Toyota works to stay non-threatening

Is Toyota a threat to national security as one of the largest U.S. vehicle importers, or a valued creator of U.S. manufacturing jobs at a time when General Motors is potentially closing plants?

As the Trump administration weighs the security question and approaches trade negotiations with Japan, Toyota wants to make sure its unwavering commitment to U.S. manufacturing doesn't go overlooked. The automaker is upping its planned investment by 2022 by 30 percent, to $13 billion, and last week revealed plans to add about 600 jobs across the South — to the delight of President Donald Trump, who praised the expansion as "BIG NEWS for U.S. Auto Workers!"

Toyota executives insisted the increased investment wasn't driven by politics. But the automaker also senses an opportunity to remind those in Washington, including 10 senators and 33 representatives from the five states where it's expanding output, that the U.S. auto industry's economic engine extends far beyond the Detroit 3.

"We've been part of the cultural fabric in the U.S. for over 60 years," Chris Reynolds, Toyota Motor North America's chief administrative officer for manufacturing and corporate resources, told reporters on a call Thursday, March 14. "In a time when others are scaling back, we believe in the strength of America."

Toyota, whose American factory work force has grown to be about half the size of GM's, could soon find itself forced to invest even more in the U.S. if it wants to avoid tariffs that would raise the prices of some vehicles. Reynolds and CEO Jim Lentz said they are eager to learn whether the Trump administration will indeed declare imported vehicles to be a national security threat and go forward with tariffs, so they can determine whether additional production needs to be shifted.

But they also said the company, which imports about half of its U.S. sales volume, won't make any knee-jerk decisions either way.

"Our investment cycles go beyond any particular political cycle. We need to make decisions based on what we think the market needs rather than the policy direction of the moment," Reynolds said. "All of this activity, I hope, shows that we're a plus factor to the economic national security of the United States."

CEO Akio Toyoda then spoke in Washington on Friday, March 15, and reportedly said discussions of vehicles as a security threat "makes me feel sad." The company has also supported ratification of a new trade agreement among the U.S., Mexico and Canada, which Kellie Meiman Hock, managing partner at McLarty Associates, said is necessary to preserve efficient supply chains.

In the near term, Toyota said it will invest $749 million to increase engine capacity in Alabama, add production in Kentucky, double hybrid transaxle capacity in West Virginia and raise output of aluminum castings in Tennessee and Missouri.

More than a third of that is earmarked for the engine plant in Huntsville, Ala., which will gain 450 jobs. The company also plans to hire 123 people in Buffalo, W.Va., and 13 additional employees at the Bodine Aluminum plant in Jackson, Tenn. Toyota's assembly plant in Georgetown, Ky., won't get a bigger work force, but a $238 million investment will give it capacity to build 12,000 Lexus ES 300h hybrids annually starting in May and 100,000 RAV4 Hybrids annually starting in January.

Lentz said adding the RAV4 Hybrid benefits the Georgetown plant, which currently builds only sedans, by giving it a crossover at a time when light trucks make up about 70 percent of the market.

"Adding an SUV to that plant was important," even if the company has no plans to convert Georgetown into a truck plant, Lentz said.

Lentz said Toyota already has spent about half of the $10 billion it committed in 2017 to investing in U.S. manufacturing over five years and isn't ready to disclose details about the rest of the $3 billion it's now adding.