Toyota may slow U.S. factory expansion
Toyota's rise to the number one position in the global car industry hasn't been without its setbacks. The carmaker is starting to feel growing pains following its rapid expansion over the past few years, and the issue has got some if its top brass very concerned. The Detroit Free Press is reporting that execs are worried they've built too many factories in the U.S. and that they're considering slowing things down. The problem Toyota faces is if demand drops, it'll be stuck with a whole lot of idle assembly lines. GM, Ford and Chrysler feel your pain, man. A weakening yen also means that Toyota is better off building cars in Japan and shipping them over, and there's no forecast that things are set to change any time soon.To put a damper on its rapid expansion in North America, Toyota's board is planning a strategic shift in policy that will likely result in no more factories being built for now. According to the Journal, Toyota has already scaled back plans for its $1.3 billion Mississippi assembly plant. If by any chance demand does outstrip supply, Toyota would likely fast-track the installation of additional assembly lines at existing plants rather than setting up new ones.
[Source: Detroit Free Press]
Reader Comments (Page 1 of 1)
F451 2:18PM (6/20/2007)
Smart, very smart, on Toyota's part.
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FThorn 2:23PM (6/20/2007)
too late. nowhere to go but down
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Tool 2:56PM (6/20/2007)
The WSJ article struck me as a very sober realization on Toyota's part that it has grown too fast doing it in a manner that was not necessarily the "Toyota Way".
Of course, Toyota PR refuses to acknowledge that all of this growth has damaged Toyota's reputation for quality, durability and reliability. But the facts are pretty clear; just look at the recent JD Power IQS and you will see that where Toyota once dominated nearly every category as recently as 5 years ago, it has become an also-ran.
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Beat-it-nerd 2:57PM (6/20/2007)
Awwwwww Toyota. Too much Demand. Not enough Supply. So good to the earth. So So Green. I want to shoot myself.
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VenGent 3:06PM (6/20/2007)
I believe the the 'goal' was #1. They got it in 2006. Once the mountaintop is attained, there is the inevitable issues of what it cost to get there, in this case the reduction of quality and unToyota-like debacles and then the reality of that cost, in this case the detrimental pace of overexpansion.
This is the first step towards cutting jobs and moving production to where it's more cost effective.
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Travis Rassat 3:26PM (6/20/2007)
Out of curiosity, does anyone think that the unions' attempts to get into the Toyota factories had any effect on this decision?
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FLR 3:56PM (6/20/2007)
I think you hit the nail on the head. Toyota knows that the current plants will unionize and their advantage over domestics will be gone.
Don 3:46PM (6/20/2007)
Gee, I don't feel Toyota's pain at all.
But I do feel the American workers' pain if production slows and layoffs begin.
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Artie43 4:20PM (6/20/2007)
I see this as a combination of things.
1. Big fear of UAW unionization efforts would defeat their cost efficiency. Making them the same inefficient corrupt assembly plants as the domestic companies.
2. The limited number of models at some of the US plants puts them in the same boat as the domestics too. If demand drops off, there is not the flexibility needed to make different models on the same production lines. Luckily Honda may really pickup sales because of their flexible manufacturning designs.
3. If oil keeps going up, the truck/Suv plants may drop in production so much that it will hardly pay to keep them open. Results in really costly shutdowns.
Remember Toyota is about making money. The problems on the horizon are enought to cause executives to lose alot of sleep at night.
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Aaron 5:05PM (6/20/2007)
everyone trips all over to paty Toyota on the back when months ago they were talking, 3, 4, 5 new facilities without any details. Fast forward now to see this. Lmao..
Lemmings who parade them as being American as apple pie can wave at the ships in the harbor bringing the cars in byt he thousands.
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Barney 5:07PM (6/20/2007)
Toyota must see that all products made in America is not always up to their standards. The Japanese discipline makes the better car and Americans are buying "made in Japan". The advantages of American factories are being out weighed.
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Alessandro Merolla 5:22PM (6/20/2007)
And now Toyota smile for Google cars:
http://dallapartedichiguida.blogosfere.it/2007/06/petrolio-se-google-trova-unalternativa.html
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Tool 5:52PM (6/20/2007)
I'm not sure I agree with the comments about Toyota being concerned about unionization. It may be a concern, but I think it is a minor one.
These plants are all in decidedly non-union states and the workers enjoy wages that are as good union rates.
The real problem is the anti-Toyota backlash that is coming up. Toyota realizes that it needs to take the foot off the gas pedal and ensure that its manufacturing utilization is at 90%+.
They may sacrifice market share and allow GM, Ford and Chrysler come back. Then Toyota can re-engage in warfare.
So much of this goes back to the mind 1990's agreement that Toyota (and Honda and Nissan) would manufacture what the sell in the U.S. in the U.S. If you read between the lines, that was their trump card (We Are American!) and now they are going back to heavy imports, which they can do cheaper.
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Mikeeeeeeee 11:51AM (6/21/2007)
tool,
The wages are not a good. GM $71.00 toyota $51.00. That is where the price advantage comes.
Mikeeeeeeeee
KT 6:05PM (6/20/2007)
How many vehicles did Toyo sale in the US last year?
I don't know myself. However, according to the article they did ship 1.27m over here last year. They sure are taking full advantage of the weak Yen.
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Stratojet 8:43PM (6/20/2007)
Toyota experiences many quality issues not publicized in the media. They still enjoy consumer magazines and newspapers sympathy.
This starts to change: for the first time, Consumer Reports had not so good comments about the FJ Cruiser and Yaris; this has never been seen before.
Edmunds does not have rave reviews about the new Tundra. Good review, but not great.
Once you get to the top (Moving Forward as they say) journalist will start to criticize you because it sells more than writing about the underdogs.
They still build very good vehicles but their organization starts to morph. They now have employees with the contempt attitude, self-centered and to say it frankly, arrogant. Humility which was part of the Toyota culture is fading. Just listen to Jim Press comments when they introduced the redesigned Tundra: "It is so big that it will create a solar eclipse".
No empire is forever. Talk to the Roman about this..........
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Barney 12:47AM (6/21/2007)
Good points! Toyota is getting too fast in getting big. They are pushing themselves ahead of their own ideals and it's starting to show. Getting more of the North American market with a pickup and SUVs, was the wrong step. They should have continued with quality vehicles that sell in volume.
Bryan 8:40PM (6/20/2007)
Barney, its not so great coming from Japan either. All of the defects were just hidden. Months ago, I read something I thought I would never see coming from the husband and wife on Detnews. The wife actually said that the Fusion, while made in Mexico, had better quality than the Camry from Japan. Toyota just sucks. People can keep buying into the hype but eventually they will admit the truth, buy American or German, and move on with life. Well, maybe not German lol.
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Barney 12:41AM (6/21/2007)
Toyota and Honda still set the standard. A Fusion "as good as or better then" a Camry. It's amazing to say the NA vehicles are getting as good as the Japanese, when they have no reason for not being the standard. People are still saying they bought an American car because it was cheaper and "almost" as good as a Japanese make. People are also saying that it isn't a real Toyota if it was made in America. Toyota may be thinking the same thing.
Rene Curry 12:48AM (6/21/2007)
It's all about currency. Japanese automakers would have never considered US manufacturing if it wasn't for the Yen's strength back in the day.
The recent push for NA manufacturing was because of the weakening dollar. However, they now have renewed confidence that they can keep the Yen weak.
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