Image: Building car
Shuji Kajiyama  /  AP
Workers assemble a vehicle at Nissan Motor's plant in Yokosuka, southwest of Tokyo.
updated 4/10/2007 2:23:34 PM ET 2007-04-10T18:23:34

At a time when Detroit's "Big Three" are closing plants and slashing jobs to revive their ailing business, their Japanese counterparts are busy opening plants in Japan for the first time in decades.

That's because there's strong demand for fuel-efficient small cars such as the Toyota Yaris and Honda Fit — all of which are made in Japan — as well as luxury models and hybrids, most of which are made here.

But there's also a shift away from the conventional wisdom that automakers are best off making cars in the same region where they sell.

Toyota, Nissan and Honda realize that the roots of their success lie in the management and production strategies developed and honed at home — from outstanding quality control to their extensive supplier networks — and that expanding in Japan may be the smartest way to meet demand for certain types of vehicles.

"It doesn't make sense to produce everything abroad," said Tsuyoshi Mochimaru, auto analyst with Deutsche Securities in Tokyo. "The idea is that rethinking quality begins in Japan."

Among the recent boosts in production here:

  • Honda Motor Co. is planning its first plant opening in Japan in 30 years. The new car-assembly and engine plants will be running by 2010, creating 2,200 jobs.
  • Toyota Motor Corp. is adding a new line at a plant in southwestern Japan to double production of engines for luxury models. The engine plant, which opened in 2005, marked Toyota's first plant opening in Japan in about 20 years; the new line, starting in 2008, will add 500 jobs.
  • Nissan Motor Co. completed a second engine facility last year to make engines for luxury cars and other models. It's expanding another engine plant in Yokohama, southwest of Tokyo.

Thierry Viadieu, a Nissan executive who has overseen alliances, said the plant openings in Japan mark a new stage of growth from earlier decades when the main goal was simpler: Get out of Japan to produce cars where they're being sold.

These days, he said, multinational manufacturers need to be sophisticated in their production strategies, coordinating output among their far-flung plants, amid increasingly intense competition.

Nissan, for example, imports all of its Infiniti luxury models sold in North America from Japan — and for now, that make sense, said Nissan Chief Operating Officer Toshiyuki Shiga.

"We don't start out with the idea that we need plants in Japan," Shiga said. "Each plant taking up the challenge leads to Nissan's overall competitiveness."

Kazuo Aoki, general manager at the Union of Japanese Scientists and Engineers, an organization that promotes technology, said the fundamentals of ensuring quality are based in Japan, which boasts top-notch parts suppliers and steelmakers.

"It's still best to produce domestically those cars with extra value," Aoki said. "But what you want to avoid is friction with nations, where the cars get exported."

In the 1980s and 1990s, Japanese automakers busily set up plants abroad, including North America, to cut costs and blunt the "Japan-bashing" among some Americans who blamed them for the loss of U.S. jobs.

Some U.S. legislators have revived complaints about Japan's success at the expense of American manufacturers. United States Sen. Debbie Stabenow, D-Mich., who represents thousands of Detroit-based auto workers, has said that the Japanese have an unfair edge from a weak yen, which makes it easier to underprice American rivals.

Such complaints have struck a sensitive nerve for some Americans worried about the fates of U.S. auto companies, which are slashing jobs and shuttering plants.

General Motors Corp. lost $10.4 billion in 2005 but underwent massive restructuring and trimmed its losses to $2 billion in 2006. Ford Motor Co. lost $12.7 billion last year, while DaimlerChrysler has decided to put up money-losing Chrysler for sale.

Toyota is steadily encroaching on their home turf. Autodata Corp.'s figures for March gave Toyota a 16 percent of the U.S. market, behind GM, with 22 percent, and Ford, with 17 percent.

Toyota is now exporting nearly half the vehicles it sells from Japan. Last year, that percentage was 46 percent, up from about 38 percent in 2005 because of a surge in U.S. demand and the inability of U.S. factories to keep up with demand.

One of Toyota's hot cars, the Prius hybrid, which switches between a gasoline engine and an electric motor to deliver as much as 60 miles per gallon, is made only in Japan.

Analysts say the recent production boom in Japan is also a reflection of how Japanese automakers have dispersed production — small cars and high-end models in Japan, pickup trucks in Thailand, and bigger trucks in the U.S. — so strong local demand, labor costs, tax laws and other factors make that place the best choice.

The Japanese have much at stake in maintaining the legacy of quality production methods and management philosophies in Japan, said Anand Sharma, manufacturing expert and co-founder of TBM Consulting Group.

"They have to keep that spirit alive, and they have to have some of that production there so that spirit doesn't fade away," Sharma said.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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