Toyota to Build Engine Factory in Alabama

Toyota Motor Corp. said Tuesday that it will build a $220-million V-8 engine factory outside Huntsville, Ala., its fourth engine facility in North America. The move underscores Toyota’s confidence in the U.S. auto market at a time when domestic auto makers are planning major production cuts.

The engines built at the Alabama plant will be used in only the full-size Tundra pickup, which is sold in the U.S. and Canada. Tundra has upset the domestic companies’ stranglehold on the full-size pickup market since its introduction last year. Toyota said it can make 120,000 engines a year at the plant, which will employ 350.

Although the factory won’t be finished until 2003, analysts say Toyota would not build it if the company did not expect to see Tundra sales continue to grow.

Toyota, in fact, is expected to be one of the best-performing auto makers in the U.S. this year, largely on the strength of its new truck and sport-utility vehicles.

“These are the kinds of products that take a lot of lead time to develop, more time than do cars, and this shows that Toyota is looking ahead,” said David Healy, an auto industry analyst with Burnham Securities.

“If you want to play in the big-truck field, then you’ve got to have V-8s, and plenty of them,” he said, citing dismal sales of Toyota’s previous attempt at a large pickup, the V-6-powered T-100. “They didn’t have enough testosterone,” Healy said.

Toyota, which employs 30,000 workers in North America, including almost 20,000 in manufacturing, has two engine plants and three vehicle manufacturing plants in the U.S. and an engine plant and a car factory in Canada.

The South is becoming a major auto manufacturing region: Mercedes-Benz and Honda have plants in Alabama, Nissan has factories in Tennessee and Kentucky, and BMW has a factory in South Carolina.