Fourteen years ago, Toyota started its journey in Mexico, in Tijuana, Baja California. The border region gave the company the opportunity to have a fast, easy access to the U.S. market. Nowadays, Toyota exports 90% of its Tacoma production in Tijuana to the U.S. and has developed a strong, high-quality supply chain in Mexico.
Jun Umemura, Group Vice President, Mexico Operation Toyota Motor North America, recently participated in the Mexico’s Auto Industry Summit and took a moment to share some of Toyota’s plans in Mexico with BORDERNOW.
What are the strengths of the Tijuana plant?
Toyota Motor Manufacturing Baja California (TMMBC) is emblematic for Toyota since it was our first manufacturing project in Mexico.
Currently, the plant employs more than 2,000 people and its production level reaches 166,000 units per year, under a scheme called three-shiftthree crew.
The Tacoma pickup truck is manufactured in Toyota Motor Manufacturing Baja California. 90% of the production is exported to the US market due to the high demand that this type of vehicle has throughout the North American region.
Was it hard to develop the supply chain on that side of the country?
The plant started operations in 2004, so for more than 14 years we have developed an important high-quality local supply chain.
Does the company plan to expand the facility or in- crease production?
Precisely this year (2018) the production increase began in TMMBC. From an annual production of 100,000 it went to 166,000 units. We are running three crews, three shifts per day.
This increased volume added approximately 400 jobs and injected about US$150 million in new investment.
TMMBC’s expansion is benefiting the Toyota customers and dealers by helping meet the truck market’s growing demand. In addition, it is also positively impacting Toyota’s supplier partners.
What challenges does USMCA bring to Toyota?
We are in a process of analysis, to define the way in which we will adapt to the changes that the agreement will imply.
Toyota is prepared to respond gradually to the rules of origin established in the commercial agreement. We have three years of transition in which we will generate the necessary conditions to be more competitive.
We think it is positive that a commercial agreement has been reached because this gives certainty and a long-term free trade agreement always brings opportunities for the region.
In Toyota, we are gratified that provisions concerning auto trade rules acknowledge the industry’s importance in sustaining North America’s economic vitality. We are reviewing details in the agreement to determine their potential impact on our production, exports and supply chain. We hope the agreement will lead to the elimination of auto production-related tariffs and lift the uncertainty affecting the industry.
What are the challenges of the supply chain in Mexico?
In terms of supply, we see that it is positive, since the internal market will be developed. We have the opportunity to increase the national supply and this is very relevant.
We see great potential in The Bajío region where our new plant is being built as a provider of the automotive industry, so we believe that the national supply chain will continue to grow.
Is Toyota considering investing more in Mexico?
In Toyota, we constantly analyze new projects and investment plans. For now, we are focused on the construction of our manufacturing plant in Guanajuato, where Tacoma will also be produced, with an estimated initial volume of 100,000 units, per year. We are making our best possible effort to start operations by the end of 2019.
What is the progress of the plant in Guanajuato?
Currently the progress in construction is more than 50%, and the project is on track.
We are very proud that Tacoma is being produced in Baja California and that now, as of 2019, it will be also produced in Guanajuato.
We are firmly committed to Mexico and the state of Guanajuato and that encourages us to continue with this important investment project.
Has Toyota considered manufactu- ring electrical vehicles?
Toyota’s medium-term commitment is for hybrid vehicles since it is a technology developed by us. In Mexico, we are working to have a family of hybrids: for now, Prius, Prius C, and recently Camry are available on the Mexican market.
However, in Toyota we always look to the future. Toyota plans to sell more than 5.5 million electrified vehicles globally, including 1 million zero-emission vehicles, per year by 2030. By around 2025, every Toyota and Lexus model globally will be available either as a dedicated electrified model or have an electrified option.
Long-term, the aim is for 50% of our global line up to be “electrified” by 2030. Of this, 4.5 million vehicles will be hybrids or Plug-In Hybrid Vehicles (PHVs) and 1 million will be Battery Electric Vehicles (BEV) or Fuel Cell Vehicles (FCV) by 2030.
Are Toyota and Mazda planning on increasing collaboration?
There is a global agreement between Toyota and Mazda that aims to jointly seek the development of new technologies to improve the future of mobility, for example, electrification, so we are sure that we will continue generating interesting joint projects.