Toyota Ready for Challenge of U.S Market Swing
By Michelle Krebs August 12, 2008By Bill Visnic
TRAVERSE CITY, Michigan - Admitting that even famously "flexible" Toyota Motor Corp. was caught by surprise by the speed and intensity of rising fuel prices in the U.S., one of the company's top manufacturing executives says the company nonetheless reacted quickly to rapidly altered consumer demand and is rapidly making adjustments in its massive manufacturing structure.
Steve St. Angelo, president of Toyota Motor Manufacturing Kentucky Inc. and senior vice president-Toyota Motor Engineering & Manufacturing North America Inc., also told AutoObserver the company's major strategic moves to address shifting consumer desires in the U.S. - pulling the trigger on U.S. production of the Prius hybrid-electric vehicle for 2010 and drastically ramping down production of the Tundra full-size pickup, which started this month - demonstrate Toyota's confidence in its renowned manufacturing flexibility.
And the willingness of the company's Japan-based senior management to react appropriately to rapidly changing market conditions.
"I think Toyota reacted very quickly," to the strong reverse in American auto consumers' demands, St. Angelo said. "For them to give us the Prius for North America, that's a big vote of confidence."
And if Toyota's decision to build an entirely new plant in San Antonio, TX, to build the Tundra now, with the benefit of hindsight, seems ill-advised, St. Angelo defended the decision, saying any full-line automaker that turned its back on the U.S.'s long-expanding fullsize pickup and SUV markets would have been cheating its shareholders.
Moreover, "I don't think anybody in this country knew gas prices would rise this fast," he said. "I think it really caught everybody by surprise." At an early-June meeting in Japan, St. Angelo said the company acknowledged rising inventories of large trucks and SUVs, and responded quickly when "we said we need help."
Cautious Pullback From Trucks
Toyota has consolidated production of Tundra - currently shut down for three months - to the single plant in San Antonio, but St. Angelo says the company is cautiously watching inventories and buyer behavior for signs demand may have hit bottom.
"We don't want to over-react," said another Toyota source, and St. Angelo added, "We hope the SUV and truck market comes back."
If and until that happens, however, Toyota is pulling out the stops to bring its vaunted manufacturing efficiency to bear: St. Angelo thinks Toyota is able to retool a plant as quickly and efficiently as anyone.
Frame to Unibody and Camrys From Subaru
As evidence of the company's flexibility and speed, St. Angelo offers the example of the Highlander crossover, which is being moved from its planned assembly site in Toyota's under-construction plant in Blue Springs, MS to the Princeton, Indiana plant which will be cleared of Tundra production. St. Angelo says the plant will be retooled from building the body-on-frame Tundra to the unibody Highlander in just a year.
He also points to the addition of Camry production at the Fuji Heavy Industries Subaru plant in Layfayette, IN, following Toyota's additional investment in Subaru and the companies' deal to build Camrys in the Subaru plant.
"One year after we signed the papers, we're building Camrys (in the Subaru plant)," said St. Angelo. "Everyone knew exactly what they needed to do."
He said in the year it took to ramp up Camry production at the Subaru plant, Toyota installed its Global Body Line for the body shop, added a new-technology press for body stampings and an entirely new paint shop.
Even More Efficiency Coming
Given the complexity, then, of adding Prius to the U.S. production mix, St. Angelo says the timeline of adding the highly demanded model by late 2010 to the new Mississippi plant, is a formidable accomplishment.
But St. Angelo said Toyota management understands the pressure is strong to increase flexibility and efficiency even beyond its already high standards - and the company is working on new efficiency advances.
He told AutoObserver Toyota is underway with adopting in all its plants a new "Set Parts Strategy" system that fills a robotically guided cart with many of the specific components for each vehicle proceeding thru the assembly process. The cart follows along with the vehicle, eliminating the racks of parts near each work station from which workers normally select components for installation.
The SPS system, he said, eliminates many potential errors that come from assembling the wrong part on a particular vehicle. The SPS cart, pre-loaded with the components for each vehicle and riding alongside it, contains exactly the pieces needed. Instead of having to choose from a variety of interior sun visors and possibly installing one of the wrong color, the SPS cart already contains the exact sun visors for that vehicle.
"We give the customer what they want - a lot of choices - and you don't add that complexity to the team member on the (assembly) line," St. Angelo said, adding Toyota currently is adding the SPS system to "several" assembly lines in various plants.
"Are you more flexible?" with SPS, he asks. "You bet."
Meantime, Toyota also is considering the export of U.S.-made Tundra and Sequoia models.
Photo by Toyota
Toyota was building Camry models at the Subaru plant in Indiana a year after the deal was signed.
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