Toyota Revives Mississippi Plant to Boost U.S. Corolla Supply

Toyota Motor Corp. is resurrecting plans to complete a plant in Mississippi 18 months after mothballing the facility as U.S. sales collapsed.

Toyota, the world’s largest automaker, will begin installing assembly equipment at the facility in Blue Springs, Mississippi, with a goal of starting production of Corolla compact cars by late 2011, the company said yesterday. The decision reverses earlier plans to use the plant to build Highlander sport-utility vehicles and Prius hybrids.

“This is a great day for Mississippi,” Haley Barbour, the state’s governor, said in a conference call yesterday. Toyota’s decision to delay the plant was the right one, and “by making the right business decision, Toyota will be here the next 50 or 70 years,” said Barbour, a Republican.

Toyota completed construction of the $1.3 billion plant last year, without installing machinery to make vehicles, after saying in December 2008 it couldn’t continue with plans to make the Prius there amid market turmoil. A recession triggered by the financial crisis that began in 2008 led to a 35 percent industry-wide plunge in U.S. auto sales from 2007 to 2009. Sales this year through May rose 17 percent.

The company’s goal is to build as many as 150,000 Corollas a year, said Mike Goss, a Toyota spokesman.

The Toyota City, Japan-based company needs more North American capacity to make Corollas after production of the small car ended April 1 at New United Motor Manufacturing Inc., a closed joint venture plant Toyota shared with the former General Motors Corp. Corollas for the U.S. market currently are supplied by Toyota’s Cambridge, Ontario, plant and exports from Japan.

‘More Recovery’

“Toyota is probably expecting more recovery in North America after next year,” said Satoru Takada, an analyst at TIW Inc. in Tokyo.

The company expects industrywide U.S. sales volume may recover to as many as 16 million units annually by about 2015, Jim Lentz, Toyota’s U.S. sales chief, said in a conference call. The decision to make the Corolla in Mississippi rather than the Prius was one of supply and demand, he said.

“The immediate need today isn’t necessarily Prius,” Lentz said. “It’s on Corolla.”

Toyota said yesterday it plans to hire 2,000 workers at the plant. That’s the same number the company gave in 2007 when Blue Springs was first announced as a future factory site to assemble Highlander SUVs. In July 2008, Toyota changed plans and said it would build the Prius at the factory instead.

Supplier Jobs

At least 2,000 additional jobs with suppliers are likely to result from the plant project as well, Barbour said.

Mississippi approved $293.9 million in debt for the plant as part of an incentive package for Toyota. The company agreed last year to pay debt-service costs for infrastructure bonds issued by the state and help suppliers make promised payments. Toyota’s first $10 million share of debt was due in April 2010.

Toyota’s American depositary receipts, equal to two ordinary shares, fell 47 cents to $72.31 yesterday in New York Stock Exchange composite trading.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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