Toyota makes friends, readies for backlash

updated 7:15 p.m. ET March 2, 2007

WASHINGTON - From a high school auditorium near the birthplace of Elvis, Toyota was greeted like a hometown hero this week when it announced its eighth vehicle assembly plant in North America.

Students cheered as the automaker showed off a Highlander sport utility vehicle that will be built starting in 2010 at the $1.3 billion plant near Tupelo, Miss. Gov. Haley Barbour called Toyota Motor Corp. the “world’s premiere auto manufacturer,” and Sen. Trent Lott, the Senate’s No. 2 Republican, promised “when you are in our constituency, we are warriors on your behalf.”

Toyota’s choice of Mississippi for a new plant should give it more clout on Capitol Hill. With Michigan-based automakers facing hardships, a few more members of Congress on its side helps as Toyota takes on some lawmakers who openly question whether what’s good for Toyota and other Japanese automakers is good for America.

“They’re manipulating the yen and it creates big differences in what they can sell their automobiles for,” said Sen. Debbie Stabenow, D-Mich., who represents thousands of Detroit-based auto workers. “Most of their vehicles are still coming from Japan.”

Stabenow and other lawmakers representing manufacturing states complain that the Japanese government has kept the yen artificially low, allowing their auto producers to undercut competitors and reap huge profits in the United States. They note that 46 percent of Toyota’s U.S. sales in 2006 came from vehicles imported from Japan, even as the company highlights its American work force and assembly plants in advertising.

Toyota could surpass General Motors Corp. as the world’s No. 1 automaker next year, but the company has downplayed the significance, saying it’s more concerned with its customers, maintaining quality and rolling out a lineup that includes the new Tundra full-sized pickup — built in San Antonio, Texas.

In U.S. sales released Thursday, the company had its best February ever, posting sales increases of more than 12 percent. Sales of its Prius hybrid grew 86.8 percent while Camry and Corolla sales showed hefty increases.

Privately, Toyota officials acknowledge the potential pitfalls of growing rapidly in the U.S. during a period of job cuts and plant closings for GM, Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group.

Seiichi “Sean” Sudo, president of Toyota Engineering and Manufacturing in North America, warned in a recent presentation that the automaker could become “a scapegoat” as its Detroit-based competitors work through turnaround plans.

“With recent market-share gains and sales continuing to increase, we are becoming the de facto leader of the industry — that brings risks and responsibilities,” according to the document, obtained last month by the Detroit Free Press. “Our competitors are jealous of our success.”

Toyota has opened a major advertising campaign both inside the Beltway and beyond, touting its job creation in America. Commuters riding the escalator into a Capitol Hill Metro stop are greeted by a large red banner that declares: “386,000. Bird watchers in Nebraska. Kilometers to the Moon. Jobs created by Toyota in the U.S.”

The statistics were from a 2005 Toyota-backed study by the Ann Arbor, Mich.-based Center for Automotive Studies which calculated the company’s overall job imprint of direct, dealer and supplier employees and other spin-off jobs. The company had nearly 35,000 direct workers in the U.S. in 2006, up from more than 12,000 in 1990.

Toyota currently has 10 plants in eight states and will start producing Camrys at a former Subaru plant in Indiana this year. It also has a research and design center in Ann Arbor, Mich. that Toyota plans to expand.

The company has many allies in Congress, from members of the California delegation to Kentucky Sen. Mitch McConnell, the Senate’s top Republican, and Sen. Jay Rockefeller, D-W.Va., who helped bring an engine plant to his state.

Jim Press, Toyota’s North American president, said they were on track to make about 2.2 million vehicles in the U.S. in 2009, closing in on its current U.S. sales of 2.8 million. Asked why nearly half the vehicles sold in the U.S. last year were imports, he cited consumer demand for hybrids and fuel-sipping cars built overseas.

The Mississippi plant, Press told reporters, underscored the company’s work to meet customer demand and “build cars where we sell them.”

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