TRAVERSE CITY, Mich. (Bloomberg) -- Toyota Motor Corp. added 1,000 workers to build Tacoma pickups at its San Antonio truck plant and is using the factory's full capacity for the first time after a rocky start.
The company this week marked the start of compact Tacoma production in the plant built to make only larger Tundra pickups when it opened in late 2006. Lower demand for Tundras than Toyota expected and the closing of its former California joint-venture plant this year led it to move Tacoma output to Texas at a cost of $100 million.
“No one forecast the overall collapse of the U.S. market in 2008, and certainly we didn't anticipate full-size trucks would fall as much as they did,” Jim Lentz, Toyota's U.S. sales chief, told reporters Thursday at the factory. The company's current 270,000-unit North American pickup run rate, including 50,000 Tacomas built in Mexico, “looks about right,” he said.
Toyota planned to sell at least 200,000 Tundras a year when it began building the truck in 2006 in both Texas and Indiana. Sales missed that target in the model's first full year, and U.S. volume shrank in subsequent years as fuel prices rose to a record in 2008 and later as the recession curbed demand.
The addition of Tacoma raised investment in the Texas plant to $1.4 billion, Atsushi Niimi, executive vice president for global manufacturing, said in an interview in San Antonio. It may take a decade to recoup that investment, compared with seven years for most Toyota plants, he said.
Tough competition
U.S. sales of full-size pickups, dominated by trucks from Ford Motor Co. and General Motors Co., may total 1.4 million to 1.5 million this year, Lentz said. Tundra sales through July rose 29 percent to 54,515.
Toyota sold 79,385 Tundras in the U.S. last year, down from 196,555 in 2007, the first full year after it was redesigned to compete with models from Ford and GM.
Lentz said he doesn't expect the San Antonio plant to be enlarged anytime soon. Toyota had said in October that it would hire 850 for the additional work. The number increased after Toyota discovered Tacoma assembly required more manpower than planned, said Dan Antis, plant manager.
Plant utilization
San Antonio is building trucks at a rate that would allow the plant to make a combined 220,000 Tundras and Tacomas annually, Antis said. Official capacity for the factory remains 200,000 trucks a year, said Tania Saldana, a Toyota spokeswoman.
Toyota now employs 2,800 people at the factory. About 2,500 more work there for suppliers located on site, Antis said.
Higher production in Texas, and increases at other Toyota plants in the U.S., Canada and Mexico, will boost the company's plant utilization in the region to 90 percent this year, Steve St. Angelo, executive vice president for North America manufacturing, said this week at the 2010 Management Briefing Seminars here.
Overall use of existing Toyota production lines in North America should rise to 100 percent in 2011, St. Angelo said.
The recession that began in 2008 and falling auto sales in 2009 cut Toyota's plant-utilization rate to about 70 percent for much of 2009. Production at San Antonio stopped for three months in 2008, before the factory reopened late that year.
