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Toyota eyes U.S. buildup

The carmaker wants to add N. American plants to avoid a backlash against imports.

January 12, 2007|John O'Dell | Times Staff Writer

Toyota Motor Corp. wants to build more of its cars and trucks in North America, fearful of a backlash as its booming sales erode American automakers' share of the U.S. market.

Although the Japanese automaker often proclaims that it wants to build where it sells, nearly half of the 2.5 million vehicles Toyota sold in the U.S. last year were imported from overseas factories.

The company reportedly is close to announcing a site in the Southern U.S. for what would be its ninth North American manufacturing plant. And Bloomberg News reported Thursday that unnamed sources familiar with Toyota's plans had said the automaker wanted to build as many as five new North American assembly plants by 2016, including the facility in the South.

Toyota executives would not comment on the report or discuss expansion.

But James Press, president of Toyota Motor North America, said in an interview in Detroit this week that the automaker intended to increase investment and employment in the U.S., Canada and Mexico.

Acknowledging that Toyota is concerned about its image, Press, who runs Toyota's New York-based North American corporate office, said that "our first mission is to put the right face on the company" and to "grow with honor."

Toyota executives are concerned about criticism from some rivals and members of Congress of the company's mounting imports of Japanese-built autos as demand here outstrips its North American production capacity. Toyota, like other Japanese automakers, also wants to limit the effects of currency exchange fluctuations by building more of its vehicles in the countries in which they are sold, Press said.

Adding five plants would bring Toyota's North American total to 13 and could represent an investment of about $5 billion and the addition of 10,000 jobs, according to the Bloomberg report.

"It's an aggressive plan but conceivable if they really want to do it," said Jim Hossack, senior analyst at consulting firm AutoPacific Inc. in Tustin.

"That kind of expansion would depend on growth, but it would be good for getting more congressmen on their side," he said.

Toyota's growth isn't certain: Many analysts and auto industry executives are predicting that total U.S. auto sales could drop to as low as 15.9 million passenger cars and light trucks this year from 16.5 million in 2006, meaning that some companies will be posting declines.

But historically Toyota has grown while others have shrunk. In the U.S., the biggest sales losses among major automakers in the last decade have been posted by General Motors Corp., Ford Motor Co. and Chrysler, part of DaimlerChrysler of Germany since 1998.

Toyota's U.S. sales last year rose 12.5% to 2.54 million vehicles, while the three U.S. automakers saw combined sales decline 8% to 8.88 million. Toyota's growth propelled it into third place in the U.S. market behind GM and Ford. Toyota sold an additional 260,000 vehicles in Canada and Mexico, bringing its North American sales total to 2.8 million.

Analysts generally expect Toyota to surpass Ford this year, becoming the No. 2 auto company in the U.S., and to supplant GM as the world's largest automaker by the end of the decade.

GM, however, has said it won't give up its crown without a fight. On Thursday, the company said it would increase capital spending to an annual range of $8.5 billion to $9 billion this year and next. That's up from slightly less than $8 billion in 2006.

Detroit-based GM, which lost $10.6 billion in 2005, is in the middle of a restructuring that includes slashing more than 34,000 jobs, closing 12 plants and cutting $9 billion in structural costs.

Chief Executive Rick Wagoner said in a statement that GM's restructuring had "moved faster and further than people expected a year ago." He said his priorities this year included pushing the North American turnaround; growing aggressively in markets such as China, Brazil, Russia and India; and reaping the benefits of running the business globally.

In contrast, Toyota wants to be more local. It has scrambled in recent years to use its U.S. design and engineering facilities in Southern California and Michigan to develop more of the vehicles it sells in North America.

In a production report this week, Erlanger, Ky.-based Toyota Motor Engineering & Manufacturing North America said it produced 1.55 million vehicles at its six assembly plants in 2006. Toyota also imported 1.2 million cars and trucks to meet demand in the three North American markets, the highest total in 20 years.

Dan Sieger, spokesman for Toyota's North American manufacturing operation, said the company continually assessed its production capacity as part of its corporate planning.

Toyota's North American operations include assembly plants in Ontario, Canada, and Tijuana, Mexico. Its U.S. assembly facilities are in Georgetown, Ky.; Princeton, Ind.; San Antonio, which opened in November to produce the full-size Tundra pickup; and Fremont, Calif., a joint venture with GM.

A seventh factory, also in Ontario, is expected to open next year, and Toyota has contracted with Fuji Heavy Industries Ltd. to build Camry sedans this year at Fuji's Subaru plant in Lafayette, Ind.

By comparison, GM will have 24 North American plants and Ford about a dozen after they complete shutdowns planned as part of their North American restructuring efforts through 2009.

Toyota's North American production capacity will rise nearly 33% to 2 million cars and trucks by 2008 with new or enlarged facilities, an investment the company pegs at $2 billion. Toyota has said it intends to sell 9.34 million vehicles worldwide this year, up 6% from 2006.

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john.odell@latimes.com

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