Toyota Plant Baja Bound, Official Says

Toyota Motor Corp. is leaning toward building a major automobile factory in Baja California, a facility that could start a wave of heavy industry and investment in the border state, Mexican officials said Wednesday.

Ernesto Ruffo Appel, commissioner for border affairs for President Vicente Fox and a former Baja governor, said Toyota officials told him the Japanese company will announce details of its new facility within days. The car maker has narrowed its four-year search to sites in Mexicali, Tijuana and Ensenada, he said.

Barbara McDaniel, spokeswoman for Toyota Motor Manufacturing Inc. in Georgetown, Ky., said no final decision on where to build the plant had been made.

“Toyota is looking at Mexico with the idea of [establishing] some sort of manufacturing operation. We are not ready at this point to announce anything. There are no final decisions made.”

But a top official in the Baja state government Wednesday said Toyota has told the state that it wants to build what could become a $1-billion investment in Baja.

“So far, the governors of five different states in Mexico have told the Mexican press that Toyota is definitely gong to build a plant in their states,” McDaniel said. “There is a lot of speculation.”

The factory could transform Baja’s economic profile from one of mostly light manufacturing to heavier industry in the coming decade, Ruffo said. An integral part of that transformation will be helped by significant new infrastructure projects to be announced in Baja over the next three months, he added.

Those projects could include a new water transport line, expansions of the Ensenada port and major highways and a rail link between Ensenada and the U.S. border, as well as new electric power projects. Two liquid natural gas terminal projects in Baja, each costing hundreds of million of dollars, were proposed last month.

As Baja governor from 1989 to 1995, Ruffo presided over major investments in his state by Asian consumer electronics giants including Sony, Sanyo, Samsung and Hyundai. His post in the Fox administration entails supervising economic, environmental and infrastructure development along the U.S.-Mexico border.

A Toyota decision to locate in Baja would climax an intense competition among Mexican states for the auto factory, coveted for its multiplier effect in job creation and other economic benefits. Toyota also considered sites in Monterrey and Mexico City.

Speculation about a Mexico factory has been rampant since Toyota announced earlier this year that it would begin selling and servicing cars in Mexico in mid-2002.

Although the company’s official stance was that it would not decide on a factory here until after sales were up and running, news reports quoted Toyota executives in August as saying a plant would be built in Mexico.

Toyota has said it needs added production capacity to keep up with rapid sales growth, among the strongest in the North American car market. Though sales for Detroit’s Big Three have declined this year, Toyota chalked up a 5.3% unit sales gain compared with the same nine months last year.

The manufacturer also has said it plans to introduce a new model next year directed at the youth market, said Jeff Schuster, director of North American forecasting for J.D. Power & Associates in Troy, Mich.

Currently, the auto maker assembles cars at four North American locations: Princeton, Ind.; Cambridge, Canada; Georgetown, Ky.; and, in Fremont, Calif., in partnership with General Motors. It also operates a motor factory in Buffalo, W.Va., the spokeswoman said.

Lower labor costs and the Mexican consumer market are decisive factors in the Mexican location, Schuster said.

Mexican government sources say the Toyota plant would be built in stages, initially producing just subassemblies that would be shipped to other North American factories. Investment would start at $250 million. Employees would number 1,000 initially.

Over time, Toyota’s plan is to expand the plant to assemble entire cars at its Mexican location, requiring an investment of more than $1 billion, sources said.

Ruffo added that Baja was high on the site selection list because of its proximity to Toyota’s booming Southern California market.

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Times staff writer John O’Dell contributed to this report.