With production capacity of 3.7 million vehicles in Japan and the Yen at historical highs, it is very difficult to export Toyota admits. However, the factories are 90% depreciated, so look for slow reductions in capacity since it provides flexibility.
Toyota said today that it would expand its Huntsville, Alabama engine plant to increase North American production of V6 engines. The expansion will allow Toyota Motor Manufacturing Alabama (TMMAL) to build an additional 216,000 engines each year, increasing total V6 annual capacity to 362,000. A new 300,000 sq. ft. building will be constructed. The increased engine production will begin in March 2014.
The $80 million investment will bring total plant investment to more than $700 million. Only about 125 new jobs will be created, increasing employment nearly 10% to 1,150, since engine plants are now highly automated.
TMMAL currently assembles 4-cylinder, V6 and V8 engines for eight of 12 Toyota North American built vehicles. TMMAL is the only Toyota plant globally to produce these three types of engines in one facility. The strong Japanese Yen is forcing Toyota as well as other Japanese automakers to increase local production as a hedge against the profit destroying currency.
This latest Toyota offshore investment will increase engine production at the Huntsville plant to more than 700,000 annually, and will increase total Toyota engine production in the U.S. to more than 1.4 million per year. Toyota also builds engines in Kentucky and West Virginia.
Today’s announcement is the latest of a series of Toyota production increase announcements since February including Toyota plants in Indiana, West Virginia, Canada and Kentucky. Cumulative investment total is approximately $645 million and more than 1,100 jobs are being added.
In April, Toyota Motor Sales came within a rounding error of surpassing Ford Motor Company as the Number Two selling automotive group in the U.S. Ford Motor’s U.S. sales decreased 5% in April year-over-year to 179,660 vehicles in a market that was up 2.3%, in part because its plants were running flat out. Number Three Toyota Motor Sales reported April sales of 178,044, up 12%. Year-to-date, Toyota Motor trails Ford Motor by 52,000 cars and light trucks, a gap is decreasing each month.
Globally, Toyota finished 2011 with 7.35 million in vehicle sales. Toyota is now the Number Three global automaker behind General Motors and Volkswagen Group, which sold more than 9 million and 8 million vehicles respectively.
Akio Toyoda, scion of the founders and CEO, today assumed the chairmanship of JAMA – the Japanese Automakers Association, which was founded in 1948 to rebuild the ruined Japanese economy after WW2. Speaking in Japan, Toyoda said, “My first determination is to sustain the domestic auto industry. Today, monozukuri (manufacturing) in Japan exists in a harsh environment. Because of the current strong yen, production bases are moving overseas, while the entire supply chain is in jeopardy of being uprooted and hollowed out…”
“Through the resolve and efforts of our predecessors, the automobile industry has grown to where it can vastly contribute to our country’s employment and economy.
“I believe that we cannot do without this same resolve, and I strongly intend, within the framework of JAMA as well, to put forth my utmost effort, so that the automobile industry can continue to meet its responsibilities to employment in Japan and to Japan’s economy.”
