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Toyota delays $1.3 billion Tupelo, Mississippi SUV plant

05/12/2008, 1:50 PM

By Drew Johnson

Toyota will delay opening a new $1.3 billion SUV plant in Tupelo, Mississippi, a new report finds. The Japanese automaker was originally scheduled to open the new production facility in late 2009 or early 2010, but the opening will likely be delayed until at leas mid-2010.

The reason for the delay is a weakening U.S. economy, a slumping auto market and the continued erosion of the dollar’s value against the yen — which is shrinking the automaker’s profit margins — according to Automotive News.

“We made adjustments within a certain range of time,” Toyota Executive Vice President Mitsuo Kinoshita told the AP. “The change wasn’t that critical.”

The plant was originally slated to have the capacity to build 150,000 Highlander SUVs annually, but it remains unclear if that capacity will be reduced.

Although Toyota says the plant will be opened in mid-2010, Japan’s Nikkan Kogyo reports the plant will be delayed until 2011.

Toyota announced earlier this month that it expects its profits to decline this year, which would be the first drop-off in nine years.

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05/12, 2:38 PM

posted by:

howsmydriving

I blame Elvis.

05/12, 2:49 PM

posted by:

Commodore

Why is the dollar being blamed for everything? In this case, Toy would actually benefit from another US facility because the dollar is weak. When the dollar is strong against the yen, it is cheaper to produce in japan. When the dollar is weak against the yen, it is still cheaper to produce in Japan but not as much (unless the dollar becomes as devalued as the yen). Bottom line is that the delay is not the dollar, but is simply the fact that Toy doesn’t have a market for its SUVs here.

05/12, 2:57 PM

posted by:

xyunya

The only explanation for weakening dollar maybe that yuan is tied to USD and if USD goes down so the profit off the vehicles sold in China. I imagine that some of those Highlanders would found their way to China.

05/12, 3:23 PM

posted by:

Buhbye

Toyota is the highest profit automaker on the planet, thanks to generous Americans. But they are not invincible…Tundra was the first lesson. If Toyota builds it, Tupelo will be lesson #2. For a third lesson, they could build an Excursion fighter plant. Way too many Americans working for Toyota. They’re starting to make American mistakes.

05/12, 3:57 PM

posted by:

Z06ified

“Way too many Americans working for Toyota. They’re starting to make American mistakes.”

The Japanese aren’t all that smart. I know, I used to work for them. Not to mention they weren’t smart enough to win WWII, now were they?

05/12, 4:45 PM

posted by:

injunraiv

LOL, don’t confuse ‘em with the facts, Z06!

Yeah, LOL at the weak dollar – it should have no bearing. The fact of the matter is this segment is dying and Toyota has maybe learned it’s lesson with the Texas plant.

But building infrastructure when times are tough is usually a long term benefit…

05/12, 5:01 PM

posted by:

xyunya

Japan wasn’t smart to win the war and was even dumber to start one. However, as far as auto industry concern they came from nowhere 40 years ago and concurred good chunk on the most profitable markets (not only US, but Europe as well). I imagine that in tradition of Toyota plants this one would be producing several types of vehicles. It also would provide jobs for thousands of people at the plant and even more in supplying industry. Those are not good news for US economy.

05/12, 8:54 PM

posted by:

Commodore

xyunya – what many of you fail to see is that countries like Japan and Korea are where they are today because of what America did for them after the war. We reached a hand out to them and helped them – democratized them, industrialized them, and so on. I serious doubt that those countries and China and Israel and the UAW would be growing so rapidly if it weren’t for the fact that they accepted what we do instead of resisting our influence.

05/13, 12:57 AM

posted by:

Robert

But, if you groom a protege, you have to be ready to compete with him. Sad fact of life. Toyota cleaned the U.S. automakers’ clocks for about 10 years starting in about 1998 – it has taken 10 years for any of them to really stand up for themselves. And it will take another 10 for them to fully compete in not just product, but perception.

The Tupelo facility is delayed not because of the weak dollar, but because of the overcapacity Toyota is dealing with in the U.S. They have a $1 billion factory that is designed to pump out 300,000 vehicles annually running at about 60% capacity. Sounds like a Big 3 type problem. They don’t need more capacity if they don’t have the sales to support it – and at least they know that. And it’s a much better position to be in than to have too much and a structural inefficiency like the UAW stopping you from eliminating that excess capacity.

That said, companies like Ford aren’t sitting still either and are using their capacity much more effectively than they used to. Toyota will not have the cakewalk it’s had in the market due to the increased competition from especially Ford, Honda and Nissan. Tupelo is just a small crack through which we can start to see that.

05/13, 9:23 AM

posted by:

HemiRoadRunner

The japanese smart??? Whatever, I use to work for them also. Anybody that says jap quality is better, look where it came from, AMERICA. Heard of a guy named Demming??? The japs are constantly trying to reinvent the wheel. A job that takes one or two people to put together takes 5-8 japs, that’s efficiency for you. The japs where I use to work would continueously steal OUR ideas and present them to the jap bosses. If Z06 worked in a manufacturing facility, I’m sure your familiar with Kaizen and the term Pokayoke. We did kick their @$$ in the big one though, WWII.

05/13, 10:20 AM

posted by:

xyunya

Commodore, there not that many of me; as a matter of fact I’m pretty sure that I’m singular and unique. Maybe identity have been stolen once or twice, but it does not make me plural and fail to recognize history.

Reality is that US restored Asian economy after WWII, as well as non-communist side of Europe. It has nothing to do with the fact that Japanese auto manufacturers took over 50% of US market, developed in many instances better products and more important better processes to manufacture those products. They also are building factories and producing jobs and wealth right here in US.

There is a large population of people who would anything to protect status qoe at any cost and do not want to recognize changes in the world. If it happen in Asia or Africa we call it Taliban and/or Al Quida. And what the difference between our own ignorance? The only difference that our laws are prohibiting murder in the name of status qoe, and in Asia it is encouraged. The emotional aspect is not that different: if you read posts a lot of participants are not against violence against any form of opposition or opposing opinion.

05/13, 2:02 PM

posted by:

WEKS

“The japanese smart??? Whatever, I use to work for them also”
I smart also, me type goooood.

05/13, 8:05 PM

posted by:

Get Real

KIA killed their planned plant in Georgia (USA).

05/16, 1:48 PM

posted by:

ktulu

how do u say “double wide” in japanese?

 
 
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