Ohira, Japan (Bloomberg) -- The village of Ohira is in Miyagi prefecture, 20 miles northwest of Sendai Bay, the stretch of Japan's coastline closest to the epicenter of the massive March 11 earthquake and tsunami.
In recent years the area has become Toyota Motor Corp. country, and car and car-supply plants dot the region. And in a year that has been hard on Toyota and cruel to Japan, Ohira has done all right.
In the Sendai Shiogama port, the tsunami crushed cars as if they were soda cans, scattered street lamps like lawn clippings, and left huge fishing trawlers beached on the docks among the blown-open shells of warehouses.
Ohira, however, lies inland. Compared with the devastation along the coast, the damage the village suffered was mild: cracked walls, torqued pavement and a few utility poles listing to the side.
Ohira was lucky, and not for the first time. The village has managed to escape much of the nation's economic stagnation, too.
Unlike many Japanese towns, Ohira has good jobs to keep its young people from fleeing to Tokyo and Osaka.
The population of 5,500 swells by more than 2,000 during the workday as commuters stream in. Oki Electric Industry Co., a Tokyo-based maker of servers and automated teller machines, has a factory in Ohira, as does zipper maker YKK Corp. of Tokyo.
Corporate taxes account for 80 percent of the village's revenue.
Yet Toyota looms the largest. The Toyota City-based automaker's Central Motor Co. unit opened a plant there in January where 900 workers make Yaris compact cars.
In the neighboring town of Taiwa, a wholly owned subsidiary called Toyota Tohoku makes brakes and suspensions. Taiwa also is home to a factory where Primearth EV Energy Co., a joint venture between Toyota and Panasonic Corp., makes hybrid-car batteries.
This island of job growth was only momentarily unsettled by the earthquake: Central Motor is in the process of transferring 400 more workers here from a plant near Tokyo, and the plant will soon add Corollas to its product line. Toyota Tohoku is going ahead with plans to build an engine factory next to its existing facility to meet the growing demand from the area's Toyota car plants.
To an extent, Ohira and Miyagi's dependence on Toyota reflects the nation's. The world's biggest carmaker is also Japan's largest listed company by sales.
What sets Toyota apart from other Japanese manufacturing giants, as much as its size and clout and cultural prominence, is its insistence on making things in Japan. Nissan Motor Co., the nation's second-largest auto manufacturer, made 30 percent of its cars in Japan in the fiscal year ended March 2010. Honda Motor Co., the third-largest automaker, built a quarter of its global output in Japan.
By contrast, for Toyota the share was 60 percent in the period, and half of those vehicles were shipped abroad.
The March 11 earthquake underlined one risk of concentrating so much production in a tectonically cursed nation.
Even though Toyota's actual plants suffered little damage from the quake and tsunami, the power shortages and disruptions along Japanese supply chains hurt Toyota more than its Japanese competitors.
Toyota's global output dropped 30 percent in March, while Tokyo-based Honda's fell 19 percent. Nissan's increased as its overseas plants were able to temporarily offset the drop at home.
By itself, an unprecedented natural calamity might not be an argument for Toyota to radically change its global strategy.
Yet the company is also facing a pair of longer-term challenges: a shrinking domestic market and a stubbornly high yen that makes its cars more expensive outside Japan.
Toyota needs to speed up the process of moving overseas to stay competitive at a time when the chaos brought about by the earthquake and tsunami may cause it to lose its status as the world's No. 1 carmaker, for now, industry analysts said.
"For Toyota, economically it makes 100 percent sense to move their production in Japan overseas," said Koji Endo, an auto analyst at Advanced Research Japan in Tokyo.
That "obviously would pose at least a huge short-term impact in particular communities and a spillover impact on other industries as well," he said. "It's probably not that big a problem for Honda or Nissan, but it's going to be a big problem for Toyota."
'Not going anywhere'
In the wake of the disaster, Toyota announced its intention to maintain its footprint in Japan.
"(Chief Executive Officer) Akio Toyoda came here and told me personally that Toyota is not going anywhere," Yuki Takahashi, the Miyagi official in charge of auto-business development, said in an interview in his office in the prefectural capital, Sendai.
This vehemence is even more striking since the company revealed plans last year to cut a fifth of domestic production by 2015 and move more manufacturing to emerging markets.
Reflexively digging in now might seem a stubborn, even reckless stance for a company of Toyota's size and global reach.
The conflicting signals that Toyota has sent can be read as an illustration of how much its leadership is torn over moving more business overseas, and the company's awareness of the stakes involved.