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Toyota to revive stalled Mississippi plant, build Corollas

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Toyota to revive stalled Mississippi plant, build Corollas

Amy Wilson

Automotive News -- June 17, 2010 - 8:00 am ET

UPDATED: 6/17/10 11:44 a.m. ET

Toyota Motor Corp. will resume construction on its mothballed plant in Mississippi and begin producing the Corolla there late next year.

“We first needed to fully utilize our existing facilities as the economy slowed,” Yoshimi Inaba, president of Toyota Motor North America, said in a statement today. “Now it's time to fulfill Toyota's promise in Mississippi.”

The automaker said it will hire 2,000 workers “soon.”

Corolla output would mark another shift for the project. Toyota broke ground on the 2 million-square-foot factory near Tupelo in April 2007 with an initial plan to assemble Highlander SUVs in late 2009.

In mid-2008, Toyota said it would build the Prius hybrid instead after fuel prices soared and sales of large vehicles sagged. By December 2008, with the U.S. industry on the brink of its worst sales slump in nearly 30 years, Toyota suspended construction with the building's shell basically complete.

Back to Japan

The planned Corolla production in fall of 2011 allows Toyota to get the $1.3 billion Mississippi project up and running faster than it could with any other product. Toyota moved 150,000 units of Corolla output to Japan this spring after closing its California plant, New United Motor Manufacturing Inc.

When the Mississippi plant opens, Toyota will bring those 150,000 Corollas back. At that point, almost all Corollas for North America will be produced on the continent. About 40,000 will continue to be shipped from Japan.

Toyota also has capacity to build 150,000 Corollas and sibling Matrix models at a plant in Cambridge, Ontario. The Corolla and Matrix are the third-best selling cars in the United States, behind the Honda Accord and Toyota Camry. The Canada plant absorbed about 25,000 of NUMMI's Corollas.

Through May, Toyota sold 118,625 Corollas and Matrixes in the United States, a 17 percent gain over the same five months of 2009 and on par with the industry-wide 17 percent sales gain for the year to date.

Despite the uncertainty surrounding the project, the state of Mississippi in April decided to go forward with a $90 million investment to provide highway access to the site for suppliers.

Cost cuts

Toyota is slashing $500 million from its initial investment in Mississippi by reusing tooling and equipment from its other plants in North America.

"It's going to save us a lot," said Steve St. Angelo, executive vice president for Toyota Motor Engineering & Manufacturing North America Inc. and leader of the project. "Millions and million and millions."

Toyota now says it will invest $800 million in the plant near Tupelo, Miss. That's down from the $1.3 billion previously estimated when the Prius hybrid was to be produced there.

Tooling for the Corolla will come from Toyota's now-shuttered plant in California, New United Motor Manufacturing Inc. Toyota ended Corolla production there earlier this spring, temporarily shifting most of NUMMI's volume to Japan. Equipment such as desks, forklifts and cabinets will come from other Toyota plants around North America, St. Angelo said.

“Plants like Kentucky and Canada are approaching 25 years, so when you do a spring cleaning, you can find a lot of good stuff in the corners,” he said. “I'm not exaggerating – even screws and hammers.”

Even though the initial spending has been pared significantly, Toyota expects additional investment in the Mississippi location in later years, St. Angelo said.

And Toyota still intends to make the Prius in North America someday. It is monitoring Prius sales closely. Executives want to see an increase before moving ahead with a Prius production plan here.

"There's not a magic number," St. Angelo said, "but higher than it is now. Look at relationship between the dollar and yen. It makes it very attractive to build vehicles in the United States.”

Toyota would not create another new plant for the Prius, he said. Instead, the automaker likely would expand an existing facility to accommodate Prius production.

The renewed project is another sign of comeback for the U.S. auto industry after the steepest recession since the Great Depression. U.S. auto sales rose 16 percent through May from year earlier. Toyota, battling recalls and consumer concerns about quality, has lost share while posting an 11 percent gain.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100617/OEM01/100619877/1424#ixzz0r82iL86B

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