From a high school auditorium near the birthplace of Elvis, Toyota was greeted like a hometown hero this week when it announced its eighth vehicle assembly plant in North America.
Students cheered as the automaker showed off a Highlander sport utility vehicle that will be built starting in 2010 at the $1.3 billion plant near Tupelo, Miss. Gov. Haley Barbour called Toyota Motor Corp. the “world’s premiere auto manufacturer,” and Sen. Trent Lott, the Senate’s No. 2 Republican, promised “when you are in our constituency, we are warriors on your behalf.”
Toyota’s choice of Mississippi for a new plant should give it more clout on Capitol Hill. With Michigan-based automakers facing hardships, a few more members of Congress on its side helps as Toyota takes on some lawmakers who openly question whether what’s good for Toyota and other Japanese automakers is good for America.
“They’re manipulating the yen and it creates big differences in what they can sell their automobiles for,” said Sen. Debbie Stabenow, D-Mich., who represents thousands of Detroit-based auto workers. “Most of their vehicles are still coming from Japan.”
Stabenow and other lawmakers representing manufacturing states complain that the Japanese government has kept the yen artificially low, allowing their auto producers to undercut competitors and reap huge profits in the United States. They note that 46 percent of Toyota’s U.S. sales in 2006 came from vehicles imported from Japan, even as the company highlights its American work force and assembly plants in advertising.
Toyota could surpass General Motors Corp. as the world’s No. 1 automaker next year, but the company has downplayed the significance, saying it’s more concerned with its customers, maintaining quality and rolling out a lineup that includes the new Tundra full-sized pickup — built in San Antonio, Texas.
In U.S. sales released Thursday, the company had its best February ever, posting sales increases of more than 12 percent. Sales of its Prius hybrid grew 86.8 percent while Camry and Corolla sales showed hefty increases.
Privately, Toyota officials acknowledge the potential pitfalls of growing rapidly in the U.S. during a period of job cuts and plant closings for GM, Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group.
Seiichi “Sean” Sudo, president of Toyota Engineering and Manufacturing in North America, warned in a recent presentation that the automaker could become “a scapegoat” as its Detroit-based competitors work through turnaround plans.
“With recent market-share gains and sales continuing to increase, we are becoming the de facto leader of the industry — that brings risks and responsibilities,” according to the document, obtained last month by the Detroit Free Press. “Our competitors are jealous of our success.”
Toyota has opened a major advertising campaign both inside the Beltway and beyond, touting its job creation in America. Commuters riding the escalator into a Capitol Hill Metro stop are greeted by a large red banner that declares: “386,000. Bird watchers in Nebraska. Kilometers to the Moon. Jobs created by Toyota in the U.S.”
The statistics were from a 2005 Toyota-backed study by the Ann Arbor, Mich.-based Center for Automotive Studies which calculated the company’s overall job imprint of direct, dealer and supplier employees and other spin-off jobs. The company had nearly 35,000 direct workers in the U.S. in 2006, up from more than 12,000 in 1990.
Toyota currently has 10 plants in eight states and will start producing Camrys at a former Subaru plant in Indiana this year. It also has a research and design center in Ann Arbor, Mich. that Toyota plans to expand.
The company has many allies in Congress, from members of the California delegation to Kentucky Sen. Mitch McConnell, the Senate’s top Republican, and Sen. Jay Rockefeller, D-W.Va., who helped bring an engine plant to his state.
Jim Press, Toyota’s North American president, said they were on track to make about 2.2 million vehicles in the U.S. in 2009, closing in on its current U.S. sales of 2.8 million. Asked why nearly half the vehicles sold in the U.S. last year were imports, he cited consumer demand for hybrids and fuel-sipping cars built overseas.
The Mississippi plant, Press told reporters, underscored the company’s work to meet customer demand and “build cars where we sell them.”
“After 50 years of being in the country, it’s also part of becoming a citizen,” Press said. “This is a natural flow for our profits to stay in the United States — stay in North America and be reinvested here.”
But some members of Congress and advocacy groups question if Toyota is unfairly benefiting at the expense of U.S. automakers, who face large health care and retiree costs that they say are exacerbated by Japan’s currency practices. The weak yen puts domestics at a price disadvantage of several thousand dollars per vehicle, they argue.
In a letter last month to Treasury Secretary Henry Paulson, four House Democrats said the weakened yen had allowed Japanese automakers to increase their exports to the United States by more than 30 percent in 2006.
“A yen that’s 20 percent undervalued is giving an incentive to gush exports out of Japan and flood this market,” said Stephen Collins, president of the Automotive Trade Policy Council, which represents Detroit automakers.
Rep. Sander Levin, D-Mich., who leads the trade panel of the House Ways and Means Committee, plans to hold hearings on the undervalued yen and said he was considering legislation to address the inequities.
“The auto industry can’t set trade policy,” Levin said. “Government needs to be a partner and its been a silent partner.”
The Bush administration has been cool to a protectionist approach, despite a high-profile — and delayed — meeting at the White House between Bush and the leaders of Detroit’s car makers that included currency on the agenda.
Treasury Secretary Henry Paulson, in a speech Thursday, said erecting barriers would hurt the economy and lead to “lost jobs and lost opportunity.” Administration officials, meanwhile, have stressed the importance of foreign investment as a way to spur economic development.
Toyota has bolstered its lobbying operation in recent years. The company spent more than $4 million last year on lobbying, Toyota officials said, compared to about $875,000 in 2000.
Josephine Cooper, Toyota’s group vice president for government and industry affairs, said the company hasn’t seen “an appetite for discriminatory actions against foreign-based automakers beyond some in the Michigan delegation. I think you can attribute that to the concern for their companies.”
Members of Congress who support domestic automakers concede they face major hurdles. Rep. Mike Rogers, R-Mich., noted that “you can’t swing a dead cat in the parking lot (on Capitol Hill) without hitting a Toyota or Honda or a Mitsubishi. I don’t believe it’s a political problem.”
The Camry, after all, remains the nation’s top-selling passenger car. Rogers, who grew up in the rural outskirts of Detroit, said he remembered the days when “you did not consider buying a foreign car. Now I think the attitude of America has changed.”