Toyota Motor stresses commitment to SE Asia

Toyota Motor stresses commitment to SE Asia

TOKYO (Dow Jones): Toyota Motor Corp., Japan's biggest
automaker, considers Southeast Asia's slump over the past year as
mostly cyclical and has no plans to shut factories in the region,
said top officials in a recent interview.

In fact, it is significantly lifting the number of parts
sourced by its Japanese factories from the Southeast Asian
operations, and will shift some product lines into the region and
out of Japan.

Production levels around Southeast Asia are so low that
Ryoichi Sasaki, a general manager of the Asia division, doesn't
hesitate to use the word "rescue" when describing what Toyota is
doing with its vast production capacity.

"No doubt, all the manufacturing plants are having a very
difficult time at the moment," he said. "There are a number of
suppliers very close to Toyota (operating) in Asean countries,
therefore we also try to rescue their local counterparts."

By "rescue," Sasaki said he means keeping Toyota's assembly
lines running, even though demand is falling short of supply, and
frantically trying to generate economies of scale by better
allocating manufacturing between plants in the region and those
in Japan.

Plants that were designed to serve domestic markets are being
re-assigned to satisfy export markets outside Asia. That means
making pickup trucks destined for Australia in Thailand instead
of Japan, as Toyota will start doing in September, and shipping
unused casting dies from Southeast Asian plants to ones in
Eastern Europe.

Toyota has factories in virtually all Southeast Asian nations,
set up as far back as the 1960s to cater to what the company had
expected to be a booming regional market for its products.

Expansions also occurred in the late 1980s and 1990s.

But the Asia crisis has led to a sharp fall in demand for
automobiles. Sakaki said Toyota's regional plants are now running
at only 20 percent to 30 percent of capacity and in many places,
production runs have been reduced to less than one full shift a
day, and sometimes only two weeks a month.

Aside from Japan, Southeast Asia has the largest geographic
concentration of Toyota plants, including many parts makers.

Toyota officials said that they have been formulating plans
since late last year to keep these assembly lines in motion,
including retooling the plants for export.

The company produced 244,400 vehicles in Asia last year, about
18 percent of the overseas total, and compared with the 1.5
million it exported from Japan during 1997. Exports from Japan
and elsewhere, however, are down this year.

But Toyota officials said the company intends to boost
production in the region of some products, sometimes at the
expense of Japanese facilities. "We don't have such a concern
about it, because Japan Toyota operations are so huge we can
absorb that (possible dent to domestic revenues)," Sasaki said.

Export of parts from Southeast Asian plants to Japan will be
boosted by at least five times the 1997 levels by 2000, Sasaki
estimated. Many of those parts will be installed in cars being
assembled in Japan and destined for elsewhere.

Another business plan was decided at a board meeting last
November that aims to de-emphasize the strategy Toyota has
employed for decades. Instead of looking at Southeast Asian
nations as stand-alone markets, Toyota is breaking operations
down by business line.

For example, diesel engine production is being concentrated in
Thailand, gasoline engines will be produced in Indonesia and
transmissions are to be handled in the Philippines. Aside from
parts and component manufacturing, most of Toyota's factories in
Southeast Asia do assembly.