OHIRA, Japan -- In this remote northern city, surrounded by forests and mountains, the Toyota Group is opening an assembly plant when it arguably should be closing one.
On paper, the fundamentals don't add up.
Toyota Motor Corp. has long fought relatively high labor costs and bloated domestic capacity. And conditions have worsened this year, with the export-dependent automaker getting hammered by unfavorable exchange rates.
Small wonder Toyota's domestic operations are huge money-losers. Japan was the only region in the red in the latest quarter, to the tune of ¥122.4 billion (or about $1.5 billion).
Yet this gleaming factory, Toyota's first Japanese assembly plant in 18 years, underscores how the struggling automaker hopes to innovate its way to profit at home. And if the low-budget manufacturing techniques pioneered here work, they may soon be exported to overseas plants.
"There are some very advanced technologies introduced here, and this plant will play a big role in strengthening our worldwide network," says Atsushi Niimi, executive vice president for global manufacturing. "The point is making the plant as compact and flexible as possible."