Trump hints Toyota investment due to North American trade pact successBusiness | 15 Mar 2019 3:49 pm
US President Donald Trump congratulated Toyota on Twitter after Toyota Motor Corp said it will invest US$750 million more at five U.S. plants that will bring nearly 600 new jobs, and he tried to tie the announcement to his efforts on trade.
Referring to an agreement with Canada and Mexico that would replace the 25-year-old North American Free Trade Agreement, Trump said: "BIG NEWS for U.S. Auto Workers! The USMCA is already fixing the broken NAFTA deal.”
The revised version of NAFTA negotiated by the Trump administration, regarded by many as a modest recasting of the original agreement, has not been approved by Congress.
Trump made no mention when a Chevrolet Cruze factory in Ohio recently closed, the first of five North American plants that GM intends to shut down by early next year.
Toyota Motor North America executive Chris Reynolds said the investments represent yet more examples of the company’s long-term commitment to build where it sells, irrespective of trade uncertainty due to tariffs.
"Our overarching manufacturing principle is if we can sell it here we need to make it here. That’s been true before any tariff uncertainty, it’s true during tariff uncertainty and it will be true after. Our investment cycles go beyond any particular political cycle,” he said during a conference call with reporters.
Toyota Motor North America chief executive Jim Lentz said the driving force behind the overall investment has been consumers’ "insatiable appetite” for light trucks over passenger cars, pointing to Highlander and RAV4 production and past pickup truck production.
"But I’d be disingenuous if I didn’t say we also have an eye on trade,” Lentz said. "USMCA is part of that. But these decisions we’re making today are really driven by consumers and our product portfolio going forward, for the most part.”
The automaker is spreading the additional investments among several plants.
Toyota’s Georgetown, Kentucky, facility will get a US$238 million infusion to produce hybrid versions of Lexus ES 300 sedans starting in May and the RAV4 SUV starting in January 2020, the company announced.
The RAV4 production doesn’t signal a shift away from sedan production at the sprawling Kentucky plant, Toyota executives said. Instead, it reflects Toyota’s plan to build multiple vehicles at its plants to better insulate each facility from downturns in market cycles.
"Unlike some of our competitors, we think there’s value in the sedan market, while it may not be as big as it was,” Reynolds said.
The announcement also includes US$288 million to increase annual engine capacity at Toyota’s Huntsville, Alabama, facility. The plant will add 450 jobs to accommodate new four-cylinder and V6 engine production lines. Last year Toyota and Mazda announced plans to build a US$1.6 billion joint-venture plant in Huntsville that will eventually employ about 4,000 people.
Toyota also is spending US$62 million on equipment to boost production of Toyota and Lexus cylinder heads at its Bodine Aluminum facility in Troy, Missouri, as part of its cost-saving New Global Architecture production strategy to share common parts and components among different vehicles.
A US$50 million expansion and equipment upgrade at a Bodine plant in Jackson, Tennessee, will add 13 jobs and produce engine blocks while doubling the capacity of hybrid transaxle cases and housings.
And Toyota will add 123 jobs and spent US$111 million to expand its plant and purchase equipment in Buffalo, West Virginia, to double the capacity of hybrid transaxles.
Previously, Toyota also announced a US$600 million investment at its Princeton, Indiana, plant to increase the capacity of its Highlander SUV and to incorporate the new production strategy, and US$170 million to launch the 2020 Corolla on a new production line in Blue Springs, Mississippi.-AP