Toyota Motor has broken ground for a new $1 billion factory in Mexico even as President-elect Donald Trump threatens to scuttle the North American Free Trade Agreement.
Toyota Motor Manufacturing de Guanajuato is the company’s 15th manufacturing plant in North America. The plant in Apaseo el Grande is the latest in a long line of new factories car makers have built or are planning to build in Mexico where the annual production is expected to reach 5 million units annually before the end of the decade.
Global rankings of automotive producers continue to evolve yearly, but building 5 million vehicles annually would push Mexico ahead of South Korea and behind Germany among the world’s automotive powerhouses.
Automakers have invested an estimated $24 billion to build or expand factories in Mexico since 2010. They include a who’s-who of the global auto industry, including Audi, Volkswagen, General Motors, Ford, Fiat Chrysler, Nissan, Kia, Mercedes-Benz and Mazda.
The investment has raised anxiety among workers in the U.S. and helped contribute to Trump’s surprise election victory last week. Trump has excoriated carmakers, particularly the Ford Motor Co., for “moving jobs” to Mexico. Ford has tried to deny the charges, pointing to its hiring and investments in the U.S.
Trump has threatened to slap big tariffs on cars built in Mexico and shipped to the U.S. and analysts said virtually every manufacturer building cars in Mexico if Trump follows on the rhetoric with some kind of action.
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Toyota, however, is moving forward with the plans. The new Mexican plant is slated to produce the Toyota Corolla, the top selling car in the world, beginning in 2019, and employ approximately 2,000 team members from the Bajio region.
The new plant will have the capacity to build 200,000 units per year and will serve as the model of manufacturing for Toyota thanks in part to its design built on the anticipated Toyota New Global Architecture. TNGA will serve as a catalyst for building more models on common platforms, making intelligent use of common parts, and fully leveraging Toyota’s supply chain.
Once production begins at the new plant, Toyota will have the capacity to produce approximately 2.2 million vehicles annually in North America.
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“TMMGT will afford us the opportunity to boost vehicle quality and appeal while achieving cost savings through production engineering innovations,” said Mike Bafan, TMMGT president.
“This plant will also be simple, sustainable, mindful of its environment and highly competitive. Ultimately, this means our customers will benefit from our cars being produced locally with the highest quality and environmental standards.”
“Toyota’s investment in Guanajuato represents a long-term sign of our commitment to Mexico, its people and the Bajio region,” said Takeshi Uchiyamada, TMC board chairman. “TMMGT will play a key role in how we make products in the future, while setting a standard for manufacturing excellence in the industry.”
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He also highlighted that under Toyota’s Environmental Challenge 2050, which seeks to reduce the company’s global carbon footprint, Toyota will lower CO2 emissions and water usage by 50%. In Guanajuato alone, the automaker will help clean up Rio Queretaro and strengthen water conservation.
