xcel
11-29-2006, 03:03 PM
There's too much politics involved in the eighth plant a Toyota executive says on condition of anonymity. (http://mdn.mainichi-msn.co.jp/features/news/20061129p2g00m0fe024000c.html)
http://www.cleanmpg.com/photos/data/501/2007_Toyota_Tundra1.jpgTamotsu Takatsuka - Mainichi Shimbun - Nov. 29, 2006
About 20 minutes drive from downtown San Antonio, Texas, the rolling green of the plains suddenly gives way to Toyota's new Texas plant.
Toyota bought the oldest ranch in the state to build the 810-hectare plant. It's big enough to hold 173 Tokyo Domes. The complex is also home to 21 parts suppliers.
From the distribution viewpoint, the site is served not only by road, but also by rail and sends out Tundra full-size pickup trucks across the United States.
About one in every seven pickup trucks in the United States is sold in Texas, making it the biggest market for that type of vehicle in the country. Toyota has a philosophy of producing cars where they're bought, which was obviously a reason behind its decision to open the plant in San Antonio.
But Texas isn't exactly a manufacturing hotbed. So Toyota had to convince its suppliers to move to San Antonio with it. The cost of getting them to do so meant the motor company's investment in the plant swelled to 1.28 billion dollars, almost three times as much as Toyota said in May that it would cost to set up a similar plant in Guangzhou, China, in a joint venture with Guangzhou Automobile.
Toyota announced it would build the San Antonio plant in February 2003. Tensions were building up at the time as the United States was poised to launch its invasion of Iraq. But the war hadn't yet started and U.S. President George W. Bush was still fairly popular.
"We didn't choose Texas because it was President Bush's home state, but there were several candidate locations and I can't deny the connection gave San Antonio an advantage," a Toyota executive says on condition of anonymity.
Another anonymous Toyota executive adds: "When you're building a factory in the United States, you need to give a certain degree of thought to political considerations."
Toyota's San Antonio plant, which started full-scale operation on Nov. 17, is the manufacturers' sixth plant in North America. Its seventh North American plant will be built in Woodstock, Ontario, and is slated to start operating in 2008. Toyota has announced it will build an eighth North American plant, but it has held off on where and when it will be built.
"There's too much politics involved in the eighth plant," a Toyota executive says, again on condition of anonymity.
U.S. mid-term elections were held on Nov. 7. Toyota feared deciding before the elections on when and where to build its new plant. It worried that making an announcement on a particular place would offer too much to incumbents, who would be able to claim to have brought the giant automaker to their constituency, and garner excessive enmity from challengers. And if the challengers won, it would mean the advent of anti-Toyota ligeslators and governors.
So Toyota did nothing except decide that any announcement of when and where to build the new plant should not be made until after the mid-term elections.
Toyota is reluctant to make a decision because of the rising specter of protectionism, even though trade problems were not a significant part of the debate that went on during the mid-term election campaign.
Toyota believed that a win for the Democrats would give vent to protectionist feeling. When the Democrats grabbed back control of the House of Representatives and the Senate, its newly elected politicians included such figures as Congressman Sherrod Brown (Dem), an avowed opponent of free trade.
And, just by coincidence, Toyota's U.S. sales skyrocketed and local production could not keep up with demand, prompting the automaker to import 920,000 cars in the first nine months of this year, raising fears that protectionist sentiment would spread.
The Big Three U.S. automakers, always sensitive when it comes to trade problems, responded by demanding - and getting - a meeting with Bush, where they complained that a cheap yen was encouraging Japanese exports of cars to the U.S. and urged an adjustment of dollar-yen exchange rates.
Toyota President Katsuaki Watanabe said the automaker couldn't comment other than to say, "there's nothing we can do about exchange rates."
Toyota - and other Japanese automakers doing well in the U.S., like Honda - are worried that things are going to get hotter under the collar for them if present conditions continue.
Toyota's yet-to-be-built eighth North American plant will produce Yaris compact cars. It's believed the plant will be used to shield the company from pressure exerted by protectionists. But not everybody is happy with the plan.
"Can Yaris really make enough money to justify being built in North America?" one Toyota employee asks with doubt in their voice.
Compact cars are usually made with incredibly small margins. Countries with cheaper labor costs, like Mexico, would have been more rational destinations for the plant.
But, increasing local production is the only possible way for Toyota to avoid trade friction with the United States. Japanese automakers have taken that step in the past to avoid making trade issues with the U.S. even pricklier.
Toyota's new San Antonio plant can produce 1.75 million cars a year and it seems likely to set down very firm foundations. Yet, on the other hand, Toyota must also take political implications into consideration and produce vehicles in the U.S., even if it doesn't always make financial sense to do so.
* This is the first in a series about Toyota's North American operations. in the lead-up to 2007, the automaker's 20th anniversary of producing cars in the U.S.
http://www.cleanmpg.com/photos/data/501/2007_Toyota_Tundra1.jpgTamotsu Takatsuka - Mainichi Shimbun - Nov. 29, 2006
About 20 minutes drive from downtown San Antonio, Texas, the rolling green of the plains suddenly gives way to Toyota's new Texas plant.
Toyota bought the oldest ranch in the state to build the 810-hectare plant. It's big enough to hold 173 Tokyo Domes. The complex is also home to 21 parts suppliers.
From the distribution viewpoint, the site is served not only by road, but also by rail and sends out Tundra full-size pickup trucks across the United States.
About one in every seven pickup trucks in the United States is sold in Texas, making it the biggest market for that type of vehicle in the country. Toyota has a philosophy of producing cars where they're bought, which was obviously a reason behind its decision to open the plant in San Antonio.
But Texas isn't exactly a manufacturing hotbed. So Toyota had to convince its suppliers to move to San Antonio with it. The cost of getting them to do so meant the motor company's investment in the plant swelled to 1.28 billion dollars, almost three times as much as Toyota said in May that it would cost to set up a similar plant in Guangzhou, China, in a joint venture with Guangzhou Automobile.
Toyota announced it would build the San Antonio plant in February 2003. Tensions were building up at the time as the United States was poised to launch its invasion of Iraq. But the war hadn't yet started and U.S. President George W. Bush was still fairly popular.
"We didn't choose Texas because it was President Bush's home state, but there were several candidate locations and I can't deny the connection gave San Antonio an advantage," a Toyota executive says on condition of anonymity.
Another anonymous Toyota executive adds: "When you're building a factory in the United States, you need to give a certain degree of thought to political considerations."
Toyota's San Antonio plant, which started full-scale operation on Nov. 17, is the manufacturers' sixth plant in North America. Its seventh North American plant will be built in Woodstock, Ontario, and is slated to start operating in 2008. Toyota has announced it will build an eighth North American plant, but it has held off on where and when it will be built.
"There's too much politics involved in the eighth plant," a Toyota executive says, again on condition of anonymity.
U.S. mid-term elections were held on Nov. 7. Toyota feared deciding before the elections on when and where to build its new plant. It worried that making an announcement on a particular place would offer too much to incumbents, who would be able to claim to have brought the giant automaker to their constituency, and garner excessive enmity from challengers. And if the challengers won, it would mean the advent of anti-Toyota ligeslators and governors.
So Toyota did nothing except decide that any announcement of when and where to build the new plant should not be made until after the mid-term elections.
Toyota is reluctant to make a decision because of the rising specter of protectionism, even though trade problems were not a significant part of the debate that went on during the mid-term election campaign.
Toyota believed that a win for the Democrats would give vent to protectionist feeling. When the Democrats grabbed back control of the House of Representatives and the Senate, its newly elected politicians included such figures as Congressman Sherrod Brown (Dem), an avowed opponent of free trade.
And, just by coincidence, Toyota's U.S. sales skyrocketed and local production could not keep up with demand, prompting the automaker to import 920,000 cars in the first nine months of this year, raising fears that protectionist sentiment would spread.
The Big Three U.S. automakers, always sensitive when it comes to trade problems, responded by demanding - and getting - a meeting with Bush, where they complained that a cheap yen was encouraging Japanese exports of cars to the U.S. and urged an adjustment of dollar-yen exchange rates.
Toyota President Katsuaki Watanabe said the automaker couldn't comment other than to say, "there's nothing we can do about exchange rates."
Toyota - and other Japanese automakers doing well in the U.S., like Honda - are worried that things are going to get hotter under the collar for them if present conditions continue.
Toyota's yet-to-be-built eighth North American plant will produce Yaris compact cars. It's believed the plant will be used to shield the company from pressure exerted by protectionists. But not everybody is happy with the plan.
"Can Yaris really make enough money to justify being built in North America?" one Toyota employee asks with doubt in their voice.
Compact cars are usually made with incredibly small margins. Countries with cheaper labor costs, like Mexico, would have been more rational destinations for the plant.
But, increasing local production is the only possible way for Toyota to avoid trade friction with the United States. Japanese automakers have taken that step in the past to avoid making trade issues with the U.S. even pricklier.
Toyota's new San Antonio plant can produce 1.75 million cars a year and it seems likely to set down very firm foundations. Yet, on the other hand, Toyota must also take political implications into consideration and produce vehicles in the U.S., even if it doesn't always make financial sense to do so.
* This is the first in a series about Toyota's North American operations. in the lead-up to 2007, the automaker's 20th anniversary of producing cars in the U.S.