Toyota investing $1 billion in Mexico plant

Toyota has announced plans to build a new factory in Mexico. The site, to be located in the state of Guanajuato, is set to open in 2019 following an investment of about $1 billion.

The plant will be the first to make use of the Toyota New Global Architecture, and will (at least initially) focus on production of the Corolla. The compact sedan will continue being built in the United States at the Blue Springs, MS, site, consolidating Corolla production in the south. However Toyota's site in Ontario, Canada, will shift to "mid-sized vehicles of higher value," alongside the plants in Kentucky and Indiana, the automaker said.

The Guanajuato site will be Toyota's second Mexican plant, joining the Tijuana plant that assembles the Tacoma – soon to ramp up to 89,000 units per year. Once the new Guanajuato plant comes on full steam, it is slated to produce around 200,000 units per year. It'll be the first site Toyota will open worldwide since it began focusing on utilizing the production capacity it already has. With 90 percent of its production capacity now in use, the Japanese auto giant is also planning to broaden its joint venture with Guangzhou in China as well.
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Toyota Invests in Competitive Plants
- Emphasis on Sustainable Growth Strategy
- New plant in Mexico and expansion of its GTMC joint venture in China

Toyota City, Japan, April 15, 2015 ― Toyota announced today that it will build a new plant in Mexico and expand its joint venture, Guangzhou Toyota Motor Co., Ltd. (GTMC), in China. These investments are grounded on its plans to construct production lines that are more competitive, with greatly reduced initial investment, improved efficiency, flexibility, environmental performance and safety. These "simple and slim" production lines can be easily lengthened or shortened depending on demand. Over-head conveyance devices are eliminated, compact equipment is installed on top of the plant floors, and paint-booths are smaller.

The new plant in Mexico and the expansion in China will be designed to accelerate innovation by implementing these new technologies into real production lines.

With today's announcement, Akio Toyoda, President of Toyota Motor Corporation said "This investment represents our long-held principles of continuous improvement and challenging ourselves to always do better. An increase in production does not mean an undisciplined pursuit of more. Toyota's expansion must be driven by providing ever-better-cars and our talented people. These investments will be an important test of Toyota's resolve and a measure of tangible improvement."

Toyota had previously suspended construction of new plants in order to improve capacity utilization of existing plants and plan for reduced model change-over and new plant construction investment. Currently, total capacity utilization is more than 90 percent and the initial portion of new simple and slim plant costs, including structure and equipment, is expected to be approximately 40 percent lower when compared to 2008. Considering these achievements and forecasted steady growth of the global auto market, Toyota is taking these steps.

New plant in Mexico

A new plant will be built in Guanajuato, Mexico, to support improved competitiveness in North America. The plant will produce Corolla taking into consideration forecasted steady, mid and long-term growth in North America. Building this plant will be one of Toyota's efforts to realign its North American manufacturing operations and begin a new approach to plant building; featuring new work processes, including Toyota New Global Architecture (TNGA) production engineering innovations, and will be a model for global manufacturing.

- Realignment of North American manufacturing operations
To more efficiently supply high-quality and attractive vehicles, Toyota will continue regional consolidation of North American production based on vehicle body type and size. In 2019, production of the Corolla will be shifted from the plant in Cambridge Ontario, Canada (TMMC) to the newly opened plant in Mexico, and the plant in Blue Springs, Mississippi (TMMMS) will continue to produce the Corolla; consolidating compact vehicle production to the Southern United States and Mexico.

TMMC will then focus its production on mid-sized vehicles of higher value, along with Toyota Motor Manufacturing, Kentucky, Inc. (TMMK) and Toyota Motor Manufacturing, Indiana, Inc. (TMMI).

- First TNGA plant
From the ground up, this plant will be the first designed to fully maximize the merits of TNGA, like significantly reduced equipment investment for model change-over realized by modularization of major components made possible by unified engineering. As a TNGA model plant, "smart car-making" results and knowledge will be rolled out to other regions and other plants in the future.

Expansion at GTMC

By restructuring its existing lines at GTMC and building an additional facility by the end of 2017, Toyota will create a plant that is resilient and competitive; prepared for future TNGA innovations and capacity increase. Toyota views it as vital to further improve the competitiveness of the existing lines and respond to future demand for stable growth in the Chinese market; the largest market in the world and where a number of automakers have been competing. At the same time, GTMC will collaborate with engineering, production and procurement on effective use of the existing supplier network and cost reduction activities at its R&D center.

- Restructuring of the existing production lines
GTMC will consolidate its vehicle production by vehicle size and pursue improvements based on the Toyota Production System (TPS) and increased automation, to realize higher quality and productivity.

- New facility construction
Following the restructuring and resulting higher efficiencies of the existing lines, GTMC will operate all three lines with the current number of employees. A competitive new facility will be created by implementing productivity improvement activities conducted on the existing lines and new innovative production engineering technologies. At the same time, it will work on smart plant-building, effectively utilizing existing equipment that is adjacent to the current facilities.

Outline of production capacity increase
Mexico (new plant) China (GTMC new facility)
Timing Production to start in 2019 Production to start as needed after completion of new line 3 in 2017
Location State of Guanajuato Nansha District, Guangzhou, on land next to existing lines 1 and 2
Product lineup Corolla A model to be announced later
Annual production capacity Approx. 200,000 units Approx. 100,000 units (with consideration toward capacity expansion in line with demand)
Investment Approx. 1 billion U.S. dollars Approx. 52.5 billion yen
Employment Approx. 2,000 (new) Current level of GTMC's employees

Reference: Current production structure in Mexico and China
Mexico China
Annual production capacity Approx. 89,000 units (from April 2015) Approx. 360,000 units Approx. 530,000 units Approx. 140,000 units
Product lineup Tacoma Highlander, Camry (including HV), Camry Classical, Levin, Yaris L, E'z Crown, Reiz, Corolla, Corolla EX, Vios Coaster, Land Cruiser, Land Cruiser Prado, RAV4, Prius
Production volume in 2014 Approx. 70,000 units Approx. 380,000 units Approx. 440,000 units Approx. 140,000 units
Employment Approx. 1,500 Approx. 10,000 Approx. 12,000 Approx. 6,800

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