Chain Reactions

Strong Yen Makes the U.S. a Low-Cost Country for Toyota

What do you call it when a foreign company manufactures products in the United States for the U.S. market, and then decides to also start selling those U.S.-made products in overseas markets? I don't think there is a term for yet not yet, anyway because there aren't that many companies doing it. But Toyota, which has added plenty of lean manufacturing terms to the manufacturing lexicology, could be on the verge of inspiring another buzzword, thanks to its new philosophy of exporting some U.S.-made cars to foreign markets. Maybe we can call it "foreignshoring" as a hybrid of "foreign" and "inshoring" ("foreignshoring," by the way, is a term which does not currently exist, according to Google, so I'll take credit for coining it before somebody else beats me to it).

If an American company did what Toyota is doing, it'd be called offshoring, since Toyota is sending manufacturing work that could be done in Japan overseas to another country (in this case, the U.S.). But it gets even better: Toyota is shipping cars from the U.S. facilities to other countries, in some cases countries that are in Japan's backyard, because the U.S. is perceived as a low-cost (or to be more precise, a lower-cost) country than Japan. Yes, you read that right: Because of the strong yen, it's more economical for Japan to have cars made in the U.S., and then shipped to places like South Korea, than to have them manufactured in Toyota's Japanese plants.

"We are looking for the opportunity for any North American product to be exported," explains Yoshimi Inaba, president and COO of Toyota Motor North America, according to a recent Reuters report. "This is just the beginning of a new era of North America being a source of supply to many other parts of the world."

Think about that: While U.S. companies, in some cases entire industries, offshore their production to such places as China and Latin America to take advantage of cheap labor, Toyota is doing the exact same thing but bringing that work to the United States. During this election year, it'll be fascinating to see how Toyota's new strategy plays with U.S. politicians, particularly those who traditionally champion Big Three automakers while denigrating foreign automakers who have plants in the U.S. Could this be part of Toyota's plan of rehabilitating its image in the United States and shifting the conversation away from those millions of recalls over the past several years?

Certainly, if Toyota's foreignshoring of cars from the United States to other countries leads in the hiring of more U.S. autoworkers to build those cars, it would start an entirely new conversation... and maybe, a new trend that other Japanese automakers might want to follow.

TAGS: Supply Chain
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