As Toyota Motor Corp. expands production in North America, the company is pushing some hesitant suppliers to come along.
After the bruising 2008-10 economic downturn, some Toyota suppliers are reluctant to invest in North American plants and work forces to support the automaker's long-term plans, says Robert Young, vice president of purchasing for Toyota Motor Engineering & Manufacturing North America Inc.
"That's probably the biggest concern we have today: Can our suppliers keep up with our overall production requirements?" Young said in an interview.
Certain suppliers have met Toyota's recent growth curve by running lots of overtime rather than adding employees or capacity, he said. Young declined to name those suppliers.
"Right now, we've got maybe 20 suppliers who are running six and seven days to keep up. And that's not sustainable," he said. "I think everybody has been hesitant to pull the trigger on additional investment in North America until they were confident that volumes in North America have stabilized.
"But we're talking with all those suppliers to work on capacity-up plans. In some cases it will take capital investment."
Young said that the lag will not prevent Toyota from reaching its 2012 production forecast. In North America, Toyota plans a 20 percent jump in vehicle output this year over 2011.
Toyota built 1,176,456 vehicles in North America in 2011, down from 1,278,342 in 2010. Both totals exclude joint ventures.
"But six- and seven-day-a-week production is truly not sustainable for most of our suppliers," Young said.
He said some lagging suppliers can fill increasing U.S. orders from overseas plants -- a temporary solution referred to as "bridge production." But importing parts and materials adds cost to vehicle assembly and Toyota has vowed to get away from bridge production of parts and vehicles.
Young said Toyota has sent engineers and support staff from its manufacturing operations to the supplier plants to improve their factory output.
Along with other automakers, Toyota's production plans have been plagued for the past four years, starting with the collapse of the light-truck retail market in 2008. The economic crash of 2008 and 2009 further hindered Toyota's plans. Global product recalls in 2010 affected North American production schedules, and last year's earthquake and tsunami in Japan, followed by widespread flooding in Thailand, continued to slow production until late in the year.
The crises have made suppliers wary of expanding.
"As a result of the Great Recession, some capacity was permanently taken off the line, and some suppliers are still struggling today to ramp back up," Young said. "Some of our suppliers are struggling as they bring back team members to run at their historic rates.
"Even though they have the installed capacity, they are struggling to run at rate to keep up with our demand."
