Supply Chain

Toyota USA Considers Offshoring to Japan

June 23, 2007

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 WSJ.com 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.

About the Author

Dave Blanchard Blog | Senior Editor

Focus: Supply Chain

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Contributing Editor Dave Blanchard provides the IndustryWeek audience his expertise in lean supply chain, reporting on topics from logistics, procurement and inventory management to warehousing and distribution. He also specializes in business finance news and analysis, writing on such topics as corporate finance and tax, cost management, governance, risk and compliance, and budgeting and reporting.

Dave is also the chief editor of Penton Media’s Business Finance and editorial director of Material Handling & Logistics.

With over 25 years of experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2010), and is a frequent speaker at industry events. Dave is an award-winning journalist and has been twice named one of the nation’s top columnists by the American Society of Business Publications Editors.

Dave received his B.A. in English from Northern Illinois University, and was a high school teacher prior to his joining the publishing industry. He is married and has two daughters.