Toyota rethinking strategy
 

Toyota’s top executive in the United States said the company was reviewing its entire operation here, saying executives haven’t decided whether to close a factory in California or when it will open a factory in Mississippi.

In an hour-long interview with reporters at Toyota’s Washington office, Yoshimi Inaba, president and chief operating officer of Toyota Motor America and chairman and CEO of Toyota Motor Sales USA, said the company is not profitable in North America despite cost cutting in the organization. He said he hoped Toyota could be profitable in its next fiscal year in North America.

He said Toyota was in the middle of “an overall replanning of our North American operation.”

Among the considerations, the Japanese automaker is trying to decide whether to keep open its 25-year-old New United Motor Manufacturing Inc. assembly plant open in Fremont, Calif. The plant, which employs 4,700 people, was a joint venture with the then-General Motors Corp., but the Detroit automaker recently withdrew from the joint venture during its stay in bankruptcy court.

“That put us in a very difficult position,” Inaba said. “We haven’t made up our mind yet. We are carefully evaluating all the options.”

He didn’t commit to a timetable for a decision on Nummi, but said a decision would be made “quite soon.” He said Toyota hadn’t received a concrete government incentive package from California yet.

The hourly workers at Nummi are represented by the United Auto Workers, and the contract expires next month. Inaba said the UAW contract “is one consideration, but not the single deciding factor.”

Inaba noted that California is Toyota’s single biggest market in the United States, and closing the factory would have a negative impact on its image there.

The company also is contemplating what to do with its Mississippi plant. Toyota has completed the structure, but not moved equipment into it or given a date it might open because of the sharp decline in auto sales. It was initially scheduled to open next year.

Asked whether Toyota could shelve its Mississippi plant permanently, Inaba said, “I hope not,” and added, “I’m not that pessimistic” about the plant’s future.

He refused to rule out layoffs or plant closures at its other North American plants.

Toyota has said it may build the Prius in Mississippi. Toyota just launched its third-generation Prius built in Japan. He said it isn’t clear if Toyota would wait until the fourth-generation Prius to start production in the United States.

Inaba said the company had made mistakes in making too many decisions in Japan, urging more “decentralization” of decision-making.

Because of Toyota’s success for the last eight years, there was an attitude among some executives that, “OK, now we have been so successful, we understand the market, so we can make a decision there rather than here,” Inaba said.

Last year, Toyota became the world’s largest automaker.

Inaba said the company is listening to the market, and customers “had been a little bit lost.”

When asked whether Toyota had become complacent, he said, “Complacent or arrogant — a lot of people use that — I don’t know,” he said, adding that the company had tried to guard against those qualities.

Inaba acknowledged that Toyota vehicles had often lacked “passion” and that the company’s vehicles must be “more exciting, more nimble.”

“Toyota is a good car but not exciting. Those are the comments we usually (or) always get,” Inaba said.

Inaba said he supported the decision of the U.S. government to rescue General Motors Co. and Chrysler Group LLC with $65 billion in loans. “Stepping into Chrysler and GM was a necessary step for the government, for the country,” Inaba said.

But going forward, he said he hoped the U.S. government would have a “free-market level ground in mind in deciding what to do next.”

Despite the shuttering of about 3,000 Chrysler and GM dealerships, Toyota has no plans to expand its dealer network in the United States.

He also said GM and Chrysler were right to shrink their dealer networks.

Inaba also said that it was still on track to introduce a pilot fleet of 500 plug-in electric vehicles worldwide by the end of this year, including about 150 in the United States. Toyota hasn’t committed to selling plug-in vehicles commercially yet as some of its competitors have. Inaba said it wants to make sure there are no safety issues with larger lithium-ion batteries in the plug-in vehicles.

“All the learning that we can get from that, I think we will decide the next steps,” Inaba said.

Inaba also reversed a prior Toyota position, saying that Toyota hadn’t ruled out applying for the $25 billion Energy Department advanced technology vehicle retooling program. But he noted that Toyota wasn’t in immediate need of money.

“We are not short of cash, let me put it that way,” Inaba said.

Inaba first joined Toyota in 1968 and served in a number of roles. Since 2007, Inaba was president and CEO of Central Japan International Airport Co., also serving as a senior adviser to Toyota’s board.

He assumed his new oversight of Toyota’s North American operations last month.



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