Toyota Falls Out of Love with US Production

Discussion in 'OT Driven' started by TriShield, Jun 22, 2007.

  1. TriShield

    TriShield Super Moderator® Super Moderator

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    Been There, Done That, Bought the Politicians

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    By Frank Williams
    June 21, 2007

    Yesterday’s Wall Street Journal reported that Toyota executives have put the brakes on their American manufacturing plans. This rapid retrenchment comes against a backdrop of seemingly relentless growth in Toyota's U.S. market share. Sales of the Kentucky-built Camry are so high that Toyota is paying Subaru to build the model in Indiana. Thanks to generous incentives, the Texas-built Toyota Tundra pickup truck is keeping pace with the company’s ambitious targets. And just a few days ago, Toyota passed Chevy to become America’s top-selling automotive brand. So what’s up with the slow down?

    First up: union troubles. Earlier this year, employees at the aforementioned Kentucky production plant unearthed a ToMoCo memo outlining plans to reduce wages and benefits in accordance with local compensation. The United Auto Workers (UAW) smelled blood. The union held “town hall” meetings and set up a “worker’s rights board” to “hear personal stories of Toyota workers and recommend appropriate remedies when necessary.”

    In theory, the numbers favor the UAW. At Toyota’s Tundra plant in San Antonio, unskilled workers earn about $15 per hour, increasing to about $21 per hour after three years. Workers at Toyota’s new Tupelo, Mississippi plant will start at around $12 per hour, increasing to some $20 per hour after three years. If you include benefits (not an apples to apples comparison but there you go), the average Big 2.8 worker earns roughly $73 per hour.

    In practice, Toyota pays bonuses to achieve parity with industry norms. And yet, as the leaked memo revealed, the wages they are a changin’. Toyota will now cap new hires’ salaries at 50 percent above the average local wage. That may seem generous, but Toyota understands the seductive power of union-inspired greed aspirations. And they know that a UAW stronghold in Georgetown would put them on a slippery slope to widespread unionization.

    Toyota is also extremely concerned about its declining product quality. The company’s rep rests on the bedrock of reliability, which has been shaken by massive product recalls. The world’s largest automaker has more faith in its Japanese factories’ abilities to right that wrong than its American equivalents’.

    This belief is NOT an ethnocentric condemnation of America’s autoworkers. It reflects the importance of experience and geography.


    For largely political reasons, ToMoCo has spread its production facilities right across the North American landscape: Alabama, California, Indiana, Kentucky, Ontario, Mississippi, Missouri, Texas, Tijuana, Victoria and West Virginia. Back in Japan, the automaker clusters its factories in and around Toyota City (twinned with Detroit ‘natch).

    While Toyota Motor North American Inc. has done a bang-up job mastering its long supply lines, it’s an expensive business prone to “complications” and “misunderstandings.” In contrast, Toyota’s Japanese centralization and the company’s longstanding relationships with its key domestic suppliers give the manufacturing mothership a distinct edge in quality and flexibility. At the risk of stoking xenophobic flames, an American-made Lexus flagship or Prius still seems… unlikely.

    And then there’s the yen. Currency manipulation or no, the yen’s recent weakening against the U.S. dollar has made the economics of importation that much sweeter for the Japanese automaker.

    Union agitation, quality woes and a yen for profit– it’s no wonder Toyota’s pumped-up the volume on its North American imports, from 762k vehicles in ’04, to 1.27m in ’06. Nor should it be any major surprise that Toyota has already started scaling back American production capacity.

    Toyota’s Highlander-producing factory was scheduled to open in Tupelo in ‘09 with an annual production capacity of 200K units. The new plan: throw the switch in ‘10 with a 150K annual capacity. By the same token, southern states can put down their tax abatements; Toyota won’t be building any more new plants in the U.S. for the foreseeable future.

    What if U.S. demand for Toyota vehicles outstrips their American production capacity? In the short term, ToMoCo could add additional shifts or assembly lines to existing plants, staffed by temporary workers. Or they could farm-out the work to friendly transplants or, gulp, domestic manufacturers. Or just call home for reinforcements.

    In the longer term, Toyota has plenty of plants in countries with much lower production costs than the U.S. It wouldn’t be hard for them to import Chinese- or Indian-built Camrys for less than it costs to build America’s most popular car in America. Even with the 25 percent tariff on imported trucks (a.k.a. the “chicken tax”), building Tundras or Tacomas in Thailand, China or India would still be a price competitive proposition.

    In the broader sense, Toyota’s American plants have already served their purpose. They’ve ingratiated the Japanese automaker to the American car buyer and insulated the company from a political backlash, should The Big 2.8 go Tango Uniform. And if these same domestics move the lion’s share of their automotive production overseas, what’s to stop Toyota from following suit?

    http://www.thetruthaboutcars.com/?p=3985
     
  2. Sideways

    Sideways Do I look like I give a damn?

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    Toyota to American Auto Unions... FUCK YOU, we'll build them elsewhere :bowdown:

    about time the UAW is told to go fuck themselves.
     
  3. OneTwo

    OneTwo me>you OT Supporter

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    hmm, seems like Toyota doesnt want to go the way of GM with Union bullshit
     
  4. H Dog 14

    H Dog 14 New Member

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    good !
     
  5. fcheerleader

    fcheerleader New Member

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    American build quality is worse?
     
  6. Checker-Stripe

    Checker-Stripe Survey says...

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    :bigthumb:
     
  7. SilverJettaGLX

    SilverJettaGLX OT Supporter

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    :bowdown::bowdown:
     
  8. AlbinoMuntjac

    AlbinoMuntjac New Member

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    Too bad the domestic brands can't do that. I wonder if the UAW realizes that the more blood they suck from the domestic car companies, they closer they all are to being out of jobs.
     
  9. Doomsday

    Doomsday XXX

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  10. Divine

    Divine OT Supporter

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    Toyota is a smart company..they see declining of there product quality and want to fix it PLUS they know not to get in to an union hellhole.

    The UAW is soley responsible for most of the downfall of the American car industry.
     
  11. Morethanchris

    Morethanchris New Member

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    mf:werd:
     
  12. TriShield

    TriShield Super Moderator® Super Moderator

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    North America is an extremely expensive place to build automobiles. That's why US automakers lose billions of dollars each quarter despite selling hundreds of thousands of vehicles. They still build the majority of their products in the US, and it's burying them.
     
  13. Ffej207

    Ffej207 University of South Florida... in West Central Flo

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    FTMFW!!!!!!
     
  14. DadLife

    DadLife New Member

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    Fucking :bowdown:

    I own a 2007 Camry SE :)
     
  15. BigBronco

    BigBronco OT Supporter

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    werd
     
  16. TriShield

    TriShield Super Moderator® Super Moderator

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    Next up, Chrysler's new owner Cerberus takes a similar path with the UAW.

    Give up your half your salary and your free healthcare for life or we'll shut Chrysler down until you do. :mamoru:
     
  17. Bloody Sunday

    Bloody Sunday OT Supporter

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    i think you're mostly right about the UAW. but to say they're solely responsible for most of the downfall is kinda :ugh:

    i think it's training lazy employees to do next to nothing for a lot of money with the protection of the union is ridiculous. they're used to barely getting by on quality control because they have job security as long as they pay their dues :ugh:
     
  18. Bloody Sunday

    Bloody Sunday OT Supporter

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    yeah, but it's good for the economy :ugh: :rofl:
     
  19. Bona Fide

    Bona Fide Guest

    Can't blame them for pulling out. One only has to take a look at the assraping the big 3 have taken to understand why Toyota doesn't want to deal with unions.
     
  20. AxeWhlder

    AxeWhlder I'll eat your brain.

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    Figures the damn UAW would try to fuck this up. They're one of the biggest downfalls of the domestic companies.

    Like the article says Toyota doesnt have to be here - they're here to give Americans jobs and say that their product is made in the USA. Good for them.
     
  21. crontab

    crontab (uid = 0)

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    that's great that toyota is looking to improve on or sustain their reliable credibility and debunking any attempt the uaw tries, but moving plants to countries like thailand, china, india, and mexico? ACK... quality will get worse.

    japan and germany generate the best quality cars..

    canada is surprisingly okay.. lots of hondas from them...

    america is at a distant 3rd..

    everyone else sucks.. china is dead last...
     
  22. :werd:

    People solely blamming UAWs are fucking stupid and have their blinders on. UAWs are a major reason, but only part of a larger equation.

    Anyways let the UAW hate circle jerk continue
     
  23. Checker-Stripe

    Checker-Stripe Survey says...

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    Thanks!




    Fuck the UAW! :o
     
  24. nicklol

    nicklol Nu OT Supporter

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    that's nice...

    so when will Toyota build a car that doesn't put people to sleep?
     
  25. H Dog 14

    H Dog 14 New Member

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    k
     

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