By on July 22, 2009

Toyota is the top automaker in the world and has grown to this point by using methods put into place by one lone individual crying in the American post-war industrial wilderness. His name was Deming, and his message was (paraphrasing) “make it right the first time and it’ll be less expensive, better for the customer and more profitable for the manufacturer.” He also laid out how best to continually improve. The Japanese took this message and ran with it, patiently decimating the competition over half a century.

Toyota supplanted GM as the world’s largest automaker—just as the world economy collapsed. Specifically, the US economy is tanked, kaput, flushed. For a long time to come. The Great Depression lasted from 1929-1942, after all; and that was when the nation was not trillions of dollars in debt (and adding $1.8 trillion more in 2009 debts alone).

Then, too, you have the Canadian and US governments tilting the playing field dramatically towards their domestic carmakers, by owning and supporting GM and Chrysler, as well as writing law and rebate language specifically for their benefits at the expense of free-market competitors. Toyota’s displeasure with the state of affairs recently surfaced when the Premier of Ontario aimed rebates at GM’s future hybrids—after Toyota have put thousands of new jobs into Ontario (while GM pulls jobs and sends them to China and Mexico).

In addition, multiple Chinese automakers stand ready to enter the US market with the tacit financial support of their government. How many US market “goods” are currently made in China that used to be made in Japan thirty years ago?

What if Toyota executives believe that the US economy is going to entirely collapse? Pulling out of a market temporarily is not unheard of, specifically for the on-again/off-again South American nations which have seen hyperinflation first hand over the past couple of decades.

Toyota as a company is, first of all, not used to losses. Where are their losses right now? Exclusively in North America. So says Toyota’s CEO in North America in the Detroit News. In plain English, Toyota says, “no level playing field, no profits, no prospect for profits; time to leave North America?”

I don’t just mean close down all of the plants and simply import cars. I mean, depart—as did Isuzu, Daewoo, Peugeot, Citroën, and many others.

Obviously, that’s an extreme scenario. If, in twenty or thirty years, the North American economy recovers sufficiently to again profitably export cars here, the company would no doubt wish to return under the guise of Daihatsu (50% owned by Toyota). A small remnant, Subaru, could stay if it is profitable in North America; Toyota just increased their ownership level of Fuji Heavy Industries (owner of the Subaru brand).

A Toyota withdrawal would be an enormous PR disaster for the current North American regime, in terms of showing a total lack of confidence in the US dollar, literally astronomical deficits and the NAFTA tied-economy (i.e. the lack of future economic health prospects for Canada and Mexico).

Backing off from the nuclear option, Toyota seems certain to pull the plug on NUMMI and close it down (having already been left to hold the bag by their “partner” GM), mothball the Mississippi factory indefinitely, consolidate production and use US plants for the US market, reduce hours of the workforce to match requirements, severely restrict the number and types of vehicle available to only the profitable and better selling lines, and massively lay off Ontario workers by curtailing exports to the USA.

The alternative (total pull-out) would be very damaging for the United States; therefore perhaps the US, Canadian and Ontario Governments should sit down with Toyota executives and have a frank conversation, starting with a great big “thank you” for first investing so much into North America, a second big “thank you” for investing so much into hybrid technology and finally by confirming that the playing field will be left level for everyone at the earliest possible timeframe.

Because if Toyota leaves North America, the only companies which would gain market share would be Honda, Hyundai/Kia, Nissan and Ford in that order (IMHO), as Toyota intenders would rarely, if ever, even consider GM or Chrysler products. Whether these companies could be profitable in North America even with Toyota out of the market is another matter entirely.

If the most profitable and efficient automaker cannot make a profit here, what of the lesser companies? Is North America a cesspit of money-loss for the automotive industry? The current regime believes they have forestalled a cataclysmic auto industry collapse. That market forces cannot overcome their magical thinking. History proves them entirely wrong.

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115 Comments on “Toyota to Leave the North American Market?...”


  • avatar

    Toyota will never leave the US market. Period. Point blank. Never gonna happen.

    This editorial is well-done and interesting, but it smacks too much of racism. The superior Japanese people will take their ball and go home, leaving the American “mud folks” to suffer without them. Kind of like Chariots Of The Gods. What would we do without Toyota? What would we doooooooooooooooo? How did the United States survive for 195 years without significant quantities of Toyopets?

    From my perspective, Toyota effectively abandoned my side of the market when they discontinued the Celica GT-S in favor of the tepid Scion tC. If they want to stop selling Camrys here, so be it.

  • avatar
    BDB

    This post sounds like a bad Ayn Rand novel on wheels. Beyond that, I second what Jack said.

  • avatar
    Jeff Puthuff

    Toyota will not cede the Lexus market to its competitors. Full stop.

    It’s an interesting editorial opinion piece that piqued my interest . . . until the inflammable last paragraph.

  • avatar
    ajla

    +1 Jack and Jeff.

    I agree with you both.

  • avatar
    johnny ro

    I bet they have this as possibility in strategic planning office. But won’t do it yet if ever.

    Go away and its hard to come back. And expensive to go away.

    Not that I’m optimistic about US prospects in general.

  • avatar
    BDB

    Come to think of it, the Japanese economy sucked wind for the whole of the 1990s (in many ways it still does).

  • avatar
    pete

    The lesson is – don’t have too much exposure to one geo or market. Global players can’t ignore nearly 400 million people. Toyota certainly won’t.

  • avatar
    TZ

    The chance of that happening would be zero.

  • avatar
    Indy2010

    Hate to pile on, but all the comments are right so far – it’s not going to happen.

    We are going through a time of enormous flux and transition, but eventually we will reach a new equilibrium and, as in any industry, the organizations will adjust to eek out what profit is possible. The only question for Toyota is: will we be better than our competitors in winning whatever profitable market remains in terms of price and quality?

    And, so far as I can judge, they should answer “Yes, based on recent History, we have every reason to believe we will be able to do better.” So they’ll stay to win another day.

  • avatar
    pleiter

    If you read several books about TPS (Toyota Production System, not that Office Space thing) and the Toyota Way, you’ll perhaps understand their thinking process a little bit better. For example, the employee suggestion box input for saving money, by…. gluing 2 short pencils together at the butt end to be able to continue using the nubs. Tenacity won’t even begin to describe what Toyota will do if the consensus is reached.

  • avatar
    sfdennis1

    This is one of the most bizarre posts I’ve seen on TTAC. Toyota leaving the US market? Pure fantasy…divorced from any serious logic. As in ‘never gonna happen’.

    And as if we need a big dog-and-pony show ‘thank you’ to Toyota for it’s North American investments. Those investments where made for one reason only, self-interest on the part of Toyota…that’s business.

    Also, the not so subtle digs at the current administration, sorry “regime”, ring out loud and clear…is the author a tea-party attender? A birth certificate denier?

    Overall, just a big steaming pile of “huh?”

  • avatar
    Patrickj

    Well over half of the North American car market is made up of product types specific to the local market, or uncommon outside of it.

    Why import full sized (or mid-sized) pickups, large CUVs/SUVs, or mass-market full-size sedans not sold elsewhere until such time as all production can be moved to China?

  • avatar
    BDB

    And as if we need a big dog-and-pony show ‘thank you’ to Toyota for it’s North American investments. Those investments where made for one reason only, self-interest on the part of Toyota…that’s business

    Don’t forget the tariffs Reagan imposed. Those factories would not exist, or would be much smaller if they did at all, had he not slapped quotas and tarriffs on imports in the ’80s. Yes, Republicans, Free Market Hero ™ Ronnie Ray-gun implemented protectionist policies.

  • avatar
    ffdr4

    GM and Chrysler begging for and receiving taxpayer dollars in both the US and Canada have turned off a lot of dyed in the wool GM and Chrysler buyers. The numbers bear it out in Canada according to the latest automotive data. The beneficiaries of this revulsion have been Ford, Hyundai/Kia and the Japanese automakers (in particular Honda and Toyota). GM and Chrysler’s market share have not hit bottom yet. Market share is still sinking. Canadians are good at keeping grudges (see Vince Carter, traded in 2004 and still booed with gusto and indecent gestures from the heart today)A lot of people who use to buy vehicles from GM’s sold off and shuttered brands are not going to buy from GM’s “new brands”, they’re going to the competition. Toyota isn’t going anywhere.

  • avatar
    antiquepacbell

    Toyota isn’t going anywhere.

  • avatar
    MadHungarian

    I did a double take to make sure the date on this piece was not April 1. However, Toyota could take this opportunity to rationalize its product mix. Combine the Corolla and Camry into one model slotting between the two in size. Personally, I would use the 1992-96 generation Camry (which was practically sexy compared to its competition of the time) as a packaging and styling benchmark. Not to copy its appearance, but to recapture the idea of a stylish, non-bloated Camry. Ditch the Venza, add a coupe and wagon to that new Camry or whatever you call it line. Add a Fit-beater hatch to the Yaris line. There are currently 13 models of Lexus (or 10 if you do not count the hybrids as separate models). All those models must be cannibalizing each other’s sales; lose 2-3 of them at least. Back on the Toyota side, do we really need both the Highlander and the 4Runner, and both the Sequoia and the Land Cruiser? Last but not least, either revitalize Scion or kill it. Scion is Toyota’s Saturn.

  • avatar

    Toyota is not making money here at the moment because they invested billions in new capacity right in time for the market collapse. Trim NUMMI and perhaps another plant or two, let the market recover a bit, and they’ll be okay again.

    The big question: will they go against their corporate tradition and lay people off?

  • avatar
    BDB

    The beneficiaries of this revulsion have been Ford, Hyundai/Kia and the Japanese automakers (in particular Honda and Toyota).

    I don’t agree that Honda and Toyota are benefitting nearly as much as Ford has. There are some things Detroit just plain does better, namely, taxi cabs, cop cars, pickups, and tradition SUVs. Ford is going to get all that.

    Then there are people who will not be seen dead in Japanese car. Ford will get a lot of them, too.

    GM will survive, but will be the #3 seller in the country by the time this is done. Toyota will be #2, and Ford will be #1. Chrysler is…well…done for. If its lucky it can be the new Mitsubishi.

  • avatar
    folkdancer

    Because of our horrible economic meltdown maybe it is time to think of other realignments along with the Old GM/Chrysler and New GM/Chrysler.

    New Country 1: Japan, Northern California, Washington State, Oregon, British Columbia, Hawaii, and South Korea.

    New Country 2: Southern California, Arizona, New Mexico, Baja, Sonora, Chihuahua, Coahuila, and Texas.

    New Country 3: Quebec, Ontario, New York, New Jersy, and New England States possibly to join the European Union.

    Old Country: the remainders of Canada, U.S., and Mexico.

  • avatar
    BDB

    folkdancer, you ripped it off that insane Russian ex-KGB guy. You just became a victim of information warfare (and badly conducted information warfare, at that).

    I swear Americans are too optimistic when the economy is good and turn into gloom and doom crybabies just as quickly as soon as it turns bad.

  • avatar
    eh_political

    Toyota is extraordinarily aware for a corporation. Statements by senior executives show a willingness to acknowledge mistakes, the capacity to learn, and the ability to lead.

    Over the timelines, and under the scenarios you suggest for North America, Toyota would remain and adapt. It is uniquely positioned to do so. Companies/nations rise and fall but Toyota shows every indication that is is capable of vigorous reinvention.

    I pray America is also equal to the task.

  • avatar
    walksatnight

    What a weird day. Saw a Chevy Citation on the road today – not a common sight in this day and age. It was an ugly spud when it was new and it’s an ugly spud today. Now this article.

    What happens if the word Toyota in the article with Nissan, Mazda, Subaru? Mitsubishi and Suzuki probably are not gonna hang around if the economy worsens.

  • avatar
    th009

    ffdr4: The beneficiaries of this revulsion have been Ford, Hyundai/Kia and the Japanese automakers (in particular Honda and Toyota). GM and Chrysler’s market share have not hit bottom yet. Market share is still sinking.

    One month of Canadian data is insufficient for any conclusion other than maybe picking lottery numbers — there are way too many variables in play for that.

    Wait for Q3 (July-September) sales numbers for both US and Canada and then we can draw some real conclusions about the actual impact of the GM and Chrysler chapter 11s.

  • avatar
    rockit

    I agree with Jack and Jeff.

    This article is pure speculation with no credit whatsoever, along with a racist slant.

  • avatar
    P71_CrownVic

    You know…there was a time that people said there was no way in hell that GM could EVER go bankrupt.

    You can never say never. Anything is possible. Toyota loses money here…and if they cannot make money here…nobody can.

    I doubt that Toyota would ever leave…but to say that it would NEVER happen…well that is just silly.

  • avatar
    rockit

    Toyota has had what, like 1 year of losses? Stating that they are to leave the North American market IS silly.

  • avatar
    Dimwit

    Menno, that’s just silly. Now, in the corridors of power will Toyota, in the fullness of time, get a little something back? You betcha. They won’t trumpet it, but payback’s a bitch, you know?

  • avatar
    rtx

    Toyota………leaving????
    Nobody told the people in charge of the Cambridge/Woodstock plants.

    Here’s a letter dated July 21/09 from Frank Voss to the TMMC employees:

    RE: Production Saturdays for West Plant (Woodstock)
    Even in a very difficult North American market, the RAV4 continues to be a sales leader in 2009. In the U.S., where overall sales of Toyota vehicles have dropped by over 38%, the RAV4 has only dropped 13% and continues to be one of the best selling Toyota vehicles. In Canada the RAV4 is the only Toyota vehicle which is showing a year to date increase in sales with an improvement of 26% over last year. With the continued strong customer demand, dealer inventories remain at low levels.
    In May 2009 we announced that additional orders had been requested of TMMC and that we had accepeted an increase of 1,988 vehicles over the initial build order. Since that time the West Plant has successfully implemented 3 seconds of takt change and an increase in the hours of work to 45 hours to support sales demand. As an additional step to meet the volume requirement, Saturday production is required starting in September 2009.
    At this time, we are announcing the following production Saturday dates with 3 hour shifts.
    Saturday, September 12, 2009 from 7am to 10am
    Saturday, September 26, 2009 from 7am to 10am

    Thank you for your continued flexibility and support as we adjust our production plans to meet changing customer demand.

    Frank Voss
    General Manager Production Control

    *******************************************

    Small steps in the right direction….its only 6 additional hours of production on top of the 45 hr workweek that Woodstock is already working but the demand is there and it’s showing some legs.
    The key to the whole operation is that Toyota doesn’t build cars without having a place to put them when they are built. They adjust production to demand and thats why you dont see fields of new Toyotas rusting away before they see their first owner.

  • avatar
    Unmisinformed

    It is certainly conceivable for Toyota to leave the North American market if they are convinced they cannot make money here.

    The question is whether they are convinced of that or not.

    I fail to see how this post is in ANY way racist?

    The last paragraph is a little inflammatory, but it fits with the thesis of the whole piece:

    Actions have consequences.

  • avatar
    toxicroach

    Don’t worry menno. Toyota leaving North America is about as likely as the Mayan gods returning in 2012 to end the world.

  • avatar
    Steven Lang

    This is starting to look like a train wreck. So instead of throwing one more caboose on top of all this wreckage, I’d rather write about the one thing that I have to agree with menno on… and that’s profitability.

    The global auto industry for all intensive purposes has become a modern Amtrak. Government subsidized, fiercely protected, and incredibly unprofitable. I’m sure many of you are wishing that some of the weaker players will either go away or simply merge with a stronger player. I know of a few that rightly deserve to be whacked at this point.

    It won’t happen. At least not in the near future.

    There are far too many people in need of work which means that ALL governments involved in this industry will subsidize whatever they can to keep their job base intact.

    That’s the ‘Inconvenient Truth’ in the automotive world.

  • avatar
    grog

    This post sounds like a bad Ayn Rand novel on wheels…

    I’m shocked, shocked I say to find Randian/Libertarian views espoused *here*.

    Plus “bad ayn rand” novel is a double negative.

  • avatar
    rtx

    Here’s ANOTHER letter from Frank Voss to the employees of TMMC dated July 21, 2009.

    It seems like the demand for luxury SUV’s is increasing??…..go figure!

    RE: Hours of work/Saturday production for South plant (Lexus)

    RX sales continue to be strong in the US and Canada. As a result TCI and TMS have increased the production request to TMMC by nearly 400 additional vehicles. The majority of these additional units are required in September. To meet the overall increase in demand for the RX, the hours of work are being increased and a production Saturday is required.

    The south plant hours of work will be adjusted as follows:
    9.0 hours per shift Monday through Thursday effective September 8th
    8.0 hours per shift on Friday

    In addition , we will be scheduling production on Saturday September 26th as follows:
    4 hour “A” shift from 7am to 11am
    4 hour “B” shift from 12:15pm to 16:15pm

    Thank you for your continued flexibility and support as we adjust our production plans to meet changing customer demand.

    Frank Voss
    General Manager Production Control

  • avatar
    stevenm

    Toyota isn’t going anywhere. They fought long and hard for their market share, rising from the econobox fever of the 70′s and 80′s, enduring the “toy pickup” jibes of the 90′s, and through it all chipping away at markets that domestic and other foreign car makers were too stupid to capitalize on. If the powers that be make it difficult for them to be profitable with a given line of cars, they’ll make different ones. There are literally hundreds of Toyota models that are only sold in specific markets, and nothing really prevents Toyota from shifting the model lines around as they see fit.

    The Japanese business mindset is one of decades (if not centuries) and generations. They generally do not balk at blips on the radar or economic downturns.

    Toyota has been effectively dead to me since they stopped building sports cars, but my own personal sour grapes and general disinterest in their current products aren’t going to cause one of the best-run car companies to up and abandon one of their largest markets.

    The “tilting the playing field” mentality is silly. Sure, it is and will continue to happen. However, minor “blips” aside, the market will generally ignore it. I don’t see government rebates stopping the Prius faithful from buying Toyotas any more than I see them moving people from a Lexus to a Cadillac.

    As for the powers that be manipulating market forces, yes, they are, and will continue to do so for as long as they’re able to. Fortunately, we have a system of government that, much like the car industry, is inclined to self-correct. And fortunately, unlike the car industry, it isn’t susceptible to “bailouts” prolonging the inevitable.

  • avatar
    topgun

    A poorly reasoned article which fails the basic credibility test. Yes, Toyota did have to face a huge loss in the NA market last year and will probably face another one this year, but the thing to remember is that Toyota’s balance sheet isn’t riddled with debt. They have sufficient liquidity to ride this out. In such a position, they would use their superior market position/cash flow to try and squeeze out smaller, less profitable and debt-laden competitors. Look for Suzuki and/or Mitsubishi to pack up their bags and leave.

    As for the supposed ’tilting of the playing field’ due to the bailouts, it won’t hurt Toyota one bit. In fact, one can reasonably argue that the bailouts won’t help GM/Chrysler at all and their slide towards market share oblivion will continue unabated.

    The final and obvious point is, if they left, where would they go?? Things back in Japan are worse and won’t improve for a long time due to structural deficiencies like aging population and low birth rates and Europe is in a deeper fiscal hole than the US. Amidst all the ‘Chindia’ growth hullaballo, one forgets that auto-sector profit margins there aren’t particularly high. Yes, the scope for growth is tremendous but the emphasis is on smaller cars with the attendant downward pressure on prices and margins. The Indian market in particular is already crowded with US also-ran Suzuki dominating half the market. Toyota has been there for over a decade now with very little to show for it.
    To sum up, NA market is still the place to be.

  • avatar
    Bill Wade

    In defense of menno he has the inklings of some very valid points concerning free market competition versus government subsidized competitors.

    If the government chooses they can sell GM products at prices that cannot be matched with financing that cannot be matched. They could also put in place tax incentives that are not level for all manufacturers, which he’s pointed out.

    He’s also giving a nod to the ferocious looming problem of Chinese autos. Laugh all you want but in an environment of government subsidized competition coupled with uncontrolled Chinese imports I could well see unthinkable decisions being made.

    I treated the piece as speculative musings by menno but with many aspects of truth behind it. We fail to understand the mindset of the Japanese. We look at quarterly profits, they look at the 5, 10, 20 year outlook. Some believe the US is going to tank in a massive way. I’m betting Toyota is looking at numerous aspects of their North American business and will make their decision accordingly. It’s not entirely out of the realm of possibility you could see a huge cutback by Toyota based on very long term predictions of the US economy and political decisions concerning free markets and competition.

    While I don’t consider his piece stellar journalism, I believe he’s written down a number of thoughts that do bear careful consideration and discussion. Some are much better at putting thoughts to paper than others. This doesn’t entirely negate their ideas.

  • avatar
    mtypex

    Toyota is waiting for Chrysler and other competitors to implode. It’s a waiting game for them.

    The economy is also a waiting game for the rest of us.

  • avatar
    Harleyflhxi

    “Plus “bad ayn rand” novel is a double negative.”

    Excellent, grog, excellent!

  • avatar
    PeteMoran

    Sorry, you lost me when you (re)made the common claim that “Deming told Toyota everything they know…”

    Read: The Man Who Discovered Quality: How W. Edwards Deming Brought the Quality Revolution to America.

    Toyota (unsurprisingly) defend their methods as the results of constant input and change ever since they were a small family weaving company. They don’t over- or under-state the influence of Deming either.

  • avatar
    PG

    I see where you’re coming from, comparing China’s current rise in carmaking to what Japan did in the 50s, 60s and 70s. But they’re very different examples.

    China is still a one-party, quasi-communist state with a government that keeps a tight hold on everything – and is willing to sweep things like quality problems (tainted milk, lead toys, etc.) under the rug to make the country look good. Post-war Japan was never like that. I don’t think China’s politics and economy are set up in a way that lets them (currently) make truly competitive goods. Maybe in a few decades.

    As for Toyota… unlike Isuzu and Daewoo, they’re too big, and have way too much invested in the U.S. to ever leave. Think of all the plants, design studios and employees they have here — Peugeot never had that. I could see Mitsubishi or maybe even Mazda leaving the U.S., but definitely not Toyota.

  • avatar
    50merc

    Whew! Tough crowd here.

    Menno, my friend, you have the courage of your convictions. But remember, “whales only get harpooned when they’re spouting.”

    As for “regime,” that’s very mild compared to the rhetoric the left has been slinging for years. Merriam-Webster’s definition: “2 a: mode of rule or management b: a form of government c: a government in power d: a period of rule”

    Looks spot-on to me.

  • avatar
    sean362880

    Huh? Last time I checked, people still want to buy / drive cars. Toyota’s gaining market share. Why would they leave? They’re winning.

    This ‘regime’ is a fairly elected government, and quite a reasonable one at that.

  • avatar
    pacificpom2

    Another oppourtunity for the Australian car industry. Toyota exports camry/aurions to the Middle-east and other parts like Holden. Once again, divert a boat from Saudi Arabia to the east coast of America. Problem solved. Toyota still keeps the Camry/Aurion alive and in the minds of buyers and mothballs the local plants. When the economies re-awaken, fire up the plants, and put the ships back to their original routes! :)

  • avatar
    FrankCanada

    Toyota (ie all of Japan) is a post war American puppet company supported by the US government inorder to defeat the Soviets. It was in America’s interest to have a strong friendly Japan as the pinkos were sweeping across Asia. So trade was was biased toward japanese companies. The big three would have decimated the Japanese in Japan in the late forties & fifties. But Uncle Sam would not allow it. In the book “The Japanese Conspiricy” they go over how the whole country systimaticly would use industrial espionage to rip off American technology. When IBM sued Hitachi & Japonese government, they lost there suit- thanks Uncle Sam. I owned a 1981 Land Cruiser BJ or FJ 40 what ever- the solid axles and steering where eirely similar to my friends 1934 Ford 1 Ton. Why did ford not use this superior Japanese technology in 1981? They used it in 1934! Nissan nickle plated bolts? 1960′s Ford have niclke plated bolts! A-holes build Toyotas A-holes buy toyotas. No presence, no soul. Driving a Toyota is like talking to that weed smoking cousin on prosac- no substance. Henry, Walter, Billy come back America needs you!

  • avatar
    Areitu

    The Chinese are not going anywhere fast as far as automobiles. I can’t think of a chinese “designed” and built car that doesn’t remind me of the 1989 Hyundai Excel in terms of quality and reliability.

    Has any chinese auto company made a move to buy any US brands from the fallout yet?

  • avatar
    frizzlefry

    I think it was completely foolish for Ontario to support GM hybrids only with public money. Such a union vote grab it makes me sick.

    That said, I have no interest in this article. Hybrids getting gov’t money are boring, Toyotas are boring, Lexus is boring.

    I will continue to limit my auto news searches to Ingolstadt and Munich. :)

  • avatar
    obbop

    “Toyota (ie all of Japan) is a post war American puppet company supported by the US government inorder to defeat the Soviets”

    Japan also was shielded by the USA “nuclear umbrella” along with many other countries.

    The USA spent trillions of dollars over the decades to protect the free world; a cost many other countries did not have to pay or only contributed a small percentage by doing their itty bitty part.

    That was overhead all Americans paid in some manner, from the individual consumer up to large corporations.

    Those costs were never recouped and plague us to this day.

    And, at the supposed end of the Cold War, we did hear a little about an elusive “peace dividend” but that term was not bandied about for any length of time.

    Then we have Billary bragging about a billion for Gaza and a billion for Aids in Africa and…..

    well, the USA as a whole has too much overhead.

    A complex topic that does not fit well into a message board post but the ramifications are real and the negative effects have been becoming quite obvious lately.

    Toss in the effects of class warfare and the economic battering will continue.

    By the way, I admit to feeling vindicated when I read a quote from Warren Buffet, the mega-billionaire, from an interview where he clearly stated that it was his socio-economic class that started the class war and that his class was winning.

  • avatar
    oldguy

    Tough crowd tonight….Bill Wade is spot on with two statements: We fail to understand the mindset of the Japanese. We look at quarterly profits, they look at the 5, 10, 20 year outlook. Absolutely they look many years down the road, and if the playing field does not appear level, then it will impact the mindset. The article may be a bit off the wall, but there is much truth, as well. Perhaps some of the B&B that think they are so swell should have the jam to write an opposing piece….

  • avatar
    don1967

    Sure, this piece is wild-ass speculation at best, and the headline is blatantly sensationalist. But how many of us thought the same of RF’s “GM Death Watch” only a couple of years ago?

    TTAC did not make its name by following the crowd, and I hope it does not start now. Besides, the occasional bit of wild-ass speculation is good for the mind.

  • avatar
    jthorner

    Toyota exiting the US market is about as likely as it would be for the US to tell Japan it is now completely on its own with regard to self defense.

    How long do you think it would be before China gobbled up Japan if the US made it clear it would not involve itself in any such conflict between China and Japan?

    Toyota isn’t going to bail out of the US market. It may scale back production in the US to meet the lower demand, but it isn’t going away.

  • avatar
    PeteMoran

    @ obbop

    The USA spent trillions of dollars over the decades to protect the free world…

    It was to protect US interests plain and simple, so was all the positive (and all of the negative) meddling the US/CIA has been involved with ever since WW2.

  • avatar
    carlisimo

    I don’t think Toyota is so impulsive to consider leaving after just a year. They’d give us a decade.

  • avatar
    ConejoZing

    Well, dude.

    I don’t want a Camry. I don’t want a Prius. I don’t want a Corolla.

    I mean, really, uh… at least Honda has a CIVIC SI. Toyota is like… where are the drivers cars? To me, it’s like a statement kind of like “Americans here are your bland mobiles since you are so bland.” Oh wait, oh wait there’s Scion! Which is like, annoying body kits that might not really equal performance or maybe kinda sorta. Or something.

    I miss the 90′s. Seriously, the Aughts are a disaster. Just a freaking trainwreck. Paris Hilton’s new BFF. “Music Television” that doesn’t play any real music (Orwellian doublethink). Economy go crashy, culture stale and trashy.

    I want to play Super Nintendo and watch Ranma 1/2. And remember when things were fresh and there was a Supra or Celica. Jammin’ some Mario Kart on the SNES or bang around those multiple ending scenarios in Chrono Trigger. Gosh, Final Fantasy 7 (ok yeah Playstation One), Smashing Pumpkins or 1998 Boards of Canada. Or having to search the whole town for VHS anime… and when you found it, it was genuine and awesome.

  • avatar
    eh_political

    @jthorner:

    The current Japanese Self Defense forces are no pushover, and Japan could rapidly become a sophisticated nuclear power with little effort. In fact timely American withdrawal from Japan might improve the ability to contain Chinese adventurism. With present capabilities, China would probably fail in an attempted invasion of Taiwan–already a probable stealth nuclear power.

    With respect to American largesse in the post WW2 era, it’s a lifetime of scholarship with no resolution other than a display of the researchers biases. As a Canadian with some familiarity in such matters I would describe the era of American hegemony as primarily benevolent, largely benign and occasionally boneheaded.

    On the other hand, the trillions spent went to American corporations in protected sectors of the economy. No bid contracts, guaranteed profit margins, markups and a general exclusion of free market economics. How ironic.

    Arguably there have been only a few occasions in which America has squandered treasure in a way that left scars. Vietnam, and Iraq War 2 are both examples of overwhelming power projected without clear, achievable military or political objectives. It’s the kind of conflict that bleeds a country white, a conflict that is initiated and maintained through the vanity of a head of state.

  • avatar
    George B

    Menno, you live in an alternate reality from what I experience. The United States is experiencing the worst recession since the 70s, not “The Greater Depression”. We are only now starting to approach levels of unemployment considered to be normal in Europe. Our economic pain is likely to continue for many months, but life goes on and eventually consumers will purchase replacement goods, including cars. Maybe the days of easy profits on near-luxury vehicles for everyone are over, but Toyota should be able to do ok if the car market shifts toward reliable basic transportation.

    Steven Lang, I don’t see the American taxpayers patiently keeping GM and Chrysler alive on subsidy like Amtrak forever and I don’t see many previously burned consumers reconsidering Government Motors because of a big price discount. Lots of bad blood over past experience with GM and Chrysler. New domestic brand cars are still relatively expensive in terms of depreciation and time spent on repairs. They only become a good value in the used market after someone else gets screwed.

  • avatar
    ConejoZing

    “Machikado ga utsushi-dasu
    Sabishige na shiruetto watashi yo
    Sayonara no serifu ima
    Shinjirarezu ni kiita

    Genki wo dashite mou nakanaide
    Ashita ni nareba subete kawaru wa
    Genki wo dashite mou nakanaide
    Atarashii kaze mukatte
    Smile again!”

    At least I hope it gets better. And try not to make crude jokes about “Da Shite”

  • avatar
    Dynamic88

    1. GIGO.

    2. Ford is nowhere near in the same league as Toyota and Honda. When the great shakeout is done, those who follow Deming will win, incrementally, and those who treated Deming like the flavor of the month will loose. Ford will loose. It’s barely healthier than the other 2. It may pick up some scraps of GM/Chrysler business (if GM/Chrysler fail, which isn’t necessarily gonna happen) but they’ll just loose it to Toyota and Honda in the long run. The D3 still don’t really understand what they are up against.

    3. Even in the 1930s, at the very bottom, 3/4s of the workforce was still employed. I don’t see total economic collapse happening – but then I don’t hate Obama and therefore don’t let my immagination run away with me.

    4. Cars don’t last forever, so there will be a very large market here for as long as there are going to be personal vehicles.

    5. Cheapen the product, cheapen the brand. Goes for websites too.

  • avatar
    Matt51

    This actually is a very good article, which took some courage to write. Considering all the attacks from those who view Honda and Toyota as a religion, not as car manufacturers.
    It is easier for those companies with less exposure to North America, to stay here, than it is for those with greater exposure, such as Toyota, to stay in the game.
    Toyota faces problems which may be insurmountable. Their full size pickup is viewed as fourth choice. Their manufacturing costs, in the US and in Japan, are larger than the Koreans, the Chinese, or the Indians. Penske is going to start selling Nissan designs made in Korea, as Saturns. How can Toyota make money?
    Toyota has kind management, who tries to treat the customer well, and tries to treat American employees well. They are not bad people. But they may be caught in a bad position. Facing a subsidized GM, Ford, Chrysler, facing an onslaught of low cost Korean, Chinese, Indian cars, they may have to pull back their horns.

  • avatar
    John R

    Alright. Someone please enlighten me. I’m really trying hard to detect the racism in this. The only thing I can think of is this:

    “The Japanese took [Deming\'s] message and ran with it, patiently decimating the competition over half a century.”

    Is this what everyone is on about? This doesn’t strike me as racism. Just an oberservation. That’s what they did, they call it Kaizen.

    Maybe what baruth is reading too much into is (and getting personally offended with), “The superior Japanese people will take their ball and go home…” Um, Toyota is not “the Japanese people”. It’s an automaker. Menno is implying Toyota will take their ball and go home. Not Japan. Why the conflation? He clearly states Honda, Hyundai and Nissan would be picking up the pieces.

    ?????????????????

  • avatar
    sutski

    Good work Menno! loved the article, it woke a lot of people up and produced some great ideas and comments and discussions (the point of an editorial you would think!!)….I especially loved the wild-ass replies.

    according to wiki’

    “The United States has one of the oldest regimes still active in the world, dating to the ratification of its Constitution in 1789. Although modern usage often gives the term a negative connotation, like an authoritarian one, Webster’s definition clearly states that the word “regime” refers simply to a form of government. [2]”

    And to add my two penneth, If I was Mr. Toyota, I would only make hybrids from here on in, with some made in the US to keep a toehold there, but mostly made where they are going to be being sold, wherever that may be…

    Then I would cancel all other lines and integrate this technology in a range of vehicles that will cover the whole market and get the plug in technology to market as quick as possible !

    i.e

    1. Hothatch hybrid like the Honda CRV concept
    2. Prius as it is
    3. A hybrid station wagon
    4. A hybrid SUV 4×4/truck
    5. A fullsize hybrid sedan
    6. A halo hybrid, something like an Audi R8 shape with their best tech in it.
    7. A human/petro/hybrid scooter/commuter bike sort of thing for the masses – yes I know, but Honda used to only make bikes too you know!
    8. A small hybrid van (eg renault kangoo size)
    9. A hybrid commercial size van (eg ford transit size)

  • avatar
    v65magnafan1

    The premise of this essay can be debated, but one fact cannot.

    Dalton McGuinty, Premier of Ontario, is an idiot.

  • avatar
    rnc

    Toyota does have a big problem, alot bigger than capacity issues, its exchange rate issues, infact there whole company is based on the expectation of said rates. There enormous profits have come from north america, based on an manipulated currency (part of the war against the soviets, yes our country did sell out for allies at the time). The exchange rate will not go back there is no cold war anymore. This will be Toyota’s undoing, thier only real choice will be to a)pay there workers less, less benefits or b) make thier cars cheaper. Use the B3 as as example which of the above is more likely to happen? And then what happens? They can’t leave, where will they go, Japan is a dying country (population wise) and car purchasing wise, the new generation could care less about cars. While Toyota was focusing on conquering the US all of the other automakers focused on Eastern europe, south america and china. Toyota has an enormous mouth to feed and its been fed by NA based on unrealistic exchange rates and no matter what thier treasury does at this point (and I imagine that they have been trying) they are never going back. Toyota has as big of a problem as GM had in the 1970′s, the question is how will they deal with it? Or can they deal with it.

  • avatar
    Geo. Levecque

    I agree about the Premier of Ontario, he has his head right up GM’s rear! after all he has given millions of Taxpayers dollars to GM Canada over many years, but he won’t be Premier for ever, change is coming for Dalton and his motley crew of Liberals!

  • avatar
    Mark MacInnis

    NO WAY will Toyota abandon North America. Capital markets in Japan, and the Japanese government, would never. NEVER (if I could write it in a larger font I would) NEVER! allow it to happen.

    Here’s why:

    1. Think about the MASSIVE accounting and financial write-off which would have to result at Toyota for discontinuing operations. The red ink they have shown so far would be a pittance in comparison.

    2. Because of the inter-locking Keiretsu structure, not only would Toyota have to pull out, but the many related tier 1 and tier 2 and tier 3 suppliers, most of whom are related parties with stock held by Toyota in Japan and ToMoCo in the US, would be destroyed by this. Including banks, who are also heavily invested in Toyota’s success and would have to take HUGE write-offs. This is the real fallacy in menno’s argument…he is looking at Toyota as a stand-alone, without recognizing the entire Toyota organization as a single-entity (which it really is….anti-trust laws be damned.) So, we are not talking about a single company pulling out and taking a write-off…we are talking about dozens if not hundreds of companies, large, medium and small, including banks, insurance companies, airlines, freight companies, etc….an entire Japanese infra-structure set up to support the Japanese Transplant Auto System (JTAS (my acronym…not official)), which would have to be written off. This would absolutely crater the Japanese economy.

    3. Menno’s focus on profits is too narrow. Despite being unprofitable, the entire JTAS generates a tremendous amount of cash flow, and revenue for the Japanese government. The Japanese government would strenuously object.

    4. Toyota is remarkably astute at using such fears to wring more, major concessions from governments. Think about how they play one state against another each time they build a plant in the US….politicians fall all over themselves granting tax concessions, etc. Now imagine national governments doing the same thing to ‘keep’ or attract Toyota and their piece of the JPAS in their economies. That is what this grumbling, supposition and rhetoric about “level playing fields” is about…posturing to get their slice of the government subsidies.

    5. The story is perhaps apocryphal, but I read once that the founder of Toyota was once famously asked if his company had five year plan. Of course, he said. He was asked if they had a 10-year plan. He nodded. Supposedly, he was further pressed to find out what Toyota’s planning threshold was. “We have a one-hundred year plan.”, he is reported to have admitted. My point is that Toyota thinks in much longer terms than just a five-year threshold. I think it reasonable to assume that a 5 year decline in the US market is something that Toyota and it’s constituent keiretsu has adequate plans to survive.

    I have worked in Japanese Auto supply companies for more than 10 years of my career. I have studied and understand how the kairetsu structure works and it’s impact on the decision making of the entire JTAS.

    For Menno to even suggest that Toyota would leave is playing into their hands and fanning the flames of economic uncertainty on which Toyota is trying to capitalize, with which to wring concessions from the US or state governments.

    Preposterous.

  • avatar
    Autojunkie

    It will never happen, but it wouldn’t bother me one bit to see those uninspired “kitchen appliances” gone from this continent.

  • avatar
    Stingray

    Save for the racism word, I agree with Baruth.

    Toyota is not leaving the US market anytime soon. They sell there almost 2 million cars and have a lot of factories. Too much money invested there.

    PR disaster? to whom? for Toyota surely. For the US… ummm, the OPEC (specially Iran and Venezuela) has been playing the weak dollar card for over a year. That would be a real BIG hit. Toyota leaving the US, not so much.

    @FrankCanada: you forgot to mention that the engine in that FJ40 was based on a Chevy I-6 design. In fact, you can use some Chevy parts in those things.

    Toyota haven’t left our country, despite having their plant closed by its workers for 4 months. They threatened, but in the end stayed.

    Thanks the hybrids? why?, is that much of a breakthrough technology?, I don’t think so. Couldn’t be developed by some USA manufacturer? Of course it could.

  • avatar
    menno

    a) Michael Karesh, Unmisinformed, P71 Crown Vic, Bill Wade, don1967, Matt51 and Sutski “get it.”
    c) Racist?!?! WTFAYTA?!?! I can add nothing else here or I’ll be banned!!!

    I’m glad it caused such a stir, that was the intent – to stir up minds and bring out conversation and discussion. I don’t have to have everybody agree with me, I’m a big grown up now. I read all of the comments, both pro and con, with high interest. Thanks for your thoughts, everybody.

    The meat of the argument posed in my opinion piece/editorial (same thing) was “Backing off from the nuclear option, Toyota seems certain to pull the plug on NUMMI and close it down (having already been left to hold the bag by their “partner” GM), mothball the Mississippi factory indefinitely, consolidate production and use US plants for the US market…”

    But, ultimately, what is the object of the exercise behind business if not to make a profit, in order to continue investing, improving, hopefully keeping people employed, etc. Toyota cannot obviously rely upon the US or Canadian government, as Chrysler and GM obviously can.

    It’s a remote, small possibility that Toyota really would pull out – I had no “inside information” (only read “between the lines” in the Detroit News article from statements made by the Toyota executives) – but logic says that yes indeed, in the worst case scenario – why stay in a “dead orchard” to pick fruit when China, India, the Middle East, have “live orchards flourishing” ?

    BTW did ANYONE take note in the Detroit News article, that the UAW contract at NUMMI is one month from expiration?

  • avatar
    cdotson

    I agree with Mark that Toyota’s loss of revenue will have a negative impact on the whole organization even if it trims the absolute number value of their monetary losses. That said, I don’t think it impossible that Toyota would be strategizing a way to minimize their exposure to NA market losses. Rationalizing product is one good way to do this; balancing production vs. tarriffs and exchange rates is another.

    If Toyota were seriously considering a larger-scale limit to their NA loss exposure I would look for them to start smaller at first, say tell California and their regulatory cohorts that they’ll simply cease selling vehicles that have to be specially prepared to meet that regulatory structure. That only represents what, about 25% of the US market? I think if Toyota abandons NUMMI outright it would be a step toward this direction and an early indicator of future market limitations. A full pullout would simply not be practical for an organization the size of Toyota within a time frame that would allow it to be noticed by the ADDled American mainstream media.

  • avatar
    Pch101

    So, do I win something when Toyota doesn’t leave as predicted here? Because that’s a bet that I would take in a heartbeat.

  • avatar
    quasimondo

    Toyota’s hurt feelings over proposed volt rebates betrays their lack of a short term memory when sales of their prius was buoyed by the significant tax rebates offered by the us government.

    With that said, of tomoco were to leave the us market, they would be cutting off their nose to spite their face. Despite the tanking of our economy, we still are the largest consumer for export based economies who struggle to peddle their wares to their own people. If they can’t sell to us, who are they going to sell to?

    The idea that tomoco would even consider withdrawing from north America is wishful thinking at best.

  • avatar
    menno

    Sutski, Toyota could do pretty much exactly your proposed line-up within 18 months, if not less.

    1. Hothatch hybrid. Call it the Scion UFE (“ultra fuel economy”) 3 seat commuter hybrid (Daihatsu based, probably Daihatsu built; yes, Daihatsu already have built Kei car hybrids)
    http://www.diseno-art.com/encyclopedia/concept_cars/daihatsu_ufe-III.html
    A hothatch version could have maybe Daihatsu’s 1.3 litre 4 cylinder – this would be super-fast considering the low weight.

    2. Prius as is.

    3. A hybrid station wagon. Build Toyota Avensis wagons in the USA adding hybrid drive. (Slightly smaller than the Camry, slightly larger than the Corolla – it’d be about the size of the last Camry wagons sold in the US)

    4. Toyota Highlander is currently hybrid. (Toyota have stated that hybrids don’t work great for pickups – they do have some terrific diesel engines which could be sent over for the Tacoma).

    5. A full sized hybrid sedan. (Camry).

    6. A halo hybrid (I think they’re working on one, the concept is called Toyota Volta) – would it be best marketed as a Lexus, a Scion or a Toyota? I dunno…
    http://www.hybridcars.com/concept-hybrids/toyota-volta.html

    7. OK I’m not sure about the human/petrol/hybrid rig. See #1 with the Kei car 660cc engine, and 169 miles per gallon, however….

    8. A small hybrid van. They build these in Japan right now, could ship over the design. I think it is still called the Toyota Previa.

    9. Both family and commercial could be done from the upcoming Sierra hybrid minivan. Or, the commercial job could be based on the somewhat boxier Alphard hybrid van built in Japan.
    http://www.newsoxy.com/hybrid-cars/toyota-hybrid-minivan/article11949.html

    You’re right; this would play to Toyota’s strengths, and probably would ensure a profit since “nobody else” would do hybrid as thoroughly.

    Of course, all bets are off if BYD are able to pull a rabbit out of the hat and bring in Chinese hybrids for 2/3 the cost (with the backing of Warren Buffit, who has invested in BYD). Of course, BYD’s current cars (sorry for the pun) are all based on ripped-off designs (mostly Toyota and Honda, for their mid-sized sedan). They’d have to get some properly independently designed bodystyles before marketing here.

  • avatar
    Sanman111

    Toyota leaving the U.S. won’t happen. The bottom line is that Toyota is a fairly forward thinking company and that would make no sense in the long-term. Especially since they have the money to wait out others who might pull out of the market. The best idea is to pair down U.S. operating costs, slash non-competive models, and minimize cost associated with U.S. only models. That way they can minimize losses while waiting for the market to pick up and be in the best position to sell again when it does.

  • avatar
    windswords

    Bill Wade:

    “While I don’t consider his piece stellar journalism, I believe he’s written down a number of thoughts that do bear careful consideration and discussion. Some are much better at putting thoughts to paper than others. This doesn’t entirely negate their ideas.”

    +1 Bill. As someone who has contributed in the past to this website, it’s not easy to write a concise clear blog post, let alone an editorial. If you think you can do better, then go ahead and submit something. It’s a lot harder than taking the writer to task over politics or imagined racism. By the way, from the number of comments it looks like this editorial did very well. Kudos to you, menno and kudos to Robert for printing it.

    Matt51:

    “Considering all the attacks from those who view Honda and Toyota as a religion, not as car manufacturers.”

    Damn! I think you hit the nail on the head. I could make some serious money if I opened up a Church of Toyota or a Church of Honda.

    rnc:

    “The exchange rate will not go back there is no cold war anymore. This will be Toyota’s undoing, thier only real choice will be to a)pay there workers less, less benefits or b) make thier cars cheaper.”

    From what I read and heard others say about the Toyota Camry, it looks like b) has already been chosen.

    Mark MacInnis:

    “So, we are not talking about a single company pulling out and taking a write-off…we are talking about dozens if not hundreds of companies, large, medium and small, including banks, insurance companies, airlines, freight companies, etc….an entire Japanese infra-structure set up to support the Japanese Transplant Auto System (JTAS (my acronym…not official)), which would have to be written off. This would absolutely crater the Japanese economy.”

    I thought Toyota was an American company now and we could buy their products without guilt? Now I’m confused.

  • avatar
    Gardiner Westbound

    The killer issue is consumers questioning if Toyonda products still merit price premiums.

    Toyota/Lexus was the longtime automotive quality gold standard until value engineering resulted in a series of image crushing recalls. Honda/Acura mangled its reputation with a decade long deluge of transmission and air conditioner failures. Repair shops that 15-years ago rarely saw a broken Toyota or Honda are now filled with them. Customer care is being sacrificed in a shortsighted effort to preserve emaciated bottom lines, and it’s not going unnoticed.

    Toyota built local plants because it was less costly to produce here than Japan. The falling dollar makes U.S. production even more economic. The plants will stay until they find a cheaper place, say Mexico.

  • avatar
    menno

    Well said, windwards, and thanks.

    Gardiner, +1

  • avatar
    Stingray

    They’d have to get some properly independently designed bodystyles before marketing here.

    Don’t think so… they’re in some cases a blatant rip off, but there are subtle details that differentiates them from the originals.

    I’ve seen here the BYD F3, a previous gen Corolla rip off. Taillights are different (completely). From far away they look exactly the same. Near, yes, but not that much. Interior is similar.

    yesterday I saw a Chevy Colorado rip off, based on the previous gen Isuzu Pick up/Chevrolet LUV. Nicely done, but, still you can see it’s not the “real thing”.

    The brand, service and quality will have a bigger effect. And if price is low enough, screw that too.

    The new Kia Forte is a Civic rip off. Don’t think it will have trouble selling.

  • avatar
    menno

    Don’t you think Toyota and Honda would defend their designs, Stingray? I do. They’ve done so in Europe, against rip-off Chinese car designs. GM even tried doing so in China (GMDaewoo and ostensibly, SAIC against Chery) and lost. What a surprise…

  • avatar
    cleek

    Toyota has to stay. The continuing slide of the dollar will make made-in-Japan imports prohibitively expensive.

  • avatar
    rnc

    “From what I read and heard others say about the Toyota Camry, it looks like b) has already been chosen.”

    I had a 2001 camry and it was ok, but I remember right after buying it sitting in my co-worker’s previous generation model and thinking how much nicer and well put together it was (same trim line). I think the process started awhile ago.

    My brother who has been a toyota or mazda man since the 80′s, is so unhappy with his latest tacoma that he will not buy another (nothing specific, just the general quality expected isn’t there) and he put 500k miles on his previous one, so whatever it is it must really bother him.

  • avatar
    Stingray

    They may try menno… but remember this world is all connected.

    What they do in the US for example, will have consequences in China. They can get PWNED (see what happened to Renault), badly, in no time, in the biggest growing market in the world. Not good.

    And if the chinese can prove their cars look similar but the customer won’t be confused…

    By the way, don’t apologise for the article. It’s not perfect, but to me that is not an issue.

  • avatar
    menno

    Good point, Stingray. Besides, the BYD copy-cats are prior generation Toyotas and Hondas, anyway – and “somewhat disguised”.

    Wonder how well the BYD’s would crash? The lack of high-strength steel in most Chinese cars seems to be the big issue, not necessarily poor design (especially given that so many of their designs are “borrowed”).

    In fairness, many of the other Chinese car companies are approximately where “Japan Inc” was in the mid-1960′s; using Pininfarina, IDEAL, and other design-houses to come up with styling and even engineering assistance.

    Given that the Chinese are moving even faster than the South Koreans, who moved even faster than did the Japanese, I suspect that we’ll be seeing Chinese branded cars in the US within a few years. Though, admittedly I did say that a few years ago (and I suspect that had the economy not melted-down, they might even be here by now). Specifically Geely, BYD, Brilliance and FAW, possibly others.

    As for arguments about recession vs depression, the REAL (as in “it would have been measured at this level before all the tinkering of the unemployment figure calucations since Nixon”) unemployment rate in Michigan is 22% (23% in Oregon being the only worse state level), not 15.2% as seen in recent headlines.

    If you lived in Michigan, you’d know it’s no recession. We’ve been in a recession for a decade or more; this is a depression.

  • avatar
    obbop

    ““We have a one-hundred year plan.”

    USA has quarterly profit statements.

  • avatar
    fincar1

    “Don’t you think Toyota and Honda would defend their designs, Stingray? I do.”

    Menno, they may, but they may also decide something like “Go ahead and copy my last year’s model, I’m still ahead of you.”

    Re high-strength steel, I really have to wonder (1) how much of that is being used in cars, with the increasing weight to comply with rollover standards and such it seems to me that they’re going with beefier parts and still using 1010 and 1020 steel. And (2) why Chinese manufacturers wouldn’t have access to the latest developments in metallurgy.

  • avatar
    Mr. Sparky

    In other news, Ford plans to leave the North American auto market when Toyota does.

    Of course, that because the continent has sunk into the ocean, and Detroit is now a reef. On the bright side, I see a future in house boats. Perhaps, Ford could switch out gods and replace Mercury with Neptune:)

    Hey, my post is just as logical as this article.

  • avatar
    jmo

    Menno,

    Three quick questions for you.

    1. What is Japan’s gov’t debt to GDP ratio?

    3. What is our debt to GDP ratio?

    2. What will the population of Japan be in 2050?

  • avatar
    wsn

    Then, too, you have the Canadian and US governments tilting the playing field dramatically towards their domestic carmakers

    ———————————————

    menno, Canada has no domestic carmakers. As a Canadian, I LOL at any other Canadians who thought GM is “domestic”. Oh, yeah, the American guards at the border certain don’t view them as “domestic.” A passport is always required. If they choose to live in the States for a while, they will be classified as resident aliens. So much for the domestic love.

    Even for the USA, it can be argued that GM is not entirely domestic, since more than half of its sales are outside of the USA.

    Your statement would have been more accurate if you replace “domestic” with “American branded.”

  • avatar
    Stingray

    menno

    Living up there in Michigan you should know a car technology is skin depth…

    Being said that, a chinese car can have whatever platform under the skin. Based on what they have available over there. I used the Colorado rip off because I have already counted about 4 different variants of the old Isuzu pick up here. Some are powered by Mitsubishi engines, other by Toyota engines (very similar to the ones employed in forklifts but with MPFI)…

    What is holding them out of Europe and USA is mostly 2 things, I think: emissions and crash worthiness. Europe has been successful keeping them out with the second argument, and also the brutishly complex homologation that is needed to sell a product there. USA, I don’t know. Bertel may elaborate more here than me.

    Once they get access to the foreign know how to overcome those difficulties, the “big brands” will enter a world of hurt. Especially the mass ones.

    I’d expect to see them in the USA in about 10-15 years.

  • avatar
    wsn

    P71_CrownVic :
    July 22nd, 2009 at 10:32 pm

    Toyota loses money here…and if they cannot make money here…nobody can.

    —————————————–

    1) Why can’t another car maker make a profit? On a per car basis, Toyota never had any real advantage over Honda in money making.

    2) GM lost money in NA for many years, yet GM never quit from NA. Why would Toyota?

  • avatar
    Stingray

    @wsn

    If they choose to live in the States for a while, they will be classified as resident aliens.

    Ummm… why exactly you would like to live in the US?

  • avatar
    menno

    I know what you are getting at jmo, but the reality is, Japan Inc and Toyota already know they cannot count on Japan for increased or even steady auto sales. In no way did I ever even infer that, nor did I intend to.

    Let me ask this rhetorical question; do you think that if any half intelligently run auto company “had to choose” between the USA market (stuck at under 10 million per year with a population of 330 million, and a saturated auto market with very few profits to be made) OR selling cars in India and China (massive potential market, China already #1 in the world) and not yet having a saturated market, which they would choose?

    Put another way – North America used to be a “critical” market to be in. It doesn’t appear to be that, any more. In fact, it is almost a liability (in reality, if money cannot be made, it IS a literal liability).

  • avatar
    Pch101

    do you think that if any half intelligently run auto company “had to choose” between the USA market (stuck at under 10 million per year with a population of 330 million, and a saturated auto market with very few profits to be made) OR selling cars in India and China (massive potential market, China already #1 in the world) and not yet having a saturated market, which they would choose?

    Most companies would choose to do both if both markets can be profitable to them. You’ve created a false strawman choice, and the business world doesn’t work at all as you believe that it does.

    You need to nuke the political-religious/Second Coming of Christ End Timer subtext that permeates your thinking, and analyze the business as a business. You confuse your political-religious wishful thinking with business-based analytical thought.

    You’ve made your usual mistake — you begin with an ideological dog, and know you want your dog to fight, irrespective of the facts or reality. As a result, you completely miss the boat because you spend far more effort trying to reassure yourself of your worldview than you are in actually figuring out what the business may or may not do. If you want to get closer to a good guesstimate, you should start with the facts and see where they lead you, not start with an opinion and hope that you can find excuses to justify it.

    There is a reason why just about every major automaker on the planet tries to play in the US, and a lot of that has to do with the economies of scale that they can achieve here, thanks to a large, affluent population. Automaking is a high fixed cost business, which had led to regional and international businesses dominating this industry because a small market will probably not be enough.

    Like any market share leader, Toyota’s challenge going forward will be to protect its turf as much as possible from threats, while finding the right balance between sales volumes and margin. Now that it has the capacity, it has a vested interest to try to use that capacity effectively, while avoiding the GM mistake of fixating on capacity utilization at the expense of brand equity and profit.

    Given that the US market is mature, that effort will need to involve either (a) keeping its competition from grabbing too much share or else (b) retreating a bit (although not too much to hand a huge advantage to a rival), but trying to make up for the lost share with margin.

    The smart thing to do would be to reduce the variety in the lineup, while increasing sales of those models that remain. Ideally, they would be able to shift those who would have preferred the cars that are targeted for elimination into different ToMoCo products, so that they keep the share and grow other nameplates while gaining the efficiencies of the cull.

    Retreating from the US entirely would be utter lunacy. There’s absolutely no reason to give up that brand equity, at the cost of writing off massive capacity that they would have paid a fortune to create, because their costs would go up and pull down their margins in their remaining markets. Those are just some of the many reasons that your assessment just doesn’t make any sense at all.

  • avatar
    menno

    Yes, Pch101, but would it be “utter lunacy” to believe that the US market could provide no profits at all over the foreseeable future, and consciously choose to stay/lose money anyway, instead of putting the valuable resources into markets which have a much better prospect of growing? Thanks for your comments, but as usual, we pretty well have to agree to disagree since we are coming from entirely different perspectives. I’m not quite sure why you seem to think it is necessary to put your commentary into terms about my “political/religious” viewpoints, but in one sense, if my religious viewpoint comes through in my life and is noticed, then I suppose that’s a high complement even though you disagree with it and surely didn’t mean for it to actually be a complement. Or something like that.

    As for the economy, don’t you live in California? Are you going to take the position of “oh, don’t worry, everything’s just fine – you’re over reacting” when presumably all around you, as well as myself here in Michigan, the drek is hitting the air recirculating device at tornado speeds….

    Besides, did you not see my above notes about those folks who “got” the gist of what I was trying to say, here.

    Certainly, we have had a lot of interesting comments and thougthts, though. It’s been enjoyable reading most of them.

  • avatar
    gslippy

    I’d rather see GM leave North America. Toyota won’t bail after 1 years’ losses. On the other hand, GM keeps hanging around long after the party is over.

    +1 Deming.

    Sorry menno, but this sounds like a Nightline piece where they might ask “what would you do if an asteroid was headed toward earth?”.

  • avatar
    Pch101

    would it be “utter lunacy” to believe that the US market could provide no profits at all over the foreseeable future

    Yes, it would be utter lunacy to believe that the second largest car market in the world cannot be profitable for a mainstream producer with brands and products that are already popular in that market. It makes zero sense to believe that.

    I’m not quite sure why you seem to think it is necessary to put your commentary into terms about my “political/religious” viewpoints

    Because your underlying view of the alleged second coming is the foundation of your purported analysis of a car company. Hence the poor analysis and the hostile comments from many of the readers.

    in one sense, if my religious viewpoint comes through in my life and is noticed, then I suppose that’s a high complement

    It is not a compliment in any way whatsoever, as it causes you to completely blow it. You come from such a skewed, stilted perspective that you can’t get past it and see things objectively — you’ll earn no praise of that.

  • avatar
    jmo

    menno,

    selling cars in India and China (massive potential market, China already #1 in the world) and not yet having a saturated market, which they would choose?

    So, China with the ticking demographic time bomb that is their One Child Policy is going to continue to grow and avoid a traumatic transition towards a more responsive government?

    Much like Toyota sells both the Yaris and the Sequoia to hedge their bets they can’t count on growth in any particular market as any predictions of continues growth may prove incorrect.

  • avatar
    menno

    I see your point, jmo. I also realize that China only allows a 50% ownership of auto companies by outsiders, and that obviously at any given time, the Chinese government can simply declare ownership over property/car companies/whatever they please.

    What is a good market today, may turn out to be a Titanic the next, in this fast moving world. Look at Russia; a couple of years ago, car manufacturers were stumbling over themselves trying to get factories into Russia and now it has turned into a pile of dung, not to mention that the Russians even dis-allowed car imports for awhile.

    By the way, if anyone wonders, I do not work for an auto maker or supplier. Nor have I ever done so.

    Here’s a snipet of something I just emailed to Robert:

    BTW I certainly don’t want Toyota to leave the US market, nor do I want to see the job losses. I’m not insane or evil. People need constructive jobs and lives.

    The likely situation to come about truly is that Toyota will try to dance on the fence and keep a balance between not being in a position to take advantage of their strengths in future (by shrinking too much in North America) and the opposite ditch of losing too much money by staying in North America, thereby damaging the overall company and harming worldwide prospects.

    What seems to be missing from a lot of the debate is the fact that I was not imagining the statements made right in the open by the US CEO of Toyota; they aren’t able to make a profit IN NORTH AMERICA. This admission all alone, is striking and ominous, hence the article.

    bluecon, you get the gist of the article…

  • avatar
    jmo

    in one sense, if my religious viewpoint comes through in my life and is noticed, then I suppose that’s a high complement

    Menni

    You also have a very provincial view of the world – you fail to evaluate the US and our problems against the numerous demographic, budgetary and political problems that are challenging the rest of the world.

    You mention India – what would continued success of the BJP mean in terms of their relationship with Pakistan and what would the economic repercussions be, for India, of a powerful Hindu nationalist party?

  • avatar
    menno

    jmo, I really don’t know anything about the political problems of Pakistan and India, so I can’t comment. I’m somewhat well rounded in my learning, but I don’t know much about that.

    I think you’d be rather surprised at my view of the world if you knew me personally, but this is not the place… perhaps I am provincial.

    As provincial as someone can be living in a nation where 50% of the population live and die 50 miles from their birthplace, but living a life where I have lived overseas (twice); lived in Arkansas, Colorado, the Chicago suburbs, Mississippi and Texas, you mean?

  • avatar
    njoneer

    Well, Toyota would not just leave, but they will do what it takes to stop the losses in North America. Detroit’s automakers social welfare companies are not smart enough or brave enough to do what Toyota will do.

    I think it is a real possibility that there will be no more US-only models. There will only be models that sell for profit in other markets. No Tundra, no Sienna, no Avalon, no Sequoia, no Venza. Why invest in US-only models just to lose money on them?

    Then Toyota would not need its US engineering center anymore. Sayonara, Michigan.

  • avatar
    Canandovq

    US will always be a very important market for any serious company, and Toyota will last to see how both of them will recover (the market and itself).
    Toyota`s reliability is an asset that many companies would like to have, and making fun cars is something they’ll sure make in this new stage.

  • avatar
    jmo

    I’m somewhat well rounded in my learning, but I don’t know much about that.

    Well, I think your views would be different if you were more familiar with the immense problems other nations are facing. If you look at the budgetary and demographic challenges facing Europe and Japan not to mention demographic, ethnic and political challenges facing India and China, your thinking would be more balanced.

  • avatar
    jmo

    The country has crazy politics and is a political mess with maybe a hundred different parties. A more likely result would be the country breaking into pieces.

    Exactly – the idea that a company would bet its fortunes entirely on countries as potentially unstable as India or China is just ludicrious.

  • avatar
    jmo

    You would bet your money on the socialist USA instead?

    Compared to the political consensus that predominates much of the rest of the world, Obama is an arch conservative.

    Compare the political platforms the BRIC leaders – Hu, Medvedev, Singh and da Silva to Obama’s and get back to me.

  • avatar
    jmo

    You should take your own advice.

    Please compare how Obama falls politically compared to Hu, Medvedev, Singh and da Silva. Hu is an actual Communist, da Silva is a life long, card carrying, actual former head of the Steel Workers Union – socialist.

  • avatar
    Juniper

    Inaba just blew this “thesis” out of the water.
    But it does look like NUMMI is gone.
    And that’s why I like cars.

  • avatar
    jmo

    Investment money is fleeing the USA.

    To where is this investment money flowing? The only place that could hope to handle US levels of investment are Japan, Europe and the BRIC countries. They are all lead, with Aso as the one possible exception, by people far to the left of Obama.

    You can’t argue that people are fleeing the US because of socialism if they are fleeing to countries that are infinitely farther to the left than the US and its current leader.

  • avatar
    Pch101

    To where is this investment money flowing?

    Judging from the markets lately, exotic foreign locales such as the New York Stock Exchange and the Chicago Board of Trade.

  • avatar
    wsn

    menno :
    July 23rd, 2009 at 3:34 pm

    I see your point, jmo. I also realize that China only allows a 50% ownership of auto companies by outsiders, and that obviously at any given time, the Chinese government can simply declare ownership over property/car companies/whatever they please.

    ———————————————

    The irony is that we thought they might do that in China, but they didn’t. Auto makers are still making money until that day comes.

    While we (most of us anyway) never thought the American government might do that in the US, they already did. And legitimate businesses (Toyota, Ford) are hurt.

  • avatar
    Richard Chen

    Wagons? Aw, not this crap again…

    The VW Jetta SportWagen TDI sold just over 1500 last month, accounting for almost all SportWagen sales. It goes for mid-$20′s and has the 2.0 diesel, 6-speed conventional manual or DSG, EPA 33mpg combined, 1100 lb load limit, tows 1600 lbs. Enthusiast affordable wagon lovers, your ship has arrived.

    Sales wise, it’s still far behind the underacheiving Ford Flex. It also doesn’t leave all that much room for wagon competition in the US market, as there’s next to zero demand. (IIRC Mazda sold a couple hundred Mazda6 wagons per month which got dumped into fleets and didn’t bother introducing a second generation.) Not to mention barely any profit margin, unlike a Venza.

  • avatar
    tonycd

    # bluecon :
    When you look at the results of socialism you would wonder why the USA has decided to go down that road and copy the socialist system that is such a worldwide failure. Obama is very much a socialist. Community organizer?

    Obama not only isn’t a socialist, he really isn’t that much of a liberal. As a liberal Democrat (read: LBJ, Humphrey, Kennedy, Feingold, Kucinich), my discontent with Obama is that he’s just as much a demi-Republican as the Clintons. I daresay that if Obama looked different and had a different-sounding name, he’d have a much harder time fending off criticism of his policies from the left — and he’s still getting plenty.

    The only people benefiting from Geithner and Summers’ brand of economic justice sure aren’t the ones I’d reward under “socialism.” In fact, they’re exactly the same people rewarded by Obama’s predecessor, hailing from the same schools and literally working on the same street.

    As for the “worldwide failure” of socialism, what failure? In most of Europe’s social democracies, the people are healthier, happier, work less hard, endure less stress, have healthier babies, live longer and take longer vacations. Lower corporate profits equal “economic failure” only if you think corporations outrank people as the first priority of economic policy.

  • avatar
    Starion

    While I think this article is preposterous, I would like to see Toyota withdraw production from the North American continent. Drive a Toyota, Nissan, or Honda from the 80′s(When they were usually built in Japan) and drive a NA built one now, and the quality has deteriorated immensley due to sheer incompetence by North American workforces. I live in Canada, and I usually shy away from NA products because they are assembled by people who are generally;

    -Are extremely lazy
    -Don’t care about actual product longetevity, all they do is crank out as many as possible, screw quality THERE IS PROFIT TO BE HAD!
    -Arrogant, bigoted, Usually Extreme-Conservative(At least here). All they do is blame “Foreigners, Immigrants” for their woe.
    -Uneducated
    -No discipline AT ALL.

    All of the current cars in our family were Japanese-Built, and it shows. The craftsmanship and attention to detail is remarkable.

    If protectionism is such a faliure then why is Japan Generally better off than most North American and European Naions? Japan until very recently(Last 15 years or so) was essentially a Communist Country in all but name.

    The Japanese should take production back home, North Americans have proved time and time again that they are incapable of building vehicles properly.

    I work as a mechanic, and I get paid far less than these bozos on the assembly line, and my line of work is arguably harder. I have no sympathy for any NA auto worker getting paid 86$ an hour to poorly assemble a car.

  • avatar
    ZekeToronto

    tonycd wrote:

    As for the “worldwide failure” of socialism, what failure? In most of Europe’s social democracies, the people are healthier, happier, work less hard, endure less stress, have healthier babies, live longer and take longer vacations. Lower corporate profits equal “economic failure” only if you think corporations outrank people as the first priority of economic policy.

    And the same applies to “socialist” Canada.

    As for Toyota taking its marbles and going home? Not a chance.

  • avatar
    wsn

    Stingray :
    July 23rd, 2009 at 2:04 pm

    @wsn

    If they choose to live in the States for a while, they will be classified as resident aliens.

    Ummm… why exactly you would like to live in the US?

    ———————————————-

    I am not sure what’s your message here.

    1) If it’s “we Americans don’t welcome foreigners to lived here”:

    It’s OK that you feel that way. But refer to my earlier post, GM is not Canadian. It better pack up and go back to the States.

    2) If it’s “the US is so ruined that nobody would want to live here”:

    Maybe some fresh blood from the north can help.

  • avatar
    Getitdone

    Please sign this petition and help our family and thousands of families livelihoods that are dependent on the continuance of the operations of Toyota car manufacturing plant.
    http://www.thepetitionsite.com/5/save-california-jobs

    We ask that you also PLEASE send this to EVERYONE you know, every signature counts!
    For a quarter-century, the New United Motor Manufacturing Inc. vehicle plant, which employs 4,700 workers, was a joint venture between General Motors and Toyota. But the NUMMI venture now circles the fringes of a whirlpool. GM, while working through bankruptcy, abandoned NUMMI, and Toyota says GM’s departure has forced it to explore all options, ranging from going it alone to shutting down the factory. The closure of NUMMI would not only affect the 4700 workers at the plant, but would have a ripple effect on as many as 35,000 jobs. The health of a number of local economies across the state would suffer loss of jobs, jobs that are indirectly tied to the plant through suppliers, vendors and small-parts manufacturers throughout the state.
    Please sign this petition and help our family and thousands of families livelihoods that are dependent on the continuance of the operations of Toyota car manufacturing plant. We ask that you also PLEASE send this to EVERYONE you know, every signature counts!
    For a quarter-century, the New United Motor Manufacturing Inc. vehicle plant, which employs 4,700 workers, was a joint venture between General Motors and Toyota. But the NUMMI venture now circles the fringes of a whirlpool. GM, while working through bankruptcy, abandoned NUMMI, and Toyota says GM’s departure has forced it to explore all options, ranging from going it alone to shutting down the factory. The closure of NUMMI would not only affect the 4700 workers at the plant, but would have have a ripple effect on as many as 35,000 jobs. The health of a number of local economies across the state would suffer loss of jobs, jobs that are indirectly tied to the plant through suppliers, vendors and small-parts manufacturers throughout the state.
    Regarding the NUMMI/Toyota plant in Fremont
    Thousands of people in California want Toyota to continue operations at the Fremont auto plant. The Bay Area provides skilled and enthusiastic workers who want to keep their jobs and others who want to gain employment in the auto industry. California, the nations largest population offers an excellent environment for Toyota’s plant because of its love of environmentally friendly cars. Toyota should produce cars in California because Californians are the largest buyers of cars in our nation. We are enclosing a petition reflecting thousands of signatures of people who desire Toyota to stay in Fremont Ca.
    We respectfully thank you for all the employment you have provided to all of our people over the past years. Please keep Toyota Manufacturing in Fremont Ca.
    Concerned Californians and Friends

  • avatar
    menno

    Well, getitdone, I live in Michigan. You know, that funny shaped state in flyover country which is either laughed at or ignored by folks on the left and right coasts?

    We’ve lost “just a few” more jobs than one little plant in San Fran bay over the past 4 decades, in that little thing called the auto industry.

    In fact our state is in a full scale depression. It is not with pride that I say that our Democratic governeress is totally incompetent, but at this late date, Bingo the Evil Clown could run this state and it would be difficult to be in a worse situation.

    I’m sorry if NUMMI closes, but gosh, I don’t recall anyone going out of their way trying to save literally hundreds of thousands of jobs in my home state over the past 40 years. Perhaps if the Union guys had been willing to actually take note that the auto workers really truly didn’t “deserve” $78 an hour plus free viagara that they could black-market and make extra money on, free medical care, etc etc, then perhaps just perhaps the Big 3 and AMC could have woken up and engineered then built better cars in order to better compete. But this didn’t happen. Of course, there is no guarantee that it would have happened had costs been contained. After all, greed is not simply a blue-collar phenomenon, to say the least. Look at NYC and the banksters, look at DC and the fraudsters in charge.

    How does 50% plus unemployment in Flint, Michigan (early 1980′s) sound? How about a real world unemployment rate of over 22% right now in the entire state? (“Official” unemployment is 15.2% but this is yet another government lie from the Feds, in case you’ve been asleep for awhile).

    Be thankful you only have one car plant TO LOSE.


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