When it finally decided in late 1985 to take the plunge and build its first solely owned U.S. auto assembly plant to make Camrys, Toyota solved a product problem — but started a political one.
To get the original $800 million Georgetown, Ky., plant project up and going quickly, Toyota turned to a familiar Japanese construction giant, Obayashi Corp. When Obayashi refused to negotiate a role for unionized contractors, political hell broke lose.
Officials representing Kentucky's contractors lodged a complaint in Washington with the AFL-CIO. The labor organization rang the alarm bell with sympathetic congressional delegations and pro-labor interests from around the country that a Japanese corporation was discriminating against union members in hiring 3,500 construction workers.
With site work already under way, there was little Toyota could do immediately to defuse the political reaction, and so it simmered. The first year of the project was dogged by criticism from labor and Washington trade groups.
The AFL-CIO and the construction trades department of the International Brotherhood of Teamsters called on their 4 million members to boycott all aspects of work on the Georgetown plant, which could have slowed the time-sensitive project to a creep. They also urged their members to file lawsuits against Toyota in an effort to halt it.
By Thanksgiving 1986, Obayashi had reversed its policy and signed a formal agreement with 16 U.S. labor groups. The agreement promised to favor Kentucky companies ahead of out-of-state contractors on project awards, with no discrimination on any basis.
The agreement also gave labor a review role on project awards. Toyota would work with the construction trade unions on all future U.S. projects.
The peace plan could not please everyone. Nonunion contractors complained, to no avail, that Toyota had caved in to the boycott threats and that the new plan essentially would favor union shops at their expense.
And the solution did not completely win hearts on Capitol Hill. Trade groups continued to question Toyota's business methods, and Congress opposed a plan for Kentucky to provide Toyota with $6.7 million in federal training funds.
By 1991, a congressional subcommittee would question the fairness of Japan's interconnected network of keiretsu business arrangements, casting a cold eye on Toyota in particular.
Toyota would spend much of the coming decade reassuring decision-makers in Washington of its intentions and trying to build bridges with U.S. parts associations and trade groups.
— Lindsay Chappell