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Toyota USA Considers Offshoring to Japan

It sounds like one of those "everything you thought you knew is wrong" scenarios, but apparently Toyota has come to the conclusion that it's got enough factories in the United States and doesn't plan to build any more any time soon (read the Wall Street Journal article here, if you're a subscriber).

The irony is almost too delicious: Toyota has discovered, just as Detroit's Big Three long ago knew, that rising materials and labor costs in the United States are cutting into profitability.

The WSJ quotes an unnamed Toyota senior executive and management board member who says, "It's much, much more profitable to produce cars in Japan and ship them all to the U.S. right now, if it wasn't for the political problems that might cause." The article notes that Toyota estimates its manufacturing labor costs will jump by $900 million by 2011.

Toyota being Toyota, though, the company already has a manufacturing strategy that it hopes will help curb some of those costs. For instance, according to the article, "Toyota has developed a shorter assembly line that can churn out a dozen different cars nearly simultaneously, on the same line -- one every 50 seconds, one of the fastest production speeds in the world."

The automaker also plans to alter its wage structure to be more in line with what comparable workers in a given region might make. Which could be bad news for workers in the company's yet-to-open Tupelo, Mississippi, plant, which not only will probably pay those employees less than they might have expected, but they'll have to wait an additional year for the factory to even launch; Toyota now plans to bring Tupelo online in 2010 instead of 2009.

TAGS: Supply Chain
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