Toyota announces new Mexico assembly plant, Canadian factory will switch to luxury models

April 2015 - Toyota will build a “simple and slim” assembly plant in Mexico to produce Corollas for North American consumers and for the export market. It means a redeployment of existing manufacturing assets in the region.

Toyota previously had suspended construction of new factories in order to improve capacity utilization of existing operations and plan for reduced model changeover and new plant costs. However, capacity utilization has surpassed 90 percent and the initial portion of new “simple and slim” plant costs—including structure and equipment—is estimated to be 40 percent below comparable 2008 projects.

Feeding demand

Toyota will spend about $1 billion to erect the plant in Guanajuato, Mexico, that will build the Corolla based on a forecast of steady, mid- and long-term growth in North America. The plant, to start up in 2019, is part of Toyota’s efforts to realign its North American manufacturing operations and begin a new approach to plant building.

Featuring new work processes, including Toyota New Global Architecture (TNGA) production engineering innovations, the Guanajuato factory will be a model for global manufacturing.

Operations realignment

To more efficiently supply high-quality and attractive vehicles, Toyota will continue regional consolidation of North American production based on vehicle body type and size.

In 2019, Toyota will shift production of the Corolla from its Cambridge, Ontario, assembly operation to Guanajuato and to Blue Springs, Mississippi, which already builds the Corolla. This move consolidates compact vehicle production to the Southern United States and Mexico. The Ontario plant will then focus on producing mid-sized vehicles of higher value, alongside Toyota Motor Manufacturing Kentucky Inc. (in Georgetown) and Toyota Motor Manufacturing Indiana Inc. (in Princeton).

From the ground up, the Mexican plant will be the first designed to fully maximize the merits of TNGA, which promises lower investments for model changeover because the major components of production are modularized via unified engineering. One example is to eliminate overhead conveyors, install compact equipment above the floor, and reduce the size of paint booths. Yet the production line can lengthened or shortened, depending on demand.

“An increase in production does not mean an undisciplined pursuit of more,” Toyota President Akio Toyoda stated. “Expansion must be driven by providing ever-better cars. These investments will be an important test of our resolve and a measure of tangible improvement.” MM