Toyota delays Mississippi assembly plant

updated 6:16 p.m. ET Dec. 15, 2008

NEW YORK - Toyota Motor Corp. is shelving its plans to build the popular Prius hybrid in Mississippi as the slump in the auto industry continues to hobble the Japanese carmaker known for it emphasis on fuel-sipping vehicles.

Toyota’s plant under construction in Blue Springs, Miss., was scheduled to begin production in 2010, marking the first time the gas-electric Prius, which has been on sale for more than a decade, would be built outside of Japan and China.

But Mike Goss, a spokesman for Toyota’s U.S. arm, said Monday that despite investing $300 million in the plant so far, the automaker is delaying production there indefinitely because of the industrywide downturn.

Construction of the plant is about 90 percent complete, and Toyota will finish the building, Goss said. However, the installation of the factory’s equipment and machinery — “the most time-consuming” element of construction, he said — is delayed indefinitely.

The roughly 100 people who have been hired to oversee construction and install human resources plans at the plant will not lose their jobs and will be assigned other duties, Goss said.

“Those people’s jobs are safe, and we’ll find things for them to do,” he said.

Mississippi Gov. Haley Barbour said at a news conference that the state has invested $200 million in the plant, while local governments have invested about $35 million. He said Toyota plans to work with state and local governments to mitigate extra costs caused by the delay.

“While we definitely are disappointed (and) wish it wasn’t happening, we understand that these companies like Toyota have to operate in the private marketplace and have to do so successfully,” Barbour said.

Although Toyota’s U.S. sales have held up better than those of its Detroit-based counterparts, the entire industry has seen a steep plunge because consumers are skittish about making big purchases during the recession, and it has been more difficult and more expensive for some buyers to obtain financing in the tightened credit markets.

Toyota reported its auto sales in the U.S. fell 34 percent in November, while sales across the industry sank 37 percent. The company’s sales are down 13 percent for the first 11 months of the year compared with the same period in 2007.

The Toyota City, Japan-based automaker has also seen volumes of its once-popular hybrids plunge amid the collapse in gasoline prices. The Prius was a brisk-seller earlier this year as a gallon of gas fetched well over $4 a gallon, but U.S. sales plunged 48 percent in November. Toyota’s other hybrids, like gas-electric versions of the Camry sedan and Highlander sport utility vehicle, are facing even bigger sales declines.

MORE FROM AUTOS

Autos Section Front

VW buys 49.9 percent stake in Porsche Auto industry shows a pulse at L.A. show Whitacre steers GM onto new path Pontiac hits end of the road   Los Angeles Auto Show 2009 Automakers to reconsider dealer closings ‘Green Car of the Year’ at L.A. show is an Audi Now Whitacre can drive GM where he wants Ford gets small with Fiesta subcompact General Motors CEO Henderson out Autos Section Front   Add Autos headlines to your news reader: