It may have recently passed GM to become the world's number one automaker, but even mighty Toyota isn't immune from the deteriorating U.S. market. Even before reporting a 38.9 percent drop in profits, the company predicted a sales slowdown in 2008 and moved to cut production of its full-size Tundra pickup and Sequoia SUV. But due to slumping demand, some factories that build these vehicles are now offline, and Toyota doesn't like paying its employees to do nothing. Rather than resorting to layoffs, the automaker has instead decided to begin U.S. production of the new Highlander SUV six months early so its workers can keep busy.
The Highlander's American production run was originally reserved for Toyota's new manufacturing plant in Tupelo, Mississippi, in late 2009. The plant is still under construction, however, and as rising gas prices eviscerated the pickup and SUV market, the automaker's other U.S. factories in Texas, Indiana, and Alabama suddenly had nothing to build. So instead of getting Tupelo ready (the Highlander's production date was recently pushed back to May 2010), Toyota will begin building the SUV in Princeton, Indiana this fall. Saying "we need to get those people working. That's the bottom line," senior vice president of North American engineering & manufacturing Steve St. Angelo explains that with Tundra and Sequoia assembly halted in Princeton, it makes sense to move the Highlander there "because the tools are ready." The SUV is also due for a refresh in 2010, and Tupelo would've had to retool less than a year after starting production.
Princeton isn't the only Toyota factory looking for work, however, and according to the automaker some Texas and Alabama employees have volunteered to join the new Highlander production line, while others are working temporarily at Toyota's Georgetown, Kentucky factory. When Tupelo finally opens in 2010 it will instead build the Prius, which is still in high demand. Looking to the future, St. Angelo hopes the worst is over for Toyota, and says "I don't anticipate us laying off any people." Currently Tundra and Sequoia production is set to resume in Texas and Indiana by November, but if sales in the U.S. don't improve, the automaker could be forced into more drastic action to protect its bottom line.
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