Toyota is serious thinking of breaking a taboo. It is considering moving some production of its Lexus luxury brand from Japan to the United States, says Reuters. The oddest part: The Japanese government might help Toyota to move the jobs out of the country.
A likely option would be making the Lexus ES in the United States instead of Japan, Toyota’s U.S. chief Jim Lentz told Reuters. “With where the yen is today, I think it’s only a matter of time” before Toyota moves more production to North America, particularly to the United States, to have assembly nearer to the U.S. market, Lentz said.
The Japanese government said yesterday it would extend its dollar credit facility, which helps Japanese companies invest overseas.
Except for the Lexus RX crossover, which is built in Ontario, Canada, all of the Lexus production is stubbornly kept in Japan. Most of the Lexus sales are abroad, especially in the U.S.A. Privately, executives at Toyota always maintain that this is in order to keep the quality high. This decision has cost Lexus sales and profits, especially in China, where imported cars carry high duties.
Lentz said that in addition to the strong yen, moving production would be driven by engineering capabilities in the United States. At Toyota’s engineering center in Ann Arbor, Michigan, more than 1,100 engineers are employed.
On July 6, 2012, the first 2013 Lexus ES rolled off the line at Toyota’s Miyawaka plant (picture.)
I hope Toyota doesn’t move production to Canada. Those clowns already gloat about their huge trade surplus with the US.
images.google.com/search?tbm=isch&q=canada+americas+hat
I somewhat doubt production would be moved to Canada. The value of the loonie bounces around too much and our labour costs tend to be higher.
“Those clowns” are already supplying a good chunk of America’s oil. With $28B worth of U.S. goods coming into Canada and $25B going back, that was a mere $3.8B goods deficit for the month of April (too tired to look up anything newer – it doesn’t change much, hasn’t in decades.) Surprise: most of Canada’s trade with the U.S. (are you sitting down) is OIL.
That’s one tap you’d not like to see turned off…. just sayin’
@carbiz……+1000
Good point.
Maybe Asian companies are beginning to realize that if decent paying jobs continue to be sucked out of the US, there won’t be any customers left to sustain their biggest markets. Doesn’t take rocket science to understand this.
It’s fun to stay at the Y….M…C.A
There it is, the last reason to buy a Lexus over a Toyota… Made in Japan.
It’s the process, not the people, that matter when it comes to quality.
… not to mention the Belief! Toyota, show me the WAY!
While that is true in theory (since it’s all robots doing most of the work most of the time anyways), this hasn’t been true for BMW or Mercedes as they moved to S. Carolina and Alabama. And in Toyota’s case, Japan-sourced Camrys (available up until the mid-2000s?) were obviously better put-together than the Kentucky-built ones. But BMW seems to do very well with their S. African-made 3-series. So the people definitely has some bearing on this.
Culture, employee motivational fit, and the big one -local suppliers- also play important roles. Even if the first two were the same, US suppliers will not provide the same quality of parts vs the Japanese local ones.
Someone a few weeks back brought up the fact the same companies who delivered parts to his GM plant (Lordstown IIRC) also did deliveries to Honda (St Marysville I suppose). While some larger components may be shipped from overseas, from a cost standpoint are you really going to ship every part from your Japanese supplier and just assemble in the US?
That’s my whole point, you’re going to be buying an American Lexus, it defeats the whole purpose of buying a Japanese car. The sheeple just don’t pick up on it.
Although I see the need to diversify production, if I am going to sink serious money into a Lexus, I want the quality the Japanese have proven in the past thirty years. if that’s no longer going to be available, then there is no point to purchasing a Lexus over a US built Toyota, or really at all.
The RX not being built in Japan hasn’t hurt sales of that model. I don’t see GS, IS, or LS production moving out of Japan anytime soon, but I can see the ES and perhaps the CT moving to Canada or even TMMK.
28-Cars-Later I used to work in the automotive parts inspection field. I’ve seen parts factories make parts that went to American and Asian manufactures. Same parts, same specs, same inspections. Did the Americans get better, did the Asians lower their standards, or was it a good part to begin with?
There’s been talk around the plant in Georgetown, KY for the past couple years of squeezing a Lexus model onto the existing assembly line. Just rumors though.
What is going to become of Japan? Their manufacturing companies are either in their last throes (Sony, Mitsubishi, Suzuki etc.) or packing up and heading for cheaper pastures (Toyota, Nissan, Honda). GDP growth is all over the place. What’s the deal???
The old cronies still kicking around from MITI must be choking on their saki! What has the world come to? Who’d a thunk that Bank of Japan yen would be used to put jobs BACK in America?
Maybe there isn’t enough electricity to light the homes, let alone the factories? After all, running on natural gas is not a cheap option if they shut down their entire nuclear network. (At least Germany has France’s nuclear power to rely on.)
Then again, Toyota does have that shiny, new $1.2B factory in Texas that is growing tumbleweeds these days…..
Well, Germany was still a net exporter of electricty during the first half of 2011, despite shutting off the nuclear power plants.
I know that to a American it must be looking a bit odd if a country is investing in its infrastructure. I can tell you that I never ever experienced a power outage here in Germany in the last 15 years myself. Go and figure …
http://www.technologyreview.com/featured-story/428145/the-great-german-energy-experiment/
At least in my corner of the US there is significant investment in new infrastructure. The difference is a big part of the infrastructure is being built by private companies for private companies that plan to get a good return on their investment.
New roads. I-635 expanding from 8 to 14 lanes. Room to drive a US built Lexus.
http://www.tollroadsnews.com/node/4810
I have to drive through this road construction plus the privately funded Dallas North Tollway this afternoon.
New natural gas power plants.
http://in.reuters.com/article/2012/08/08/utilities-texas-nrg-idINL2E8J890V20120808
George Mitchell spent 18 years and many millions of his own dollars to figure out how to get natural gas out of the Barnett Shale at a profit.
http://geology.com/research/barnett-shale-father.shtml
Sold his company to Devon Energy and became a billionaire. His gas is helping power my computer right now.
That’s a good point. The primary objective is to diversify the manufacturing base in the event of a disruption of raw material and energy supply lines. This is ingrained in their culture, as they do live on an earthquake-prone and resource-poor island. Of course, the last time they did this on a mass scale, we ended up with the Greater East Asia Co-Prosperity Sphere.
“the last time they did this on a mass scale, we ended up with the Greater East Asia Co-Prosperity Sphere.”
Well that worked out so well last time around…