No Restrictions After March, Chairman Predicts : Toyota Sees End of Import Quotas
Import quotas on Japanese cars will be eliminated next March, allowing for wide-open competition in the U.S. car market for the first time since 1981, Eji Toyoda, chairman of Toyota, Japan’s largest auto maker, predicted here Wednesday.
Toyoda said he expects the Japanese government to end its trade restrictions, which limit shipments of Japanese cars to the United States to 2.3 million units per year.
In fact, he said, Toyota is basing its production and marketing plans on the assumption that the restraints will not be extended for another year when they expire at the end of March, 1986.
“Since we are proceeding under the assumption that this quota system will be abolished next year, we are not even thinking about numbers (of cars that would be allowed under new quotas),” Toyoda said in an interview. “It is not something that we are concerned about at this time.”
Import quotas on Japanese cars were begun by the Japanese government under pressure from Washington during the 1981 recession, originally limiting shipments of passenger cars to 1.68 million units annually. After the economy started to recover, in 1984, the ceiling was raised to 1.85 million units. Despite the fact that the Reagan Administration urged that the quotas be dropped this year, the Japanese government extended the restraint program while raising the ceiling to 2.3 million units for the period from April, 1985, through March, 1986. Toyoda was in Lexington to formally announce his company’s plans to build its first U.S. assembly plant outside of Georgetown, Ky., a small town of about 11,000 near Lexington.
Toyota officials said the $800-million plant will employ about 3,000 workers, will manufacture 200,000 cars a year and will house the same kinds of operations that are performed at the Fremont, Calif., plant where Toyota has a joint venture with General Motors.
The complex, to be built on a 1,500-acre farmland site, will include both stamping and assembly operations and is expected to begin producing a version of Toyota’s Camry compact model in mid-1988 in time for the 1989 model year.
Toyoda said the cars produced in Kentucky will have about 50% domestic content (including the value of the labor performed at the facility).
Earlier estimates by government officials here that the plant would employ 2,000 workers and represent an investment of $500 million were revised Wednesday when Toyota officially announced its decision to locate in Kentucky.
Additionally, 6,000 to 7,000 jobs are expected to be created at plants to be built by outside supplier firms that plan to come to the United States to serve Toyota, according to Kentucky Gov. Martha Layne Collins.
However, Toyoda said in the interview that engines and transmissions for the cars will be imported from Japan. He added that Toyota has no plans to build additional U.S. parts manufacturing plants of its own.
Meanwhile, Toyota President Soichiro Toyoda indicated that the company has no plans to voluntarily recognize the United Auto Workers as the bargaining agent for the Georgetown plant’s future work force.
“We have no employees yet, so it is impossible to discuss” whether they will want to join the UAW, Toyoda said at the press conference announcing the Georgetown plant.
He said the company is not willing to negotiate with the UAW before the plant begins operations, despite the fact that Toyota and GM agreed to such talks with the UAW at their joint-venture plant before that facility began small-car production last year.
May Exert Pressure
But, since the UAW now represents workers at the Fremont plant--which will be producing 50,000 cars for Toyota beginning next year (all of the production output has so far been earmarked for GM)--the union would seem to have the ability to pressure Toyota to open talks concerning union representation at the Kentucky facility.
In a statement, UAW President Owen Bieber said the union’s cooperative relationship with Toyota at the Fremont joint venture, widely hailed as a model for the future of labor-management relations in the auto industry, should reduce Toyota’s inhibitions about allowing the union to organize the Georgetown plant. “We know Toyota management has been very positively impressed by the UAW work force employed (by the joint venture) in California,” Bieber said.
“Based on that foundation, we look forward to developing a productive, ongoing relationship as Toyota establishes additional manufacturing sites such as the one announced today.”
Toyota, the last major Japanese auto maker to announce plans for an American plant of its own, is also the third auto company within the last few years to locate a huge new project in the mid-South.
Nissan already is producing cars and trucks at its plant in Smyrna, Tenn., near Nashville, and General Motors announced earlier this year that it will build its huge Saturn plant in Spring Hill, Tenn., which also is near Nashville.
Auto industry officials have said that the region’s central location--within a day’s drive of about 75% of the nation’s population--helps cut down on transportation costs. At the same time, its pro-business, anti-union climate makes the region attractive for car production. Kentucky officials did not say, however, how many incentives they offered Toyota to lure the firm to their state.
