Toyota Tundra production
San Antonio Express-News, 7-10-08:
Toyota to shut S.A. plant for three months
Sean Wood
Express-News
Toyota officials will announce a plan Thursday morning to shut down the Tundra production plant for three months starting in August in an effort to reduce the inventory of the slow-selling pickup truck.
According to an official close to Toyota, the company's other Tundra plant in Princeton, Ind., will stop building the truck and all Tundra production will shift to San Antonio in November. Princeton instead will build the next-generation Highlander that was destined for Mississippi, while the Mississippi plant will build the hybrid Prius.
More information
"This is intended to take out a big chunk of inventory and take some pressure off the sales staff," the official said.
A local elected official who did not want to be identified said, "We're hopeful some good news will come out of it next year."
The plan is to keep the workers at Toyota Motor Manufacturing Texas busy those three months with "kaizen" days, which means "continuous improvement." The workers will also train and find ways to increase efficiency and processes.
"It's a reflection of what's been hitting the rest of the industry, and Toyota is not immune to what's been hitting the rest of the U.S. automakers," said Jim Dorsey, spokesman of the forecasting firm Global Insight. "They built a big plant to build big trucks. It says more about the fact that no one in the industry is immune to the economic problems that have befallen the industry."
Toyota Motor Manufacturing Texas is one of Toyota's largest facilities. With a $1.3 billion plant investment, it employs 2,000 people inside the plant and more than 2,000 with the 21 on-site suppliers.
The plant has been a model for Toyota since the first truck ceremoniously rolled off the line in November 2007. This summer, the plant was named one of the best in the Americas by J.D. Power & Associates. It won a silver award, the youngest plant in the Toyota system ever to win such an award.
Despite the quality of the production, the demand for the full-size truck has slipped dramatically. The entire market for pickups, like the Tundra, has fallen more than 40 percent since the start of the year.
The slowdown in housing and construction along with $4-a-gallon gasoline has dampened the nation's appetite for full-size pickup trucks. Toyota's inventory of the trucks has grown to well over 115 days' worth. Normally, the company likes to have a 70-day supply available to its dealers.
To help shrink supply, Toyota announced in mid-June that it was jettisoning its 200 temporary workers in an effort to slow production at the plant and spare the jobs of nearly 2,000 employees at Toyota Motor Manufacturing Texas. The company also planned to halt production for 14 Fridays through the end of October.
On July 1, June auto sales figures showed that and sales of the Tundra fell 53 percent when compared with June 2007. Toyota's overall sales were down more than 21 percent as it didn't have enough of the hybrid Prius, among other small models, to satisfy the craving for gas-sipping vehicles.
The move to bring Prius production to the United States helps it boost capacity for a hot product and signals the company's belief that high-priced fuel is here to stay.
"With $4, heading toward $5, gasoline, it makes it untenable for consumers to buy vehicles that don't get very good gas mileage," Dorsey said. "It doesn't matter whether they are stellar Japanese cars or stellar American cars."
Express-News staff writer Tracy Idell Hamilton contributed to this report.