The French would never admit it, but a Japanese car company is helping revive the northern region of the country left in the dust of the former industrial revolution.

Nord-Pas de Calais, where Toyota has located its sparkling new Yaris assembly plant in the city of Valenciennes, has been on the wane since its mining, steel and ship repair industries started declining in the late 1960s. Unemployment soared while the area struggled to attract new development.

Few dreamed that Japan’s No.1 automaker would ride in on the white horse of prosperity and sink $652 million into a new subcompact car plant - the first Japanese car company to build a car in France. Of course, the fact that Northern France economic development officials offered incentives equal to about 10% of Toyota’s investment couldn’t have hurt.

Yaris has been a smash hit in Europe since its introduction at the 1999 Paris auto show. But the import’s acceptance hasn’t been easy. Notoriously nationalistic, the French automotive press at first was openly hostile to Toyota’s manufacturing initiative, despite the fact that the Yaris was designed in part at Toyota’s European Design Center. The rub seemed to be that it also was designed in part in Japan, where it’s known as the Vitz.

But a lot of attitudes have changed since then, particularly after Yaris won the coveted 1999 European Car of the Year award. Through April of this year, it has sold more than 220,734 units throughout Europe, winning praise in tough markets such as Italy. First quarter sales were up 9% in Europe and a whopping 33% in France.

Sales are so strong that by 2003, Toyota plans to add a second shift at the Valenciennes plant, increasing production capacity to 180,000 units annually from 150,000 and creating 400 more jobs.

Toyota says it chose the region because of its established infrastructure and proximity to suppliers, plus its access to major European markets. It’s worth noting that the region also has the lowest unionized rate in Europe, with hourly labor costs well below Germany, Belgium, the U.S., Japan, the Netherlands and the U.K.

Locals claim industry absenteeism averages between 2% and 2.5%, including sick leave, and strikes are rare. The general manager of French auto supplier Valeo says the company’s nearby Calais plant, which makes 6 million alternators annually, has lost only two days of work to strikes in the last 25 years.

Toyota’s ride has not been without its speed bumps. French automakers Renault and Peugeot control 60% of domestic sales, with more than a dozen others, including Volkswagen and Fiat, fighting for the scraps. All the same, Toyota has done in France what it always does well. And that is to succeed where others fear to tread.