Tuesday, September 10, 2002

Toyota likely to add fifth assembly plant

By Mike Boyer mboyer@enquirer.com
The Cincinnati Enquirer

        It's not a question of if Toyota Motor Corp. will build a fifth assembly plant in North America but when, in the view of analysts. Whether such a plant would be built in the Midwest, the South (where more auto plants are locating) or in Mexico is less clear.

        Building another plant is “all but inevitable. Certainly their sales in North America warrant expansion,” said Josh Peters, industry analyst with Morningstar Inc. in Chicago.

        The possibility of a fifth assembly plant was raised late last week by Fujio Cho, Toyota's president after meeting with analysts.

        “Our sales people are very aggressive and want production expanded further,” said Mr. Cho, considered the creator of Toyota's Georgetown, Ky. assembly plant, which is the company's largest in North American employing more than 7,000. “The U.S. has a growing population, so we're considering many options, including expanding production further.”

        On Monday, a spokesman for Toyota's North American manufacturing headquarters in Erlanger said the company hasn't made a decision to expand, describing it as a “maybe” issue.

        But analysts said it's not surprising Toyota is thinking about expansion. Its four existing assembly plants - Georgetown, Princeton, Ind., Fremont, Calif., and Cambridge, Ontario - are near capacity and its North American sales continue to grow.

        Last week, Toyota Motor Sales, the company's Torrance, Calif., sales arm, reported its best-ever month with sales of 186,599 cars and trucks, up 13.2 percent, surpassing a record set just three months earlier.

        David Cole, director of the Michigan-based Center for Automotive Research, said he wouldn't be surprised if Toyota doesn't eventually build several more assembly plants.

        Toyota's North American plants have capacity to build about 1.2 million units annually, increasing to 1.4 million units by the end of next year. That represents the bulk of the company's 2 million vehicles sold here.

        In the past, Toyota officials have said the company is unlikely to expand further in Georgetown because of the facility's size.

        Mr. Peters said a new plant could be located “anywhere from Cincinnati to Birmingham (Ala.)” because of that region's proximity to suppliers and auto buyers.

        Mr. Cole said he wouldn't rule out the possibility Toyota might locate its next assembly plant in or near Mexico.

        “It's a real possibility since Nissan, Volkswagen and GM have demonstrated (Mexico) can be a source of low-cost, high-quality vehicles,” he said.

        In June, Toyota broke ground on a plant in Mexico's Baja California to supply truck beds for Tacoma pickups assembled at its Fremont, Calif. joint venture with General Motors.

        That followed the company's decision to start selling its cars in Mexico.


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