilities are always in place and up to standard to receive more salaried workers and foreigners alike.h

However architect Michel Weenick, President of the Chubu branch of the American Chamber of Commerce in Japan (ACCJ), sounds a note of caution. gI worry that people are making a bigger deal about the move than is called for.h

gI am doubtful of any real benefits for Nagoya other than the current housing and hotel building boom that may be linked to Toyota's move, although that probably can't be substantiated,h says Weenick. gLots of workers will come, but how many families, international businesses and individuals will come is quite uncertain.h

gI don't imagine any long-term impact as the Toyota group of businesses - suppliers and sub-suppliers - is already set, but perhaps service industries will profit from more workers downtown. I think that hotels, train operators and perhaps the airlines will benefit, but I don't see any real changes for Nagoya. I can easily imagine Tokyo folks staying put and simply commuting to Nagoya.h

The long-term effects of Toyotafs move remain to be seen. In the short-term, however, with business media focusing on Nagoya, it will certainly help the city with name recognition. As James Hanna points out, despite the domestic success of the 2005 World Expo, gmost people overseas don't know where Nagoya is.h