Toyota Fuels Ideas
For Another Hybrid
In North America
By NORIHIKO SHIROUZU
Staff Reporter of THE WALL STREET JOURNAL
November 12, 2005; Page A3
Toyota Motor Corp. is looking at boosting manufacturing capacity in North America again, creating more jobs at the same time as it continues to put pressure on Detroit auto makers.
With demand for Toyota vehicles continuing to rise in the U.S., company executives interviewed by The Wall Street Journal say they are scrambling to find a site for a new plant to produce more engines and transmissions in the U.S.
Toyota's continuing expansion in the U.S. has intensified competition among U.S. states to land a big investment by the Japanese auto maker. Among the governors wooing Toyota most intently for the new plant is Michigan Gov. Jennifer Granholm, whose state has lost thousands of jobs as General Motors Corp. and other Detroit auto makers and suppliers have retreated under fire from Toyota and other Asian brands. Toyota already is expanding an engineering center near Ann Arbor, Mich., and company executives aren't ruling out Michigan for a manufacturing facility.
At the same time, Toyota's new equity ties with Fuji Heavy Industries Ltd. could give Toyota a quick, low-cost way to add vehicle-assembly capacity in the U.S. by using a Subaru factory in Indiana.
New U.S. factories would help Toyota maintain the ratio of North American-made to imported vehicles well above 60% in the U.S. market. Company leaders view that as the threshold for being viewed as an "American" producer. Toyota has five operational assembly plants in North America, one under construction and another just announced. Other plants in North America produce components, including engines and transmissions.
Tokuichi Uranishi, a Toyota executive vice president, says one expansion idea involves the recent acquisition of an 8.7% stake in Fuji, the maker of Subaru brand vehicles. Toyota could get access to idle capacity at Fuji's existing assembly plant in Lafayette, Ind., in order to make Toyota vehicles. Mr. Uranishi says Toyota is "looking seriously at" such a move.
According to executives familiar with the development, Toyota's North American manufacturing operations near Cincinnati already have dispatched a team of engineers to inspect the plant.
Gary Convis, a Toyota managing officer and a senior leader of Toyota's North American manufacturing operations, says Toyota is busy narrowing down the list of possible sites for a new engine and transmission plant it wants to build in the U.S. over the next few years.
"We are looking very seriously" for a site, Mr. Convis says. "We'll decide soon." He confirmed Michigan is on the radar screen. "We're not excluding Michigan."
Without additional North American capacity for engines, transmissions and other big-ticket components, Toyota executives fear the North American content of Toyota vehicles may start falling and call into question the company's commitment to the U.S. market and economy.
Toyota's next round of capacity expansion is likely to ratchet up the already fierce rivalry among more than a dozen U.S. states vying for Toyota investments. Toyota's last big North American factory expansion went to Canada.
Toyota executives familiar with the search say the auto maker needs more North American-made four cylinder engines, and also needs to beef up transmission production capacity in North America. It has capacity in West Virginia to produce 360,000 automatic transmissions a year and is expected to boost the plant's capability to 600,000 by 2007. But even counting additional capacity of 300,000 transmissions a year Toyota affiliate Aisin Seiki Co. has in North Carolina, Toyota could equip less than half of more than two million vehicles it sells in the U.S. today.
Asian auto makers like Hyundai Motor Co., Honda Motor Co. and Nissan Motor Co. are all expanding manufacturing capacity across North America. But governors from a slew of U.S. states -- from New Mexico to Michigan to Indiana to Mississippi -- are zeroing in on Toyota, an auto maker that some say is poised to displace rival GM as the world's biggest producer of autos as early as next year. Even as prospects of factory closures and massive job losses loom over Detroit, they are courting Toyota in an increasingly fierce manner to get a piece of Toyota's multibillion-dollar move to invest in plants to fuel growth in its U.S. business.
Earlier this year, more than a dozen U.S. state governors -- many from southern states like Mississippi, Alabama, Tennessee and Arkansas -- traveled or sent delegations to Japan to attend the World Expo 2005 held outside Nagoya, near Toyota's global headquarters. The company's honorary chairman, Shoichiro Toyoda, served as chief of the expo's organizing committee. |
