SAN ANTONIO -- Look for a new level of sourcing activity by Toyota Motor Corp. in Mexico now that the automaker has a growing need for Mexican parts content.
In the next three years, Toyota will begin building its first vehicles in Mexico. And in the years that follow, Toyota is certain to increase its sales there, offering vehicles using Mexican-made components.
Toyota has seemed oddly uninterested in Mexico in the past 20 years, even as it gobbled up sales in the United States and Canada.
Import competitors such as Nissan and Honda - and even Suzuki, Mitsubishi and BMW - pursued Mexican sales initiatives. But Toyota stayed away, wondering out loud whether it would be able to meet its own quality goals in Mexico.
That hesitation disappeared last September when Toyota unveiled plans to build Tacoma pickups in Baja, Mexico, starting in 2005.
Then in February, Toyota gave another nod to Mexico, announcing an $800 million Tundra pickup plant in San Antonio, 150 miles from the Mexican border.
While the Texas Tundras will not sell in Mexico, Toyota officials acknowledged that San Antonio models might cross the border. One executive noted the importance of finding a plant location "on the NAFTA highway into Mexico."
The Japanese giant may be new to Mexican automaking, but it's no stranger.
"We've already established relations with some Mexican suppliers and have had for some time," said Toyota CEO Fujio Cho on a visit to the San Antonio site.
Cho says it is possible that Toyota's Mexican suppliers will play a greater role in supplying Toyota - not just in Baja but also in Texas and at its other North American plants.
Last year, Toyota bought about $600 million in Mexican parts from 20 suppliers there for its North American plants, says Jim Wiseman, senior vice president of Toyota Motor Manufacturing North America in Erlanger, Ky.
Toyota's Mexican-made components include seatbelt assemblies, wiring harness systems and assemblies, junction box components and other electronic items.
Cho is all too familiar with untested supply chains. He has recalled how nerve-racking his days were waiting for Toyota's first wholly owned U.S. car plant to open in Georgetown, Ky., in 1988.
Cho, then president of the U.S. manufacturing subsidiary, remained unconvinced that parts suppliers spread hundreds of miles around the American Midwest would be able to brave bad weather and uncertain road conditions to meet Toyota's just-in-time schedule.
Cho and Toyota have since become so confident about North American suppliers that the thought of a San Antonio assembly plant - located 1,000 to 1,500 miles from established U.S. suppliers - doesn't faze them.