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Toyota announced Thursday that it will join forces with Mazda to build a $1.6 billion assembly plant in the U.S., The New York Times reports.
The plant will be operational by 2021 and will create 4000 jobs and produce 300,000 vehicles a year, according to The Wall Street Journal. Half of the vehicles would be Toyota Corollas, and the other half would be “an unspecified Mazda model, according to the Wall Street Journal.
A source told the Journal the two automakers would also “co-develop electric vehicles, safety features and connected-car technologies.”
Mazda and Toyota have shared technology before. In May 2015, they partnered in an effort to defray the cost of producing fuel-efficient vehicles. Toyota shared its plug-in hybrid and fuel cell technologies, while Mazda offered technology to optimize the fuel-economy of gas and diesel engines. Toyota mentioned the 2015 agreement in its statement, indicating that the assembly plant endeavor was the latest fruit of prolonged “[exploration of] various areas of collaboration” with Mazda.
As part of the deal, Toyota will purchase a 5% stake in Mazda.
A source told the Wall Street Journal in May that “Toyota President Akio Toyoda is concerned that [his company] tends to be too inward-oriented, and feels it needs to open up more to work with and learn from other companies.”
Toyota partnered with Subaru’s parent company, Fuji, in 2011, and has worked with Tesla.
Mazda, for its part, held a partnership with Ford from 1974 until 2015. From 1996 until late 2008, Ford owned a third of Mazda. The two companies worked together at an assembly plant in Flat Rock, Michigan. The new plant will be Mazda’s first manufacturing venture in the US since the automaker abandoned Flat Rock in 2012.
Toyota already has a host of factories throughout the southern and midwestern US, in states including Indiana, Kentucky, Mississippi, and Texas.
As Japanese brands capture an increasing share of the US market, many have migrated production to the U.S. so as to “be closer to the U.S. market and reduce exposure to currency fluctuations,” says Adrienne Roberts of The Wall Street Journal. According to a June 2016 report by Dan Eaton of bizjournals.com, 75% of Japanese vehicles sold in the USA are also produced here. In 2015, the three largest Japanese automakers built 3.48 million cars on American soil. The three biggest American manufacturers at the time—Chrysler, Ford, and GM—built 6.44 million vehicles on their home turf.
In other words, Japanese manufacturers had about half as much production presence in the US as native companies. But, if we isolate car production—that is, remove trucks, SUVs, crossovers, etc. from the picture—Japan outproduced America by a tally of 1.75 million to 1.53 million in 2015.
To frame the data another way, half of the vehicles made in America by Japanese companies were cars (i.e. sedans, etc.), while less than a quarter of American vehicles produced domestically were cars.
Companies like Toyota and Mazda are looking to shift their focus toward trucks, SUVs, and crossovers as demand for sedans falls in the US market, partly as a result of low gas prices.
Japanese car brands have only increased their production operations to the States in the years since 2015, and the White House is encouraging them to do so. Toyota originally planned to shift its Corolla production to a $1 billion facility in Mexico but canceled those plans when President Trump threatened an import tax.
Following Trump’s objection, Toyota released a statement (per WSJ) saying, “Toyota looks forward to collaborating with the Trump Administration to serve in the best interests of consumers and the automotive industry.” The newly announced plant may be their compromise.