A Change for the Better -- Toyota's manufacturing plant in Indiana, which has begun to assemble the all-new 2020 Highlander (as shown in these photos), is part of a realignment that will help the company be even more responsive to customer needs and changes in the marketplace.
TMNA announced last week that it plans to realign assembly of Tacoma and Sequoia at its plants in Indiana and Texas. We sat down with Chris Reynolds, chief administrative officer, Manufacturing & Corporate Resources, and asked him to help explain how this change will ultimately help us better serve our customers.
Driver’s Seat: So, the news out of Princeton was that Toyota Motor Manufacturing, Indiana (TMMI) would invest an additional $700 million and create 150 new jobs to complete the plant modernization project it announced two years ago. But the story is a bit bigger than that, right?
Reynolds: Well, if you ask me, $700 million is a pretty big number!
But I know where you’re going with that. The key is what we intend to do with that investment which, all told, amounts to $1.3 billion and 550 new jobs at TMMI. In pure nuts-and-bolts terms, it will allow us to retool, install new equipment and incorporate advanced manufacturing technologies that will help us meet strong demand for the all-new 2020 Highlander.
Makes sense. The demand for Highlander along with SUVs and crossovers, in general, continues to grow.
Absolutely. We’re currently running at about a 70/30 split between trucks, SUVs and crossovers and passenger cars. And there’s no reason to believe that’s going to change any time soon. Meeting the needs of our customers will always drive our decision making, and that includes changes on the manufacturing front.
But the additional investment at TMMI is just one part of a larger puzzle. We also learned there’ll be changes at Toyota Motor Manufacturing, Texas (TMMTX).
Correct. In addition to Highlander and Sienna, TMMI has also been building Sequoia. Meanwhile, TMMTX has been the sole production source for Tundra. And it has been assembling Tacoma, along with Toyota de Baja California (TMMBC) and – since December — Toyota de Guanajuato (TMMGT).
Now, Highlander and Sienna ride on car-based platforms. Conversely, Tundra and Sequoia are body-on-frame vehicles. So, to improve efficiency and maximize production, it simply makes sense for TMMI to focus on Highlander and Sienna and for TMMTX to specialize in Tundra and Sequoia. The investment of $391 million in San Antonio, that we announced last September, will help make that possible.
When will this production realignment take effect?
TMMTX will cease production of the Tacoma by late 2021 and will begin assembly of the Sequoia starting 2022. The gap at TMMTX will allow team members to train and ensure that high-quality Sequoias are rolling off the line simultaneously with Tundras.
What will this mean for Tacoma? It’s a very hot commodity right now, too.
Our new plant in Mexico — TMMGT— will more than make up the volume. In fact, when they began assembly of the Tacoma in December, their 1,000 team members were on track to generate 100,000 units per year once ramp-up is complete. We wouldn’t be able to do this without their help. The combined annual capacity for TMMBC and TMMGT is 266,000 Tacomas.
Change is inevitable. But it can also be unsettling, especially if you’re a team member who works at one of the affected plants. Should they have any reason to be concerned about their employment future?
Not at all. Toyota prides itself on providing stable, well-paying jobs — and the investment at TMMI created 550 more of those. Let me emphasize that employment will remain the same across the rest of our manufacturing operations.
Now, that doesn’t mean there won’t be changes. After all, our success has long depended on a never-ending pursuit of continuous improvement. For example, the investments at TMMTX will allow us to introduce new materials, such as aluminum and advanced high-strength steel. In the stamping and body shop, some of the new processes will include material joining equipment and flexible sub-assembly lines that will reduce the lead time for future model changes. And the paint shop will also add capacity for additional color palettes while increasing automation of anti-corrosion applications.
We’re also exploring the implementation of technology that will empower our team members to embrace the future of manufacturing. That might mean robotics that are simple to use but incredibly helpful. We’re also looking at new augmented reality systems that will assist team members in training and development. We believe these and other innovations will create new efficiencies and help improve safety and quality for all of our downstream processes.
The search for new and better ways to make vehicles never ends. We are currently partnering with small and large companies — such as Microsoft, Elementary Robotics, Ready Robotics and Invisible AI — on this front. And we consult with Toyota AI Ventures, the venture capital subsidiary of Toyota Research Institute, on a regular basis to identify other emerging technologies that might be applicable to manufacturing.
What about the impact on suppliers that play such an important role here?
We’ve been transparent with suppliers and we’re working with them to minimize any impact on their operations. Truth be told, the new alignment will create value and new business opportunities for our suppliers. It will reduce complexity by simplifying parts, components and materials. And it will optimize our supply chain and logistics for even greater efficiencies.
When it’s all said and done, in what ways will Toyota be better positioned going forward?
The efficiency across all of our manufacturing operations will be improved, from supply chain and logistics to the continued rollout of the Toyota New Global Architecture. These moves also build on our philosophy to build where we sell and buy where we build.
But the big win is that we’ll be able to better serve our customers and adjust more quickly to shifts in market demand. At the end of the day, that’s what it’s all about.
By Dan Miller