The first Japanese hybrid made in the USA

The future is here

Made in the USA – Toyota Motor Manufacturing North America (TMMNA) announced the company’s first North American gas-electric hybrid production will be at its Georgetown, Ky., plant – Toyota Motor Manufacturing, Kentucky, Inc. (TMMK) beginning in late 2006 as a Camry hybrid.

TMMK was established in 1986 and is Toyota’s largest plant in North America, building almost six million vehicles and investing around $5.3 billion dollars. The plant can produce 500,000 vehicles annually. It employs approximately 7,000 team members and currently builds the Camry, Avalon, and Solara on two production lines.

TMMK will have the capacity to build approximately 4,000 Camry hybrids every month, equaling 48,000 Camry hybrid vehicles per year. The addition of hybrid production to TMMK will include a $10 million investment in the plant.

Toyota expects capacity and employment to stay the same at TMMK with the addition of the Camry hybrid. The production of these hybrid vehicles will take place on the plant’s existing lines, so no new construction is planned. There are less than a hundred people that will be employed because of hybrid production.

Made in the USA by Toyota

“This is a proud day for the entire state of Kentucky,” said Kentucky Governor Ernie Fletcher, who attended the news conference from Japan via satellite. “For nearly 20 years, Toyota has called Kentucky home. We provide the kind of favorable business climate that encourages companies like Toyota to continue to invest here.”

Favorable, indeed. In the same satellite conference that was staged in Kentucky, Washington D.C. and Japan, Kentucky said they had agreed to a tax incentive of 25 percent of the investment, plus recouping the cost of training. JOBS for Kentucky provides an income tax credit for any entity that undertakes an environmental stewardship project with a minimum investment of at least $5 million. The credits will cover 100 percent of eligible skills upgrade training costs and up to 25 percent of eligible equipment costs.

There are no sheet metal changes and very few tooling changes. Usually, a tax incentive for this size is given when more people are employed, and there are substantial gains for the state. There was no indication that Toyota was going to go anywhere, so why give them such a generous bounty? It was the reason Ford – the first hybrid made in the USA – didn’t get a tax incentive.

I have been heralding the advent of hybrids since they came out. I have also been railing on the manufacturers for making boutique, or niche, hybrids. For example, the 48,000 Camry hybrids (assuming they are 25 percent more fuel-efficient) will save almost 5 million gallons of gas per year. If Toyota built all their Camrys, the number one selling car in the United States, as hybrids that would save the United States over 48 million gallons of gas per year.

“Once the decision was reached to make a hybrid version of our best-selling vehicle – the Camry – the Georgetown plant was the natural choice for Toyotas first North American hybrid production,” added Gary Convis, president of TMMK and a managing officer of Toyota Motor Corporation. “Our team members’ hard work and dedication over the last 20 years will ensure that the production of these cutting-edge vehicles in Kentucky will also be hugely successful.”

A tax incentive for environmental stewardship is not going to make hybrids successful. If the Kentucky Governor had looked at this as a win-win for all involved, he would have made a deal to give a $5,000 state tax incentive to the good people of Kentucky that purchase those vehicles. Remember, there is little retooling needed to make a hybrid, and all the technology and parts will be coming from Japan, they won’t be made in Kentucky. There are less than 100 jobs being created, yet Toyota is getting a 25 percent tax incentive on equipment for ten years and recouping all training costs.

“The continued success of Prius has demonstrated consumers growing demand for hybrid vehicles,” said Jim Press, Toyota Motor Sales, U.S.A. executive vice president and COO, and a managing officer of Toyota Motor Corporation. “Hybrid production in the U.S. will allow us to be even more responsive to the desires of our customers.”

Toyotas reputation, right now, is the environment. Has anyone noticed that their average gas miles are going down? That’s right, the behemoth trucks that General Motors is getting slammed for building, the ones that get about 14 mpg, are doing quite well in Toyotas metal farm, and no one has said boo about them.

The Camry hybrid joins a growing Toyota and Lexus niche hybrid lineup in the U.S., which currently includes the Toyota Prius and the Lexus RX 400h luxury hybrid sports utility vehicle (SUV). Next month, the Toyota Highlander Hybrid mid-size SUV will go on sale and the 2007 Lexus GS 450h hybrid luxury sedan is targeted for sale in the spring of 2006.

Don’t get me wrong; I’m not begetting Toyota for taking the incentive money from Kentucky, all corporations do. I applaud Toyota for building its Camry hybrid in the United States. I’m just tired of the niche market-spin of it. We are being inundated with this hybrid story, but no one is picking up the cost to the end consumer, and part of the reason the cost is so high is that it is a niche market.