Toyota Will Build Corollas in Mothballed Mississippi Plant
Before the global economic collapse, when Toyota began construction of its new plant in Tupelo, Mississippi, the automaker had planned to build Highlander crossovers at the plant, as Highlander demand was booming at the time. Before tooling for the plant had been installed, a series of events conspired to change Toyota’s plans. First, Tundra sales significantly slowed, so that Toyota was able to shift all Tundra production to San Antonio, leaving extra capacity in Princeton, Indiana.
Princeton’s capacity was then absorbed by moving Highlander production that had been intended for Tupelo to Indiana. Tupelo was then left without a product, but Toyota subsequently announced plans to produce the Prius there. When the global auto market slowdown hit, Toyota no longer needed the capacity to produce the Prius, so the company completed the exterior shell of the Tupelo plant to prevent damage, then left it vacant while it decided what product to produce there.
Meanwhile, GM declared bankruptcy, shut down its Pontiac division, and exited its NUMMI joint venture with Toyota in California. NUMMI had produced the Pontiac Vibe, Toyota Corolla, and Toyota Tacoma pickup. With Toyota having extra production capacity, NUMMI being Toyota’s only unionized plant in the US, and enough spare capacity to absorb Tacoma production at the sprawling truck plant in San Antonio, Texas, NUMMI became expendable. The only question was then what to do about Corolla production.
The Corolla is currently built in Japan and in Cambridge, Ontario. Once the Tupelo plant is on line in the fall of 2011, essentially all Corollas sold in the US will be built in North America. According to Toyota, because the plant’s construction is essentially finished, it will shortly begin hiring the 2,000 employees who will staff the plant and install the production equipment.
Toyota’s decision to kick off Mississippi production with the Corolla makes sense on a number of levels. Building the cars in the NAFTA zone makes sense from a logistics standpoint, not to mention partially insulating the cost of the cars from currency fluctuations between the yen and the dollar. Also, much of the production tooling for Corollas already exists from the shuttered NUMMI plant, so Toyota can save $500 million in projected costs by reusing old equipment instead of buying new equipment. Previously, Toyota expected to invest $1.3 billion in the Tupelo, Mississippi plant to produce the Prius there; by using NUMMI’s Corolla tooling, the cost drops to $800 million. Humorously, some of the $500 million savings also comes from re-purposing unused equipment such as desks, forklifts, and tools from other Toyota plants such as Georgetown, Kentucky, that have been in place for a quarter century.
Toyota’s North American production boss, Steve St. Angelo, also indicated that the long-term plan is still to build the Prius in the US. Currently, all Priora are imported from Japan. He would not, however, give a specific number for Prius sales at which point the company would want to build the car locally. If and when Toyota decides to build the Prius in the US or Canada, it will almost certainly expand an existing plant to do so, rather than building an all-new facility. The new plant in Tupelo is slated to receive future investments, and has room to grow, so it’s entirely possible that this plant might someday still build the Prius.
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