Why Did Toyota Build Its New Plant In Canda As Opposed To The U.S.?

[LostAngeles]

Here's the story as reported by CBC. (http://www.cbc.ca/cp/business/050630/b0630102.html)

WOODSTOCK, Ont. (CP) - Ontario workers are well-trained.

That simple explanation was cited as a main reason why Toyota turned its back on hundreds of millions of dollars in subsidies offered from several American states in favour of building a second Ontario plant.

Industry experts say Ontarians are easier and cheaper to train - helping make it more cost-efficient to train workers when the new Woodstock plant opens in 2008, 40 kilometres away from its skilled workforce in Cambridge.

"The level of the workforce in general is so high that the training program you need for people, even for people who have not worked in a Toyota plant before, is minimal compared to what you have to go through in the southeastern United States," said Gerry Fedchun, president of the Automotive Parts Manufacturers' Association, whose members will see increased business with the new plant.

...

Several U.S. states were reportedly prepared to offer more than double that amount of subsidy. But Fedchun said much of that extra money would have been eaten away by higher training costs than are necessary for the Woodstock project.

He said Nissan and Honda have encountered difficulties getting new plants up to full production in recent years in Mississippi and Alabama due to an untrained - and often illiterate - workforce. In Alabama, trainers had to use "pictorials" to teach some illiterate workers how to use high-tech plant equipment.

"The educational level and the skill level of the people down there is so much lower than it is in Ontario," Fedchun said.

...

I picked it up from a thread elsewhere about the importance of spelling and grammar when communication on the Internet. The poster said basically, "And this is why jobs get outsourced," and posted the link.

All right, so the guy saying this looks likes he's pretty much Head Union Boss Guy, so this might just be, "HA! Rednecks! We took yer jobs!" he's shouting here. If not, it's pretty damn, disturbing that this is why we've got the outsourcing situation.

On the other hand, didn't the same thing happen during the recession of the 80s with electronics? Is this just part of an economic cycle?

[webfusion]

This is how cars are built today:
http://www.assemblymag.com/ASB/FILES/IMAGES/83529.jpg
BTW, that's ASIMO, the Honda demo robot.

[Manny]

That's exactly why workers have to be trained, webfusion. There are fewer of them, but they have to have skills. In the old model, you just needed the stamina to stand up and weld the same part on the same car day after day. Now nine (say) of those welders are gone, replaced by robots, but the tenth guy is a robot supervisor supervising nine robots. And he'd better know statistics, safety procedures, basic maintenance, maybe some basic electrical engineering principles, etc. Unlike the welding machine, operating those robots takes a little more than finding the on/off switch and making a few test welds.

And the other nine guys? Well, they better have learned their skills, too, because the only manufacturing job they're gonna get now is at the robot-making plant.

[webfusion]

Cambridge, Ontario Canada is just about 150 miles from Detroit. Will Toyota endeavor to attract, re-train and employ skilled (already well-trained) USA autoworkers? I wonder...

[Manny]

Probably not. The US isn't the only place that has lost auto jobs. Plants have been closing or downsizing in Canada, too. There's no shortage of well-trained people right in the area that are equally deserving of good jobs.

Whether Canada or US, this is a big win for the heavily unionized north vs. the ununionized south. It'll be interesting to see if it is the start of a trend or just rhetoric from the Toyota guy. I wasn't aware that Toyota was unhappy with its southern plants or that Honda and Nissan's problems down south were workforce-related. I do know that Mercedes has had some quality problems in Alabama, but that's mostly ascribed to poor supplier management.

[gethane]

The article I read at reuters had a different take on it.

Lower employee health costs for companies in Canada because of its universal public health care system have been cited as a reason that auto makers, including Japan's Honda Motor Co., have invested in Ontario, Canada's industrial heartland. The province now produces more vehicles than Michigan, the traditional center of the U.S. automotive industry.

http://today.reuters.co.uk/News/newsArticle.aspx?type=motoringSummary&storyID=2005-07-01T091819Z_01_NOA132660_RTRUKOC_0_TOYOTA-CANADA.xml

[LeFevre]

Toyota is building a manufacturing plant in San Antonio. It was all over the local news when they were looking at San Antonio as a place to build.

Gerry Fedchun says that, "Nissan and Honda have encountered difficulties getting new plants up to full production in recent years in Mississippi and Alabama due to an untrained - and often illiterate - workforce. In Alabama, trainers had to use "pictorials" to teach some illiterate workers how to use high-tech plant equipment."

I wouldn't be surprised at all if this were the case, but I'd like to see where he got that information. Illiterate? Fire the idiots and hire new guys. People around San Antonio were flocking to apply for jobs at the plant they are building down there, I'd assume it is similar over in the Southeast.

I know its Mississippi and Alabama, but I doubt 100% of everyone living there were born, raised, and educated there. San Antonio isn't a bastion of brains.

[LostAngeles]

Originally posted by gethane
The article I read at reuters had a different take on it.



http://today.reuters.co.uk/News/newsArticle.aspx?type=motoringSummary&storyID=2005-07-01T091819Z_01_NOA132660_RTRUKOC_0_TOYOTA-CANADA.xml

Yeah, the CBC mentioned that too, but I think they concentrated more on Fechun's claims about Mississippi and Alabama.

(Why is it I had to stop and think about spelling the latter and not the former?)

[Tmy]

Could their be a tariff advantage to building cars in Canada?? Can they avoid taxes if they build them and sell them in Canada?

[gethane]

Originally posted by LostAngeles
... about Mississippi and Alabama.

(Why is it I had to stop and think about spelling the latter and not the former?)

Well I know how to spell Mississippi because of the Chinese jump roping chant from elementary school. Perhaps you know the same chant? :)

[LostAngeles]

Originally posted by gethane
Well I know how to spell Mississippi because of the Chinese jump roping chant from elementary school. Perhaps you know the same chant? :)

Very likely. You'd be surprised what I remember. I just thought it was rather odd that I had to stop to make sure I wasn't misplacing any a's, but Mississippi came out just fine with nary a thought.

[Rob Lister]

Not to nix the thread but

Toyota Motor Manufacturing de Baja California
Manufacturing plant in Baja California, Mexico. Established in 2002.

TMMBC builds Tacoma pickup trucks and Tacoma truck beds. The plant has an annual capacity of 180,000 truck beds and 30,000 Tacoma pickup trucks. The truck beds are used in production both at TMMBC and NUMMI.

They're rolling up the spread sheets by rolling out the talent/cost pool. Some products fit better here, some Mexico, and others in Canada.

Canada=high skill/high cost/low ben[ifits]s
US South=medium skill/medium cost/medium bens
Mexico=poor skill/low cost/zero bens
Japan=high skill/very high cost/high bens

Kinda guessing on all of those. What do you think?

[Tmy]

Originally posted by LostAngeles
Very likely. You'd be surprised what I remember. I just thought it was rather odd that I had to stop to make sure I wasn't misplacing any a's, but Mississippi came out just fine with nary a thought.

I think it was from some kinda of Mighty Mouse cartoon. Back when I was a wee lad.

"it used to be so hard to spell it used to make me cry, but since I started spelling, its just like pumkin pie.......M I S S I S S I P P I"

[LostAngeles]

Originally posted by Rob Lister
Not to nix the thread but



They're rolling up the spread sheets by rolling out the talent/cost pool. Some products fit better here, some Mexico, and others in Canada.

Canada=high skill/high cost/low ben[ifits]s
US South=medium skill/medium cost/medium bens
Mexico=poor skill/low cost/zero bens
Japan=high skill/very high cost/high bens

Kinda guessing on all of those. What do you think?

So taking your example, what you're saying is that the parts that need the highest skill in manufacturing would go to Canada, then the U.S. South, then Mexico? That would actually make very good sense for the company.

[Rob Lister]

Originally posted by LostAngeles
So taking your example, what you're saying is that the parts that need the highest skill in manufacturing would go to Canada, then the U.S. South, then Mexico? That would actually make very good sense for the company.

That sounds close but I'd guess that the highest-skill parts would come from Japan (assembled engine) and possibly from the Northern U.S. Canada would be a very close second to Northern U.S. in my estimation but it depends on the subsidies/union/bens etc. Close call. Assembled engine from Mexico? I wouldn't let them test the thing much less make and assemble it. Transmission, same. Maybe transmission, especially. But running a labor intensive sheet metal press for truck beds in addition to doing some hard to get at tacking is just about the right place for it.

But I could be way off base.

Take a closer look yourself at what Toyota builds/designs where. The results are not very shocking.

http://www.toyota.com/about/operations/na-affiliates/

[a_unique_person]

I am doing some work at a car parts company at the moment. The workers have to have a pretty high level of skill, and have to be literate. They are running equipment that is very expensive and complex. The line managers have to be pretty smart, as the bugs that can occur can be very difficult to solve.

The hard part is getting people in to do the work. You can get any number of people to apply for a job, to get someone who can do the work is a lot harder.

[LostAngeles]

Originally posted by Rob Lister
Not to nix the thread but
...

I meant to add, by all means, if you can nix the thread, then do so. If you've got the info that says, "Hey, I think this guy mistook his sphicnter for his trachea," then go ahead. Hell, I think most of the threads that I post are looking for that special someone who can nix them.

...

Those that aren't me going, "Look at me! I'm stupid! Look at me!"