In the Driver’s Seat at Toyota

Toyota Motor Corp. has a message for its American operations: It’s all yours.

With top management concentrating on expanding in Asia and Europe as part of Toyota’s drive to grab 15% of the global automotive market by 2010, much of the decision-making at the company’s thriving U.S. division is being put in the hands of U.S.-based, non-Japanese executives.

These days, “we don’t need so many approvals from Japan,” said Jim Press, executive vice president of Torrance-based Toyota Motor Sales USA and one of only five non-Japanese members of Toyota’s global management group. There is definitely no plan to cut the U.S. operations loose, but “we have more autonomy,” he said.

Press, a 34-year Toyota veteran, said the newfound independence in Torrance was a goal Toyota had been working toward since it started selling cars in the U.S. in 1957.

“As we do more and more here,” he said, “it allows Toyota Motor Corp. to use its resources” in new developing markets such as China, India, Russia and Western Europe.

If any of the company’s 36,000 North American employees had any doubts about who was in the driver’s seat in this country, they were erased in August when Toyota President Fujio Cho gave a speech at a major auto industry conference in Michigan.

“There used to be a time when we could handle everything from Japan.... But using only Japanese advisors cannot be done anymore,” Cho said. “We are stretched thin.”

Toyota ranks fourth in the U.S. auto market, the world’s biggest, behind General Motors Corp., Ford Motor Co. and DaimlerChrysler’s Chrysler Group. Toyota sold 1.8 million cars and trucks in the U.S. last year, and built 60% of them at plants in the U.S. and Canada. The company is on track to sell 2 million vehicles in the U.S. this year and wants to increase annual North American production capacity to 1.7 million vehicles by 2006.

As part of the stepped-up drive for self-reliance, Toyota is spending more than $1.3 billion to expand U.S. production and research and development facilities over the next few years.

“Our fundamental philosophy is to build where we sell,” said Gary Convis, executive vice president of Toyota Motor Manufacturing North America. Convis, 62, who joined Toyota in 1984, is the only American besides Press in Toyota’s global managing officers’ group.

The manufacturing expansion will add 4,000 or more jobs to a payroll that already includes 31,000 workers in the U.S. and 5,000 in Canada and Mexico.

Right now, Toyota operates four car and truck assembly plants, and seven engine and parts plants, in the U.S., Canada and Mexico. Together, the facilities employ 25,000 workers, about two-thirds of Toyota’s total North American employment.

Under the expansion drive, Toyota is spending $800 million on a new truck plant in San Antonio. Scheduled to open in 2006, it will build a redesigned full-size Tundra pickup.

Meanwhile, in Tijuana, a $140-million plant is partially complete and already building beds for Toyota’s compact Tacoma pickup. The Tijuana plant late this year will take over production of the entire Tacoma truck.

The company also is spending $350 million to increase production facilities at its engine plants in Alabama and West Virginia, plus $149 million to expand a test lab in Kentucky and parts plants in Canada and Tennessee.

It’s all a big change from Toyota’s early efforts in the U.S.

Press recalled that when he joined the company in 1970, “the American management used to have to go down to the docks to greet the boats to find out what the new-model-year cars looked like.”

Now many Toyota cars, and their interiors, are designed in the U.S. And Toyota engineers in Michigan, California and Arizona are assuming increasing responsibility for testing and developing new models.

The flagship 2005 Toyota Avalon, the brand’s biggest sedan, to be introduced early next year, is “the most American car we’ve ever done,” Press said.

It was designed at Toyota’s Calty Design Research Center Inc. in Newport Beach and most of the engineering was done at Toyota Technical Center Inc. in Ann Arbor, Mich.

In recent years, Toyota’s design and engineering teams in the U.S. have reworked Japanese designs for American tastes by adding more horsepower, a softer ride and more space than in European or Asian models. As part of this campaign, Toyota Technical Center has redesigned the Camry, Solara and Sienna vehicles for the North American market.

Toyota’s Cho called this process part of a “reinvention” of the carmaker, necessary because the market, especially in the U.S., is so competitive.

“Any company not willing to take the risk of reinventing itself,” he said, “is doomed.”