Toyota Slowing Down U.S. Plant Expansion?
Toyota is concerned about overexpansion and overcapacity in the U.S., apparently.
In Japan, most of Toyota’s factories are clustered in a single place, Toyota City. In the U.S., over the past decade, Toyota has spread factories from Fremont, Calif., to Georgetown, Ky.
That clustering would certainly lead to supply chain efficiencies (and risks). For each new spread out site in the U.S., suppliers often have to build new locations (to be close to the new Toyota plant for just-in-time delivery). Of course, it wouldn’t be “lean” if we talked about each supplier having a huge central factory that could easily feed ALL Toyota plants, would it? Lean gives us tools for not having to rely on “economies of scale” to be profitable. As commentators have pointed out before, part of Toyota’s strategy of sharing the factory wealth is probably more politically-driven than supply-chain-driven.
“Toyota has just announced the new Mississippi plant, where production is set to start in 2010,” Imai told The Associated Press. “As for North American plants after that, nothing has been decided.”
The assembly plant on the outskirts of Tupelo, Miss., will be Toyota’s eighth North American vehicle-assembly plant and the fourth new one in the past five years.
I think a more interesting topic to discuss — why aren’t the North American Toyota plants as flexible as in Japan?
In Japan, some of Toyota’s plants are capable of building more than a half-dozen different vehicles. In North America, several of them build just one or two models, making them somewhat inflexible to adjust to sudden swings in demand.
Having less flexible demand worsens any overcapacity problem, as it’s harder to shift production around (or forces the building of a new plant for a new product instead of using an existing flexible line). Can anyone shed more light on this?