Toyota Motor Corp is delaying the start of production at its plant in Blue Springs, Mississippi, indefinitely as the top Japanese automaker copes with the downturn in the auto industry.
The plant was scheduled to begin production in 2010, marking the first time the gas-electric Prius, which has been on sale for more than a decade, would be built outside of Japan and China.
But Mike Goss, a spokesman for Toyota’s US arm, said on Monday that despite investing US$300 million in the plant so far, the automaker is delaying production there indefinitely because of the industrywide downturn.
Construction of the plant is about 90 percent complete, and Toyota will finish the building, Goss said. However, the installation of the factory’s equipment and machinery — “the most time-consuming” element of construction — is being put off.
The roughly 100 people who have been hired to oversee construction and install human resources plans at the plant will not lose their jobs and will be assigned other duties, Goss said.
“Those people’s jobs are safe, and we’ll find things for them to do,” he said.
Mississippi Governor Haley Barbour said at a news conference that the state has invested US$200 million in the plant, while local governments have invested about US$35 million. He said Toyota plans to work with state and local governments to mitigate extra costs caused by the delay.
“While we definitely are disappointed [and] wish it wasn’t happening, we understand that these companies like Toyota have to operate in the private marketplace and have to do so successfully,” Barbour said.
Although Toyota’s US sales have held up better than those of its Detroit-based counterparts, the entire industry has seen a steep plunge because consumers are skittish about making big purchases during a recession and it has been more difficult for some buyers to obtain financing.
Toyota reported its auto sales in the US fell 34 percent last month, while sales across the industry sank 37 percent. The company’s sales are down 13 percent for the first 11 months of the year compared with the same period last year.
Toyota first announced plans for the Mississippi plant last year.
The plant, northwest of Tupelo, Mississippi, was initially to be up and running late next year or early 2010, but Toyota pushed the date back to mid-2010 after seeing signs of a slowdown in the US auto market earlier this year.
Toyota has made other cutbacks recently to adapt to declining vehicle demand. Last week, the automaker announced production cuts at factories in Indiana, Kentucky and Canada, on top of other reductions last month, when Toyota also cut several hundred contract workers.
Toyota also plans to negotiate a 30 percent cut in prices with steelmakers as raw materials costs ease in light of the global downturn, a report said yesterday.
Toyota plans to ask its largest supplier Nippon Steel to lower the price of sheet steel to ¥70,000 (US$700) a tonne from its current ¥100,000 a tonne, the Nikkei business daily reported without identifying its sources.
The two industry leaders generally agree on a benchmark price at the beginning of every year. Both companies declined to comment on the outlook of negotiations.
“The negotiations are conducted between our two companies so we don’t make public the contents,” said a spokesman for Nippon Steel, the world’s second-largest steelmaker.