Toyota Will Build Own U.S. Car-Making Plant : To Produce 200,000 Units a Year at Unspecified Site; Canada Factory, Fremont Growth Also Due
Following the example of other Japanese auto makers, Toyota Motor Co. announced Tuesday that it will build its own manufacturing plant in the United States by 1988 to produce about 200,000 passenger cars a year.
Toyota, Japan’s largest auto maker, also said it will expand production at the joint venture it operates with General Motors in Fremont, Calif., to provide 50,000 cars for its American dealers beginning in the fall of next year. A second new plant in Canada will produce an additional 50,000 cars a year, the company said.
Shoichiro Toyoda, president of the company, said his firm’s board of directors earlier in the day approved the outline of plans for the company’s first independent venture into North American production.
But he refused to specify when construction on the two new plants will begin and where they will be located. He also gave no estimate on how many workers the new plants will employ.
Asked whether a rough estimate of the cost of the new U.S. plant would be “around 150 billion yen ($625 million),” as reported in the Japanese press, Toyoda replied, “Not greatly different from that sum.”
A company spokesman said the firm decided to make the announcement, despite its lack of details, because American Toyota dealers were “clamoring for a larger supply of cars.”
Only Way to Grow
Toyota’s decision to invest on its own in the United States reaffirmed the widespread conviction among auto firms here that voluntary Japanese restraints on exports of finished vehicles to the United States will remain in place indefinitely, leaving construction of U.S. manufacturing plants as the only way to grow.
Toyota is the last major Japanese auto maker to decide to manufacture in the United States. Honda Motor Co. has been producing subcompacts in Ohio since 1982. Toyota’s archrival, Nissan, started car production at its truck factory in Tennessee this spring. Mazda Motor Corp., Japan’s No. 3 auto maker, has announced plans to build a factory in Michigan, with production to start in 1987.
When all of these plants are completed, Japanese car production in the United States will top 1 million units a year.
Toyota’s new U.S. plant, which Toyoda said will not be located on the West Coast, will produce approximately 200,000 cars a year equipped with 2-liter displacement engines. The model will be a variant of the firm’s Camry model, Toyoda added. The 50,000 cars produced by the Canadian plant will have 1.6-liter engines, he said.
Toyota’s joint venture with General Motors at Fremont, when it reaches full production, will have about the same production capacity as the new U.S. plant. Presuming that employment at both plants will be the same, the new plant could employ as many as 2,500 workers.
Japanese news reports, which Toyota officials refused to confirm or deny, said earlier that the company was considering locating the new U.S. plant in either Kentucky or Tennessee.
Toyoda said the joint venture with GM will begin producing 50,000 cars a year in the fall of 1986 and described that figure as an “addition” to the 200,000 cars a year that he said GM will obtain from the plant--although GM’s chairman, Roger Smith, has consistently said that GM intends to procure all 250,000 cars scheduled to be produced by the joint venture.
Toyoda said his firm has secured GM’s approval to have the Fremont plant start selling a variation of the Toyota Corolla with a 1.6-liter engine to Toyota’s dealers in the United States. The plant now supplies to GM’s Chevrolet dealers a Corolla variant, dubbed the Nova, which is equipped with a 1.6-liter engine.
Whether the car to be supplied to Toyota dealers will be the Nova or another Corolla variant has not been decided, the spokesman said.
In approving the Toyota-GM joint venture, the Federal Trade Commission placed a limit of 250,000 a year on the number of cars that the plant could produce for General Motors. That limit does not apply to cars that the joint venture plant produces for Toyota dealers in the United States.
The Fremont plant, the spokesman said, is scheduled to increase its annual production rate to 200,000 cars early next year.
The announcement brings to at least 1.27 million the capacity of six different plants already operating, or scheduled to be in production by 1988, to produce Japanese-designed cars in North America.
Sales of the 50,000 cars that Toyota will produce in Canada will “focus upon--but not be limited to--the Canadian market,” the spokesman said. In response to a question, Toyoda said the new plant will plan to produce 20,000 units a month, or 240,000 cars a year, about the same as the Fremont plant.
Owen Bieber, United Auto Workers president, said in Detroit on Tuesday that Toyota’s decision to manufacture in the United States is a positive step, but he called on the company to do more to create jobs for U.S. workers.
‘Jobs and Taxes’
“Given its prominence in the market, Toyota owes it to this nation to do more to support American workers and communities with jobs and taxes,” Bieber said.
Japanese companies in the United States have had lower labor costs than the major domestic auto makers, so the new Toyota plant “will put a lot of pressure on the UAW,” said David Healy, automotive analyst with the New York brokerage house Drexel Burnham Lambert.
Although President Reagan decided not to ask Japan to extend a program of so-called voluntary restraints on car exports beyond last March 31, Prime Minister Yasuhiro Nakasone’s government, on its own, enforced a new limit of 2.3 million units on cars that all Japanese auto makers can export to the United States in the Japanese fiscal year that began April 1.
Under the new limit, Toyota is being permitted to ship up to 623,760 cars to the United States in this fiscal year, an increase of 12.5% compared with last fiscal year.
Overall, the new limit will permit Japanese auto makers to ship 450,000 more cars to the United States in fiscal 1985 than in fiscal 1984, an increase of 24.3%.
The move also came at a time of renewed trade frictions with the United States and threats from leaders of Japan’s ruling Liberal Democratic Party to impose a surcharge on automobile exports. The Japanese government’s own decision to raise the limit on exports during fiscal 1985, however, was expected to add at least $3 billion to the American trade deficit with Japan, which last year reached $36.9 billion.
Because it lacked an American manufacturing facility of its own, Toyota early this year lost its position as the No. 1 foreign firm in American car sales. Honda, now manufacturing 150,000 cars a year at its plant in Ohio, took over the top spot among foreign auto makers and plans to expand its U.S. capacity to 300,000 cars.
When Toyota opens its new U.S. plant and Honda completes its Ohio expansion, Toyota’s capacity for sales in the United States will reach at least 873,760 cars, compared with 728,590 for Honda, assuming present export limits are maintained.
