Toyota is the Icing on the Cake of Japan’s Auto Investments in Mexico

Jun Umemura Cheers new US$1 Billion plant

MEXICONOW Staff Report

Mexico has always benefited from the Japanese motor companies that have set up plants in the country. But the companies from the Land of the Rising Sun have also done very well out of the deal – and it looks as though they will continue to do so.
Jun Umemura, Vice President of Toyota Mexico, spoke recently to MexicoNOW. 
He outlined how successful his own company has been in Mexico over 2015. He said: “2015 has been a very good year for Toyota in Mexico. Our domestic sales this year exceeded 80,000 and I would predict much the same for next year, perhaps a bit more, and we are satisfied with that.”
“Also in 2015, we made an important announcement in April for a new plant investment in Guanajuato and in November we announced that we would be producing the SUV in Canada which would mean that Corolla production is moving down to Mexico”.

The new factory to be located in the state of Guanajuato is set to open in 2019 following an investment of about US$1 billion.

The plant will be the first to make use of the Toyota New Global Architecture, and will, initially, focus on production of the Corolla. The compact sedan will continue being built in the United States at the Blue Springs, Mississippi site, consolidating Corolla production in the south. However, Toyota’s site in Ontario, Canada, will shift to “mid-sized vehicles of higher value,” alongside the plants in Kentucky and Indiana, the automaker said.

The Guanajuato facility will be Toyota’s second Mexican plant, joining the Tijuana plant that assembles the Tacoma – soon to increase production up to 89,000 units per year. Once the new Guanajuato plant comes on stream, it is slated to produce around 200,000 units per year. It will be the first plant Toyota will open worldwide since it began focusing on utilizing the idle production capacity it already had available globally. 

Announcing the move, Toyota revealed a multi-year plan to realign its manufacturing operations in North America in support of the Toyota New Global Architecture (TNGA), a comprehensive approach to achieving sustainable growth by making ever-better vehicles more efficiently. 
The company said: “As part of that strategy, Toyota will invest approximately US$1 billion to construct its newest North American manufacturing facility in the state of Guanajuato in Central Mexico to produce the Corolla. This state of the art plant will feature the latest TNGA production engineering innovations, employ approximately 2,000 team members and have the capacity to produce 200,000 units annually.”
“Once Corolla production begins in Mexico in 2019, Toyota Motor Manufacturing Canada Inc. (TMMC) will transform its Cambridge, Ontario North Plant to switch from producing Corollas to mid-sized, higher-value vehicles, marking Toyota’s first major reinvestment in the plant since it opened in 1997. 
At the time of the announcement, Jim Lentz, CEO of Toyota North America, said: “We are thrilled to invest further in North America so we can better meet the needs of our customers for decades to come. This strategic re-thinking of how and where we build our products will create new opportunities for our company, our business partners and our team members across the region.
“Our next-generation production facility in Mexico will be a model for the future of global manufacturing and set a new standard for innovation and excellence. Transforming our Canadian vehicle assembly plants is an equally important part of our strategic plan to position the North America region for sustainable long-term growth.”
Toyota’s vehicle assembly facility in Guanajuato will begin producing the Corolla in Model Year 2020. The new plant will be Toyota’s 15th in North America, its first since 2011 and its largest investment in Mexico to date.
 
Speaking of the new plant, Mr. Umemura told MexicoNow: “Having produced vehicles in this country for more than 13 years, we know that the strength of the workforce and manufacturing capabilities in advanced technology make Central Mexico the right place for our newest facility. The new Guanajuato plant further reaffirms our commitment to our Mexican team members, dealers, partners, suppliers and customers, and we look forward to future success together.”
More generally, Mr. Umemura declared his satisfaction with Toyota’s operations in Mexico. He didn’t foresee any major challenges in Mexico for the giant Japanese motor company, although he admitted the low price of oil and the Exchange Rate were two factors he was watching carefully.
He said: “The auto industry in Mexico over the past few years has done very well and I think that is going to continue. This rising trend won’t change. The supplier base and OEMs are moving to Mexico and I don’t expect that to change either.”
“I also expect the supply chain to become much stronger and Tier 1, Tier 2 and Tier 3 suppliers will increase in Mexico, giving a greater local feel to the market.”
“I’m also very confident about the logistics question, which has always been a challenge in Mexico. I am sure the nation’s infrastructure, intermodal work and border control will all continue to improve and in doing so will help attract even more OEMs and suppliers south of the Border.”
“All in all, I am very confident about the future of the automotive industry in Mexico.”
His confidence was matched by that of his fellow countryman, Jun Morikawa, First Secretary at the Japanese Embassy in Mexico.
Mr. Morikawa didn’t try to hide his admiration for the Mexican workforce, saying he has been “truly delighted” at how professional, educated and eager the labor pool in Mexico was.
He said: “Every major Japanese car manufacturing OEM has a presence in Mexico and that must tell you how highly the motor industry in Japan rates the Mexican workforce. It is not only because of all the government incentives that those companies have established themselves in Mexico and have expanded their operations in the country – it is also because of the excellence of the Mexican auto worker.”
“I can see nothing but a long and fruitful partnership between the Japanese motor companies and Mexico”, he concluded.