Toyota Urges Suppliers to Expand in North America

Some of Toyota Motor Corp.'s suppliers are reluctant to invest in expanding capacity and staffing in North America after a series of crises that slashed the carmaker's output in the region, Automotive News reports.

Robert Young, purchasing vice president for Toyota's North American engineering and manufacturing unit, tells the newspaper that about 20 suppliers are running their factories six or seven days per week or importing parts from abroad to meet demand.

Young says those companies are wary because of the series of setbacks to Toyota's production plans in recent years: the collapse of the U.S. light truck market in 2008, massive recalls in 2009-2010, the impact of the global recession and last year's natural disasters in Japan and Thailand. During that period, he notes, many suppliers cut capacity and dismissed employees.

"Everybody has been hesitant to pull the trigger on additional investment," says Young, "until they were confident that volumes in North America have stabilized."

Young notes that heavy overtime and importing are not sustainable for the long term. He says Toyota is working with its suppliers to increase output and make capital investments in additional capacity.