Executive Briefings

'Made in America' Strategy Isn't Enough to Shield Toyota From Trump

When Trump administration appointee Wilbur Ross sat for a hearing on his commerce secretary nomination, one name kept coming up: Toyota. A senator from Vice President Mike Pence's home state asked to be reassured trade reforms wouldn't compromise Indiana jobs. Another from Mississippi said he was "tickled to death" Corollas are built in his state.

Call this the Japanese automaker's Red Wall. Toyota Motor Corp. started building it 30 years ago with its first assembly plant in Georgetown, Kentucky, in part to appease Washington during an era of icy U.S.-Japan trade ties. One after another, more factories sprang up in politically conservative states, including Alabama, Texas and West Virginia.

The questions put to Ross underscore concerns the White House is likely to hear if President Donald Trump keeps up his attacks on Toyota and its peers. After criticizing Toyota’s plans to build a Corolla plant in Mexico, Trump rebuked Japan for sending the U.S. hundreds of thousands of cars from what he said were “the biggest ships I’ve ever seen.” General Motors Co. and its peers, meanwhile, struggle to sell their vehicles in Japan.

“For years, Toyota was extremely paranoid about being a foreign company, and about the possibility of tariffs,” said Jeff Liker, a University of Michigan professor who’s written nine books on the company. “They just try to be Boy Scouts, perfect corporate citizens, to hedge against a possible backlash.”

Top-Four Producer

Toyota built more than 1.38 million cars and trucks in the U.S. last year, behind only GM, Ford Motor Co. and Fiat Chrysler Automobiles NV. Still, Toyota’s production fell about 1 million vehicles short of its sales in the country. Imported models include Japan-built Prius hybrids, Canada-assembled RAV4 and Lexus RX sport utility vehicles, and some Tacoma midsize pickups manufactured in Mexico.

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Call this the Japanese automaker's Red Wall. Toyota Motor Corp. started building it 30 years ago with its first assembly plant in Georgetown, Kentucky, in part to appease Washington during an era of icy U.S.-Japan trade ties. One after another, more factories sprang up in politically conservative states, including Alabama, Texas and West Virginia.

The questions put to Ross underscore concerns the White House is likely to hear if President Donald Trump keeps up his attacks on Toyota and its peers. After criticizing Toyota’s plans to build a Corolla plant in Mexico, Trump rebuked Japan for sending the U.S. hundreds of thousands of cars from what he said were “the biggest ships I’ve ever seen.” General Motors Co. and its peers, meanwhile, struggle to sell their vehicles in Japan.

“For years, Toyota was extremely paranoid about being a foreign company, and about the possibility of tariffs,” said Jeff Liker, a University of Michigan professor who’s written nine books on the company. “They just try to be Boy Scouts, perfect corporate citizens, to hedge against a possible backlash.”

Top-Four Producer

Toyota built more than 1.38 million cars and trucks in the U.S. last year, behind only GM, Ford Motor Co. and Fiat Chrysler Automobiles NV. Still, Toyota’s production fell about 1 million vehicles short of its sales in the country. Imported models include Japan-built Prius hybrids, Canada-assembled RAV4 and Lexus RX sport utility vehicles, and some Tacoma midsize pickups manufactured in Mexico.

Read Full Article