Toyota Reshapes N American Business

The company has established Toyota Motor Manufacturing North America in Kentucky to co-ordinate administrative functions previously carried out by various different Toyota manufacturing companies in North America. The new company will be responsible for business planning, production control, purchasing, legal and external affairs, as well as financing related to Toyota's manufacturing operations in North America.

The move is part of the growing trend among Japanese carmakers to shift production closer to their markets because of high costs in Japan and trade friction.

The company said the reorganisation stems from a need to create a more efficient administrative structure in a market where Toyota has been increasing production significantly, but in piecemeal fashion.

 

Sales in the first eight months of this year rose 6 per cent on the same period of last year to more than 800,000 units.

With the expansion of Toyota's manufacturing operations in North America, it was felt that a company was needed to oversee the administration of the various operations,'' a Toyota representative said.''

Ten years ago we had no production facilities in the US. But with the start of manufacturing, we have also had to localise development, procurement and testing,'' he said. Some functions that have been carried out in Japan, such as production control and business planning, will be transferred to the new North American company.

However, Toyota is not yet prepared to hand over greater independence to its regional operations, the company said. Unlike Honda and Nissan, which have set out a strategy that calls for substantial regional independence, the headquarters in Japan will continue to have control over business decisions affecting overseas operations.

Toyota has announced plans to increase production capacity in North America from 890,000 units last year to 1.2m units in 1998, including capacity it owns jointly with General Motors in California. It also intends to manufacture a North American mini-van and to take on US vehicle makers in the light truck segment.

When production capacity is increased, to 1.2m units, the proportion of cars made locally is expected to rise from 60 per cent to at least 75 per cent, according to Mr Christopher Redl, industry analyst at ING Barings in Tokyo.