Toyota Reported Near Decision to Build Truck Factory in U.S.
A Toyota Motor executive indicated Tuesday that his firm is on the verge of deciding to build a truck factory in the United States and halt truck exports to the American market. The move would result in the one of the largest single shifts of production out of Japan to date.
Tsutomu Oshima, executive vice president of Toyota, said in an interview that a study has “progressed to a rather considerable extent” and that a decision is expected before long.
If such a plant is built, he said, it will result “in the halt of all truck exports” to the United States from Japan.
Oshima refused to disclose the export value of Toyota trucks, but he said Toyota exported 280,000 pickups to the United States last year, with an average weighted retail value of $9,000.
He said about half the value of production would be made up of local procurement at the time of initial production in a new American truck plant, with the other half coming from components imported from Japan.
If an arbitrary figure of $7,500-per-vehicle is used for the trucks’ export value (before any tariffs or dealer profits are added), the transfer from Japan to the United States of the production of 280,000 trucks would cut $1.05 billion from Japan’s trade surplus with the United States. Last year, that surplus reached a record $59.8 billion.
Only the closing over the past two years of many Japanese aluminum plants, which at their peak smelted a total of 1.6 million tons a year, has produced an overseas production shift of comparable scope. Today, Japan has only one smelting plant, with a capacity of 64,000 tons.
Aluminum firms formerly engaged in production here have set up plants overseas in countries where energy costs are far below those in Japan.
Oshima said Toyota is considering three possibilities for a new plant: Fremont, Calif., where the company operates a 50-50 joint venture producing passenger cars with General Motors; Georgetown, Ky., where the firm has just opened an independent passenger car production facility, or some new location.
Building a truck plant at Fremont would require GM’s approval, Oshima said, and adding a plant in Georgetown, where Toyota’s first passenger car rolled off the line last Thursday, has the possible drawback of concentrating too many workers at one location.
When an engine plant is added at Georgetown and operations there reach full-scale production, about 3,500 workers will be employed, he said. Oshima did not say how many workers a new plant would employ, but from the presumed production capacity it could be more than 3,000.
Comparatively higher start-up costs are a factor working against a new site, Oshima said.
“Before the yen started appreciating in value,” he added, “Japan developed the (small) pickup market in the United States. Even with a 25% tariff, we could sell our trucks at inexpensive prices.” But since appreciation of the yen forced Toyota to raise its retail prices on trucks by an average of 26.7% since 1985, the prices “have become a burden on the user,” he said.
Last year, a 55%-45% advantage that Japanese firms had held in their share of the pickup market in the United States was reversed, and American firms took a 55%-45% lead, he said.
American sales of Toyota pickups, he said, amounted to about 250,000 units in 1987, or 30,000 fewer than the company exported to the United States. So far this year, he said, sales have continued to decline.
