Toyota group to invest US$791m in Texas facility


Thu, Sep 19, 2019 - Page 10

Toyota Motor Corp and one of its top suppliers are to invest a combined US$791 million in Texas to build next-generation pickups as part of a drive to boost output in the US and ease trade tensions with US President Donald Trump’s administration.

The announcement that Toyota is plugging US$391 million into its San Antonio, Texas, truck factory came six months after the automaker pledged to shell out an additional US$3 billion on its US operations by 2021, a move seen as an effort to head off threatened US tariffs on vehicles imported from Japan.

That was on top of an earlier US$10 billion pledge Toyota made shortly before Trump took office.

“We view it as a tremendous vote of confidence in Texas and San Antonio and the truck market” in the US, Christopher Reynolds, the chief administrative officer and head of manufacturing for Toyota in North America, said in a Bloomberg Television interview.

The spending is part of Toyota’s multi-decade production localization drive, but also reflects a strategy to convince Trump not to follow through on tariffs of as much as 25 percent on imported vehicles and parts.

The Japanese automaker has publicly pushed back on the administration’s claim that foreign automakers pose a national security risk to the US.

Following a months-long probe, the administration in May cleared the way for tariffs on imported vehicles and components.

However, the White House has put off imposing them while it pursues trade deals with Japan and the EU.

Trump on Monday said that the US would reach an initial trade deal with Japan in the coming weeks, but made no mention of his threat of duties on US$50 billion of Japanese vehicles.

Japanese Prime Minister Shinzo Abe’s camp has warned that any final deal must include assurances that Washington would not hit the country’s auto sector with new duties.

Trump and Abe are scheduled to hold a one-on-one meeting on Wednesday next week during the UN General Assembly in New York, US National Economic Council Director Larry Kudlow said on Tuesday.

“There just might be an announcement at the United Nations,” Kudlow told the US-Japan Business Conference in Washington. “You can never tell, but I’m an optimist.”

Toyota said that its San Antonio announcement was not linked to the trade talks between the US and Japan.

“We don’t make these investment decisions based on what the current trade scenario is,” Reynolds said.

“When we make this kind of investment, we’re looking at where we think the market will be in 20 years from now, regardless of what the trade flows might be under this agreement or that agreement,” he added.

No new direct jobs were announced for the truck factory, which employs more than 3,000 workers.

The funds are to be used to incorporate “various advanced technologies” on the production lines for the Tacoma and Tundra pickups, Toyota said.

However, the automaker said that an affiliate of one of its close-knit suppliers, Aisin Seiki Co, would hire 900 workers for a new US$400 million auto parts production facility in a San Antonio suburb.

Toyota group companies own nearly 39 percent of Aisin and its president is a former senior executive at the automaker.