Market Overview

Toyota, Key Supplier To Invest Nearly $800 Million In San Antonio Manufacturing Facilities

Toyota, Key Supplier To Invest Nearly $800 Million In San Antonio Manufacturing Facilities

Toyota Motor Corp (NYSE: TM) recently announced a $391 million investment at its Tacoma and Tundra assembly plant in San Antonio.

In addition, Aisin AW, a Japanese auto supplier to Toyota in San Antonio, also announced it will be building a $400 million facility in nearby Cibolo, Texas, adding 900 jobs.

"We've been in the United States for more than 60 years, creating a tremendous value chain in this country and creating an extensive footprint in [San Antonio] since 2003," said Chris Reynolds, Toyota Motor North America chief administrative officer of manufacturing and corporate resources.

Toyota's $391 million investment in San Antonio will come in the form of additional robotics and other technologies for the production of its midsize Tacoma and full-size Tundra pickups, which are moving onto a common platform. No new jobs are planned at the San Antonio plant.

"With 10 U.S. plants, 1,500-strong dealer network, an extensive supply chain and other operations, we directly and indirectly employ over 475,000 Americans and are committed to investing here," Reynolds added.

Toyota's San Antonio plant directly employs more than 3,200 people. Including its 23 on-site suppliers, Toyota's total employment at the San Antonio plant's site is more than 7,200.

Through August, U.S. sales of the Tundra are up 2.2% to 78,012 compared to August 2018, while Tacoma sales have risen 4.7% to 169,292.

Auto production in San Antonio was up in August (SONAR: AUTO.SAT)

Toyota said the new San Antonio investment was not an effort to head off threatened U.S. tariffs on vehicles imported from Japan, according to a report in Bloomberg.

"We don't make these investment decisions based on what the current trade scenario is," Reynolds said in a Sept. 17 report in Bloomberg. "When we make this kind of investment, we're looking at where we think the market will be 20 years from now, regardless of what the trade flows might be under this agreement or that agreement."

On Sept. 16, President Donald Trump announced plans to enter into an "initial trade agreement regarding tariff barriers" with Japan.

"My administration looks forward to continued collaboration with the Congress on further negotiations with Japan to achieve a comprehensive trade agreement that results in more fair and reciprocal trade between the United States and Japan," Trump said in a statement.

However, Japanese Foreign Minister Toshimitsu Motegi said they wanted to see if the Trump administration would remove the threat of new auto tariffs before agreeing to a final trade deal, according to Bloomberg.

In addition to Texas, Toyota also has U.S. vehicle manufacturing plants in Kentucky, Mississippi and Indiana. In Mexico, Toyota has a vehicle plant in Tijuana, where it produces Tacoma trucks. Toyota is also in the process of building a $1 billion vehicle manufacturing plant in Guanajuato, Mexico.

Toyota's San Antonio plant and its suppliers rely on an auto parts supply chain that includes factories in Mexico, along the so-called NAFTA superhighway (named after the North American Free Trade). 

Laredo's World Trade Bridge – connecting Nuevo Laredo and Laredo, Texas – has been a major conduit for auto parts moving back and forth between suppliers and assembly plants on both sides of the U.S.-Mexico border.

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Posted-In: Auto Manufacturers Industry Freight Freightwaves texasNews Global Markets General


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