Toyota’s Mississippi plant delayed
Posted on Tuesday, May 13, 2008
TOKYO — A senior Toyota Motor Corp. executive said Monday that plans for a new $ 1. 3 billion auto assembly plant in Mississippi are being delayed by worries about slumping American auto sales and a broader U. S. economic slowdown.
A site near Marion in Crittenden County and a site near Chattanooga were once in the running for the plant, which is scheduled to make about 150, 000 Highlander sport utility vehicles a year at the 1, 700-acre location.
The vehicle assembly plant being built in Blue Springs, near Tupelo, Miss., was initially to be up and running by late 2009 or early 2010, said Executive Vice President Mitsuo Kinoshita.
That has now been pushed back to mid-2010 after Toyota reviewed the plans and considered the signs of a slowdown in the U. S. market after the subprime mortgage crisis, Kinoshita told a group of reporters at a Tokyo hotel.
“We made adjustments within a certain range of time,” he said. “The change wasn’t that critical.” Toyota, the world’s secondbiggest automaker in annual vehicle sales after General Motors Corp., had been on a roll with its offerings of small cars and gaselectric hybrids amid soaring oil prices.
But Toyota is seeing trouble signs in months ahead because of an expected decline in U. S. sales and a weak dollar that will erode the value of its overseas earnings.
Last week, Toyota forecast that for the financial year ending March 31, 2009, its annual sales would drop for the first time in nine years and that its profit would decline for the first time in seven years.
Toyota’s list of problems is growing and includes soaring material and energy costs and a stagnant auto market in Japan. A weak dollar, now hovering above 103 yen compared with nearly 120 yen last year, erodes the income of Japanese exporters.
U. S. vehicle sales have been falling in recent months, hurting General Motors Corp. and Ford Motor Co. more than Toyota.
American auto sales are projected to fall to about 15 million vehicles in 2008 from about 16 million last year if declines continue at about the same pace for the rest of the year, according to Autodata Corp., which compiles such industry numbers.
Other Toyota executives expressed some worries about the home Japanese market, which has been stagnant for years.
They said they hoped to attract a wider age range with new luxury minivan models, which bring in bigger profit than smaller models.
“It’s an important part of the market,” Toyota President Katsuaki Watanabe said Monday. “It’s a stable part of the market, and we want to expand that.” Toyota also raised the prices on the two new minivan models that went on sale Monday in Japan. Kinoshita and Watanabe said the rise did not reflect merely rising material costs, but were influenced by other factors, including better features and rivals’ prices.
Toyota has already started raising prices on its base models in the U. S.
The company projects that its profit this fiscal year will tumble 27 percent to $ 12. 1 billion, while annual sales are seen falling 4. 9 percent to $ 241. 8 billion.
Its shares dipped 0. 9 percent Monday to $ 50. 80 in Tokyo.
Arkansas officials believed for some time that Toyota would locate the plant near Marion. Toyota officials had once referred to it as “a phenomenal site.” At the end, it likely was air quality that did in Arkansas.
In April 2004, the Environmental Protection Agency ruled that Crittenden County’s airquality standards were below federal ozone standards. The poor air quality is due in part to ozone emissions blowing across the Mississippi River from Memphis and Shelby County, Tenn., into Arkansas.
But the county received a waiver from the EPA, allowing it to recruit major manufacturers. However, the prior EPA concerns may have scared Toyota away.
This was not the first time Toyota had rejected the Marion site. In early 2003, Toyota bypassed Marion as a site for a plant to build full-size Tundra pickups. That $ 1 billion plant, which employs 2, 000, went to San Antonio. Information in this article was contributed by David Smith of the Arkansas Democrat-Gazette and Yuri Kageyami of The Associated Press.
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