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Toyota Ups Spending on Minority Firms

August 10, 2001|JOHN O'DELL | TIMES STAFF WRITER

Toyota Motor Sales USA said Thursday that it will spend $7.8 billion over the next decade on a broad diversity program aimed in part at drawing more minorities into the auto industry.

The spending plan, one of the largest formal diversity programs in the industry, was developed in response to a threatened boycott by the Rev. Jesse Jackson's Rainbow/PUSH Coalition.

It represents a nearly 40% increase in Toyota's diversity spending, according to James Press, chief operating officer of the Torrance-based U.S. arm of Toyota Motor Corp.

Press and Jackson jointly announced the program in Chicago.

In a telephone interview, Press said Jackson's challenge to the company--raised in May after Toyota began an ad campaign that some in the African American community found offensive--"was a catalyst that allowed us to focus on what we already were doing" in the diversity arena.

A key element of the program is Toyota's pledge to spend $700 million over the next year purchasing goods and services from minority-owned businesses in the U.S., a 35% increase over present spending levels, and to place $100 million of its funds with minority-owned money management firms.

Jackson, who could not be reached for comment Thursday, has been criticized for steering business generated by such programs to relatives and associates.

Press said none of the funding from the Toyota program has yet been allocated and none has been promised to anyone.

The increased spending with minority-owned firms should stay relatively level over the next 10 years, Press said.

While $7.8 billion over 10 years is a considerable allocation of resources for a company with less than 10% of U.S. auto sales, Toyota's minority purchasing program pales in comparison with spending by the domestic auto makers.

General Motors Corp., the world's largest auto maker, purchased $2.3 billion in components from minority suppliers last year alone and has spent more than $23 billion since it began tracking its minority spending in 1968, said Bo Anderson, GM's executive-in-charge for worldwide purchasing.

Toyota's announcement reflects the Japanese auto maker's practice of making investments whose long-term payoffs may not be apparent until years later, said David Andrea, director of forecasting at the Center for Automotive Research in Ann Arbor, Mich.

In addition to its purchasing plans, Toyota will create a Diversity Advisory Board made up of outside advisors from fields such as business, government and law. It will meet several times a year with the Toyota Executive Committee--its top U.S. policy group.

Toyota also will hire an African American-owned advertising agency "within the next few months" Press said, and will spend $150 million in the next three years on ad campaigns aimed at Latino and African American consumers.

Press said Toyota also will boost its dealer development budget by 67% to $25 million next year and will step up efforts to train minority dealership personnel.

Just under 5% of the company's 1,200 Toyota and 190 Lexus dealerships across the U.S. are owned by minorities.

Toyota said it also will boost minority hiring in its corporate offices and spend $34 million over the next 10 years on training programs.

Jackson had threatened in May to launch a Toyota boycott after seeing an ad that showed a close-up of an African American man's mouth with an image of a gold Toyota RAV4 on one tooth. Toyota said the ad "was intended to communicate RAV4's styling to a youthful, hip audience."

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Times staff writer Terrill Yue Jones contributed to this report.

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