PRINCETON, Ind.—Toyota will relocate vehicles to different North American factories next year in a bid to make production lines and supply chains more efficient.
The allocation initiative, the auto maker said Jan. 17., reflects Toyota's step-by-step distancing from factory plans that were enacted in the dire days of the Great Recession when it needed to keep plants working and avoid layoffs.
With the new plan, Toyota is taking the gloves off to produce vehicles in pockets of manufacturing efficiency.
The company will move the Sequoia large SUV from Princeton, Ind., to San Antonio, where production will start in 2022. That decision will put both of Toyota's full-size body-on-frame products—the Sequoia and the Tundra pickup—in the same plant with a shared supply base.
Toyota simultaneously will remove its Tacoma midsize pickup from San Antonio and combine it with Tacoma production at its plant in Guanajuato, Mexico.
That shift will give San Antonio more capacity to turn out additional Tundras.
The Indiana plant then will devote its freed-up capacity and resources to the Highlander large crossover and Sienna minivan.
Factory utilization key
Over the past decade, Toyota has kept some vehicles in production where they sustained factory utilization rather than where they made the most manufacturing sense.
The Tacoma, for example, was added to the San Antonio plant in 2010, during a period of surging small car popularity and falling truck demand, when it became apparent that sales of the full-size Tundra were not enough to support that plant.
The upcoming moves are part of a huge manufacturing investment campaign that Toyota is undertaking in North America.
The company is midway through its five-year plan to spend $13 billion through 2021 on revitalizing and expanding its U.S., Canadian and Mexican plants and building new capacity.
Toyota and Mazda Motor Corp. are building a $1.6 billion joint-venture assembly plant in Huntsville, Ala., that will come online in 2021.
In Princeton, Toyota showed visitors a refurbished Highlander production plant that cost $700 million. That expense does not cover whatever future costs arise from easing the Sequoia out of the plant next year.
The $13 billion capital program still has $5.9 billion that is not assigned—enough to build four or five new assembly plants, if the company chose to do so.
But Toyota's U.S. outlook is remarkably more bullish today than it was a decade ago, when the Japanese giant was stunned to suddenly find itself with too many American workers and too many American factories—an anathema to a company that trains its personnel to identify and eliminate waste at every turn.
That moment caught Toyota with a partially constructed vehicle assembly plant near Tupelo, Miss., that it decided it did not need after all. It later completed that plant.
At this moment, Toyota finds itself needing both additional North American capacity and more workers.
Despite its plan to carve the Sequoia out of Indiana and send it to San Antonio, Toyota still needed to hire 150 workers at the Princeton plant to keep up with demand forecasts for the Highlander. That was on top of 400 additional workers it hired there in 2017.