Toyota’s Baja Plant Underway
Ushering in what Mexican officials hope is a new industrial era for Baja California, President Vicente Fox on Wednesday kicked off construction of a new Toyota Motor Co. automotive factory that over time may bring an influx of investments and thousands of jobs to the state.
Fox also provided new impetus for construction of a proposed rail line to link Baja with the western U.S. transportation grid. By transferring operating rights of such a line to the state from the federal government, Fox hopes to jump-start a $250-million proposal to make Ensenada a major rail-linked container cargo center.
In remarks at the ceremony, Baja Gov. Eugenio Elorduy announced that the first of several major Toyota suppliers has committed to building a parts facility. Officials in the Baja state economic development secretary’s office said an additional three or four supplier projects are imminent.
Budd Co. of Troy, Mich., will build a metal stamping and forming plant near the Toyota plant, Elorduy said. Company officials confirmed plans to build the facility but declined to say how much the company will invest in it. Budd operates a similar metal stamping plant in Guanajuato state to supply a huge General Motors Corp. auto factory.
The groundbreaking comes as the light-assembly manufacturing plants called maquiladoras continue to lose jobs and the work migrates to other areas of Latin America and Asia where costs are lower. Situated in a former olive grove about 20 miles east of downtown Tijuana, the Toyota factory initially will make parts for Toyota light trucks. But over time, the factory will be expanded to make motors and then entire vehicles, Baja officials said.
“There are days to be celebrated and this is one of them, one that is bringing technology and new investment that will create jobs and a new automotive cluster in Baja California,” Fox said after he and the chief executive of Toyota Motor Manufacturing North America, Teruyuki Minoura, planted a ceremonial tree.
Fox likened the effect of the Toyota factory on Baja California’s economy to that of General Motors and its arrival in the 1980s in Guanajuato, where he was governor before being elected president in December 2000.
Guanajuato has 60,000 auto jobs and has become one of Mexico’s most prosperous states. Dennis C. Cuneo, vice president of Toyota Motor Manufacturing North America, said Toyota still had not decided how much money it will invest in the first phase of factory construction, nor on how many workers it will employ at first.
“We always start out small and conservative, and if we are successful, we expand,” Cuneo told reporters.
Toyota expects the first phase of construction to be complete by fall 2004, when it will begin sending truck beds to its California assembly plant. Toyota has 10 factories in North America, four of which assemble complete vehicles, employing 20,000.
The Tijuana facility is Toyota’s first in Mexico. State and federal officials say the auto maker is considering building a second plant closer to the center of the country.
Toyota is beginning construction as Baja and Mexican manufacturing generally still is mired in a slump caused by the U.S. recession and a strong peso that has made Mexico less competitive on the global labor market.
Maquiladora jobs nationwide fell to 1.1 million in March, the latest month for which figures are available. That’s a 21% decline from the jobs peak of 1.3 million in November 2000. In Baja, over the same period, maquiladora jobs shrank 24% to 218,439.
Daniel Romero, head of the Tijuana area association of maquiladora operators, a trade group, said operating costs have risen as much as 23% in the last 18 months because of new tax and customs laws. Many Japanese companies have closed production lines or entire plants and moved operations to China or other lower-cost Asian countries, he said.
In his talk, Fox said, however, that the Mexican manufacturing sector showed encouraging signs of recovery in April, with output rising 8% from the previous month.
State and federal officials are hoping that Baja will enter a new age of heavier industry and “value added” manufacturing. The key element of the Baja rail proposal is a 65-mile line linking Ensenada’s port with Tecate, where it would link up with a currently inoperative rail line that connects Baja with the Union Pacific grid in the Imperial Valley.
Baja state official Jesus Torres Acevedo said the state hopes to open bidding within six months on construction of the rail line, part of a plan to increase the prominence of Ensenada’s container port and to promote economic development of an interior strip of Baja California.
