Cho: Toyota Needs to Become ‘100% American Company’

DETROIT – In a continuing effort to win over the hearts and car-buying dollars of American consumers, Toyota Motor Corp. President Fujio Cho says the auto maker must strive to create more jobs here in the U.S.

“We still have to make further efforts to become a true American company,” says Cho, speaking through an interpreter in an interview here at the North American International Auto Show.

“The local production relation must be increased and the local content also must be increased,” Cho says of making the number of vehicles Toyota produces in North America proportionate to its sales here.

Fujio Cho

“We have to add more jobs for the American people, and also we have to make a further contribution to the society of the North American continent. We never stop making efforts to become a good corporate citizen of North America,” Cho says.

Toyota’s top executive thinks trade friction like that in the mid-1990s, when there was talk of a possible tariff on luxury cars imported into the U.S. from Japan, will not be seen again.

“This was 10 years ago,” says Cho. “Compared to the 1995-1996 phase, we have increased our local production in North America and we have (created) new employment (opportunities) in the U.S.A. We have created new jobs in the U.S.A., which means we are already a very much localized company (here). With these efforts we continue to do, we’d like to become a 100% American company.”

Toyota announced Jan. 11 that it produced a record 1,443,889 vehicles at its five North American assembly plants in 2004, as well as a record 1,273,437 engines at four powertrain facilities in the U.S. and Canada.

By 2006, Toyota says it will have the annual capacity to produce 1.66 million vehicles and 1.44 million engines in North America. Toyota’s direct investment in North America is $15.3 billion, and employees here number more than 36,000. Toyota spends an additional $25 billion purchasing auto parts, materials, goods and services from North American suppliers.

However, regarding a much-talked about seventh North American manufacturing plant, Cho says Toyota has no set plans for such a facility.

“Once the (San Antonio) Texas plant comes on-stream (in fall 2006), and depending on what the likely volume is here in the U.S. once the Texas plant is completed – comparing the demand and also sales together, we would have to make a decision if that is necessary. But I think it is too early for us to make any decision on the plant at this point.”

No U.S. state, including Michigan, would be excluded from consideration, Cho says.

Dennis Cuneo, senior vice president-external affairs and public policy, told Ward’s as much in a separate interview here earlier.

Toyota already has North American manufacturing facilities in union stronghold states such as West Virginia, Indiana and Kentucky, so placing a plant in the state of Michigan would not be improbable, Cuneo said.

Meanwhile, Cho says Toyota has not played a role in keeping the Japanese yen undervalued in relation to the U.S. dollar.

“We at Toyota are not pushing the Japanese government (to keep the yen undervalued) – that is totally based on misunderstanding,” he says.

“In order to keep the yen low, we have never pushed – or we have never asked or influenced the Japanese government – to try to keep the value of the yen low, and I hope you will fully understand that correctly,” he says, adding that to his knowledge the Japanese government has not intervened in the currency market for nearly a year.

Cho says Toyota is predicting an exchange rate for fiscal 2005 of ¥107:$1.

“We used to think that ¥105 to the dollar would be a safe rate, but combining both the first and second half, the average is assumed to be ¥107 to the dollar when the (fiscal-year) books are closed at the end of March,” Cho says.

“Compared with the previous fiscal year, this represents a significantly higher value for the Japanese yen, a stronger yen. So relative to that in the previous fiscal year, we are making every effort at reducing costs so that the overall profit will not be below this year’s level because of the appreciation of the yen.”

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