Toyota eyes Ontario sites

02/25/2004

TONY VAN ALPHEN
TORONTO STAR

Booming Toyota Motor Corp. is leaning toward a site in the Cambridge area for construction of an assembly plant worth more than $1 billion starting next year, industry sources say.

Toyota officials say the Japanese-based auto giant has not yet made a decision on a site, but industry insiders indicated yesterday that the region, about 85 kilometres southwest of Toronto, has the inside track over several potential U.S. locations.

"It's ours to lose," said Gerald Fedchun, president of the Automotive Parts Manufacturers' Association.

Two industry officials, who requested anonymity, said Toyota will make a decision within the next six months because it wants to start assembling cars in 2008.

Toyota already operates two plants adjacent to each other in Cambridge, just north of Highway 401, that have become jewels in the company's worldwide network.

Nikkan Kogyo Shimbun, a Tokyo newspaper, reported earlier this week that Toyota is "nearing" a decision to build its seventh assembly plant in North America outside of Toronto, rather than in the U.S. where southern states are aggressively courting the company.

The newspaper said Toyota is looking at a site about 50 kilometres north of the existing plants, but industry sources said the company is considering a location south of Cambridge and closer to Brantford.

An auto assembly plant is a huge economic generator, creating as many as 2,000 direct jobs, another 6,000 for area suppliers and service providers and construction work. Governments can reap millions of dollars in annual tax revenue.

Ontario, which topped Michigan as the biggest producer of autos in North America for the first time last year, has 12 plants in the southern parts of the province.

Joe Cordiano, Ontario Minister of Economic Development of Trade, is travelling to Japan in April for talks on the province's participation in Expo 2005. But Cordiano, who has been aggressively seeking new auto investment, will also meet with Toyota officials there about a new plant, government officials say.

U.S.-Canada border delays have emerged as a significant obstacle to investment by major auto makers here, but Fedchun said the federal and U.S. governments plan to clear up some congestion problems.

"The two governments have promised a 25 per cent improvement in border efficiency by the end of the year at the Detroit-Windsor point, so that is no longer as much of a concern," said Fedchun, who represents more than 400 parts suppliers. "Everything else appears to be in our favour."

Fedchun said Canada offers lower health-care costs, a strong labour pool, cheap land and an excellent road system in the Kitchener-Waterloo-Cambridge area for Toyota.

Furthermore, he noted a new plant would have the advantage of proximity to parts makers that supply the existing complex in Cambridge.

One industry source said the company wants to develop "a knowledge umbrella" from its experience in Cambridge.

"They want to take what they've learned there and extend it to another plant nearby," said the source.

Toyota, which started production in Cambridge in 1989, has gradually expanded assembly operations and now builds about 250,000 Corolla sedans, Matrix cross-over vehicles and Lexus RX 330 sport-utility models annually.

The RX 330 is the first Lexus product that Toyota has built outside Japan, and industry officials regard it as a major testament to the confidence that top executives have in the Cambridge operations.

Other industry sources say Toyota is wary about locating close to a number of existing U.S. plants because of questions about adequate labour. The auto maker reportedly wants to build two more assembly plants on the continent before the end of the decade.

The Tokyo newspaper said the first new plant would produce Scion brand compact cars.

John Tennant, chief executive officer for Canada's Technology Triangle Inc., a public-private partnership for the Kitchener, Waterloo and Cambridge areas, said his economic development group has talked extensively to Toyota officials in recent months about building another operation.

"There have many rumours and straws in the wind about where it will go," he said. "We're doing our best to make sure it's coming here."

Meanwhile, Greig Mordue, assistant general manager of corporate planning for Toyota Motor Manufacturing Canada Inc., said the company's experience in production and sales here has been "positive" and that puts the country on any list for a new site.