Toyota Strengthens Japanese Production
Yuri Kageyama, AP Business Writer
TOKYO (AP) — Toyota's president said the car maker plans to take 100 percent ownership of two auto-assembly companies it partly owns and combine one of them with two other subsidiaries in an effort to strengthen Japanese manufacturing.
Toyota Motor Corp. President Akio Toyoda said the moves are aimed at keeping auto production in Japan and will quicken product development so it can remain globally competitive, despite unfavorable conditions such as the strong yen and a growing power crunch.
But they also highlight the serious hardships at Japanese manufacturers that are requiring the joining of forces to ride out tough times. A quake and tsunami disaster in March has disrupted production and a nuclear crisis that followed is threatening the power supply.
Under the plan, Toyota Auto Body Co. and Kanto Auto Works, which make Toyota vehicles, will become wholly owned subsidiaries of Toyota by January 2012. Toyota currently owns 56 percent of Toyota Auto Body and 50 percent of Kanto.
Toyoda also said Kanto Auto Works, Central Motor Co., a Toyota auto-assembly company, and Toyota Motor Tohoku Corp., a parts-maker, have agreed to start talks for a merger and integration of the three companies, targeting July 2012. Toyota already owns 100 percent of Central Motor and Tohoku.
Fears are growing in Japan that manufacturing will move abroad, where labor is cheaper, and a continuously strengthening yen erodes the value of overseas sales. But Japanese auto executives have promised to try to keep jobs in Japan, while at the same acknowledging the tough times.
The Japanese auto market has been stagnant for years, while overseas emerging markets hold the greatest potential for profit.
A nuclear power plant in meltdown has been creating a new risk for automakers — a power crunch that is forcing Japanese automakers to strive to cut electricity consumption by 15 percent and work on weekends, while shutting down on Thursday and Friday to prevent blackouts.
"This goes beyond reason," Toyoda said of efforts to keep production in Japan, speaking at a news conference in Nagoya, central Japan, shown on a screen at the automaker's Tokyo office. "But we are doing out utmost, gritting our teeth."
Toyota Auto Body, for instance, will play a bigger role in developing minivans and commercial vehicles, whose demand is growing in emerging markets, he said.
The proposed merger will solidify Toyota's plans to strengthen the Tohoku region, in northeastern Japan, which was devastated by the March 11 quake and tsunami, as a manufacturing hub in Japan.
The suppliers and manufacturers in northeastern Japan are bouncing back quicker than initially expected, but production is only recently starting to return to normal at Toyota and other Japanese automakers.
"Toyota believes that the new corporate structure resulting from these agreements will maximize the strengths of each Toyota group company, enable Toyota to utilized its group resources to the fullest extent and further advance 'monozukuri,' conscientious manufacturing, in Japan," the company said in a statement.