Toyota Pinched by Truck Slump, Too

June 20, 2008
Regular readers of TheCarConnection.com have gotten used to the daily barrage of news and headlines trumpeting the impact of record oil prices on Big Three truck sales. But Detroit makers aren't the only ones feeling the pinch. After delaying the launch of a new plant intended to build its next-generation SUV/crossover, Toyota is facing up to the fact that even its trucks are vulnerable to the slowdown.

The automaker has announced it will slow production in the coming months at two of its already operating U.S. plants. The automaker's factory in San Antonio, the primary source for the Tundra pickup, will see a reduction in line speed, as well as 14 days of shutdown between now and October. Meanwhile, line speeds will also be trimmed at Toyota's Princeton, Indiana, plant, where the automaker has scheduled six days of shutdowns between now and late August.

The automaker will switch to a seven-hour assembly shift at the plants, starting in July. Workers will also put in an hour of training for each shift.

A key to Toyota's success has been to operate its plants at or above 100 percent of straight-time capacity, notes a Wall Street Journal article. The cuts mean Toyota will face the same underutilization issue that has plagued its big Three rivals and will likely lessen, or perhaps eliminate, any profits the automaker could earn at those plants.

Complicating matters, the Texas factory is designed to produce just Tundras, a sharp switch from the flexible manufacturing system Toyota uses virtually everywhere else in its empire.

Toyota has been forced to offer Detroit-level incentives on some of its big trucks in recent months, another sharp detour from its normal practices and a further strain on what it had hoped would be a year of solid profits from the North American market.

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