ANN ARBOR, Mich. - Toyota Motor Corp. has not decided yet whether to put up a billboard along U.S. 23 in York Township, advertising its plans to Detroit-area commuters. But soon enough, passers-by will know.
Toyota is preparing to break ground on a $150 million r&d center in York Township, 40 miles outside Detroit, the home of the traditional Big 3.
The building, which will fall under the unwieldy new corporate moniker of Toyota Motor Engineering and Manufacturing North America Inc. when it opens in 2008, will not be a breakthrough.
Toyota has been conducting r&d work just down the road in Ann Arbor for years. The r&d center will be more of a coming out.
"For a long time, we made a very conscious effort to quietly go about our business," says Bruce Brownlee, general manager for corporate planning and external affairs at the U.S. r&d subsidiary. "We'll definitely be more visible here."
As the traditional U.S. auto industry scales back on the number of engineers it needs and the threat of layoff hangs over the heads of many, Toyota has been moving the other way.
The bigger Toyota's stake in the North American market gets, the greater the pressure to research, design, innovate, change and problem-solve close to its customers.
The York Township project will have nearly seven times as much property - 690 acres - as Toyota's existing r&d campus, which means there is room to grow.
Toyota plans to keep the Ann Arbor campus for various functions, including powertrain and materials research.
For now, only one building is planned in York Township. A 350,000-square-foot structure will house all of Toyota's U.S. vehicle engineering group, bringing together departments that are scattered in different buildings around Ann Arbor. Toyota now has groups working in Ann Arbor on interior design projects that are physically separated from other pieces of its vehicle projects.
That doesn't rule out the possibility of a large test track, though. Brownlee says no decision has been made on building one.
In York Township, the view from the window of Brownlee's U.S.-designed Sienna minivan takes in a sweeping tract of open flat land and trees along U.S. 23.
"Over here," Brownlee tells a visitor, pointing out the land adjacent to the Toyota site, "and also over here, we'll be able to use for expansion some day."
An empty state mental hospital is on the property. It will cost Toyota $10 million to tear that down and clear the land. The hospital has moved to a neighboring piece of land, next to a state prison. The two facilities together give the impression of a forbidding neighborhood wrapped in razor wire.
"Once we've built the new building," Brownlee notes, "we would have enough land left over to build an entire assembly plant. But that's not going to happen. The township wanted to maintain the light-density residential and agricultural feel of the community, and that's what we're doing."
It started in an old mechanic's garage in Ann Arbor. Toyota found a garage sitting on a small and badly shaped hillside lot near the center of town in 1972, and there conducted emission tests to file its EPA data. That garage still exists.
The building now is used for much the same purpose by Suzuki Motor Corp.
Emission testing and the occasional engine-tuning were about all a Japanese importer needed in the United States until the mid-1980s. Even by the time Toyota's first U.S. vehicle manufacturing was under way in 1986, Toyota employed only 61 people in r&d here. But the numbers began to grow in step with Toyota's expanding manufacturing operations.
Swell to 1,100
By 1996, there were 400 r&d employees. By last year, when Toyota announced the expansion into York Township, there were 750 personnel. There will be 900 this year, and at least 1,100 by the time the new building opens in 2008.
Toyota's U.S. engineers now turn out finished vehicles for the North American market but still rely on Japan for the powertrains that drive them. This year, the Ann Arbor unit will see its handiwork emerge from factories in Indiana and Texas in the form of a full-sized Tundra pickup.
Fittingly, Toyota's groundbreaking also will beam a message to the North American auto industry: "We are here."
Other Toyota products are relying on increasing American involvement. Ann Arbor played a key role in the development of the Sienna. The 2006 Avalon was led by a project manager in Ann Arbor.
The Michigan center also now houses a satellite office of Toyota's U.S. styling operations, Calty Design Research Inc. in Newport Beach, Calif.
"By having Calty right here with us, we don't have to send people out to California to work on the hard parts," Brownlee says. "It speeds up the entire process. And more than that, it lets us sit and work on design issues together, to sidestep problems as we identify them."
Being on site is critical for Toyota. In the 1990s, the automaker began a practice it calls obeya, which roughly translates to "big room."
Toyota now brings engineers from all parts of a vehicle development project into a war room-type setting in an effort to whack through problems. Engineers from different areas of a project, such as chassis and body panels, who might not routinely interact, work together to solve problems.
Obeya is vital
Obeya will be an important part of the York Township operation, Brownlee says.
Theoretically, at least, Toyota could continue to develop vehicles from Japan, without all the expense and trouble of duplicating r&d resources in America. But the penalty can be huge, Brownlee says. "Look at the minivan that preceded the Sienna," he says.
"It was the Previa - designed and developed in Japan. We told them that it needed to be bigger. It wasn't until our Japanese engineers came to the United States and drove the highways and experienced what it's like to drive a big vehicle here that they could see our point.
"You can design from far away," he says, "but you just won't capture the nuances of the local market unless you're here."