Toyota Motor Corp. issued an unsettling warning to Kentucky workers building its top-selling Camry sedan: Cut costs now or face an uncertain future.
The automaker can build a Camry in Japan, ship it all the way to Kentucky and make more money selling that car than from one built at Toyota's factory in the state, the plant's president told employees in a 2 1/2 minute-long internal video obtained by Bloomberg News.
"I'm not sharing this to scare you, but to heighten your awareness of the current risk we now have," Wil James, who has managed the plant for more than seven years, said in the video dated this month. He said Toyota isn't planning to close the factory and continues to invest in it for the next 30 years. "But all of this is on the assumption that we can make as much progress in cost reduction and efficiency as we've made in quality and safety."
The video provides a glimpse into the cost-cutting drive spearheaded by President Akio Toyoda aimed at freeing up resources for a record research-and-development budget. While Toyota is spending heavily to cultivate electrification and artificial intelligence -- technologies that have the potential to transform the auto industry -- the company is squeezing its vaunted production system for more savings.
Earlier this year, Toyoda set up a cost-saving task force comprised of four executive vice presidents and charged them with ensuring any new outlays are funded from cuts to other programs. James said in the video that Kentucky workers would be hearing more about cost-cutting efforts over the next few weeks.
Spanning a size equal to 169 football fields, Georgetown is the auto industry's second-largest assembly plant in North America by volume and Toyota's biggest in the world. The company announced a $1.33 billion investment in the factory earlier this year to implement Toyota New Global Architecture, a more flexible production system that's underpinning almost every new model, from Prius hybrids to Toyota Highlander crossovers.