Business

Toyota’s Largest Car Plant Is Getting a Radical Makeover for the SUV Era

The automaker is retrofitting its Camry factory in Kentucky to make 11 different vehicles.

The Georgetown plant during construction in 1986.

Photograph: AP Photo

In 2016, Americans purchased more Toyota Camrys than any other car for the 15th straight year. But even the brand’s long popularity and perennial top ranking in quality surveys of midsize cars by J.D. Power & Associates Inc. haven’t made it immune to the auto industry’s dramatic shift away from the once-­dominant family sedan. Toyota Motor Corp. found that out the hard way in the last few years when it got caught flat-footed as car buyers defected in droves to roomier pickups and sport-utility vehicles.

The main factory producing Camrys for the U.S., in Georgetown, Ky., is Toyota’s largest assembly plant. The size of 156 football fields, the facility was running at just 80 percent of capacity in April, according to Dan Antis, vice president for manufacturing, and was barely breaking even. “Can I tell you I’m making a bucket­ful of money on Camry?” says Jim Lentz, Toyota’s North American chief executive officer. “Likely not.”

To improve the profitability of its second-­largest-selling model in the U.S., Toyota is rethinking how it manufactures cars at Georgetown and other plants around the world. Right now the Kentucky factory’s two main assembly lines build only the Camry and the Avalon, an upscale look-alike that’s assembled on the same platform. But the recent shift in demand means that automakers can no longer dedicate such a huge facility to a single model, especially a sedan. Pickups and SUVs accounted for 62 percent of U.S. auto deliveries in the first five months of this year. Just three and a half years earlier, those vehicles were evenly splitting the market with cars.

Toyota is completely overhauling the Georgetown factory’s assembly lines to be able to build 11 ­vehicles of all sizes and shapes and pivot among them quickly as customer preferences shift, Antis says. The Japanese company has invested $1.3 billion and spent a year gut-rehabbing the plant, department by department, on weekends and holidays, to install new technology and operating methods on almost every job. For the first time since the Camry’s introduction 35 years ago, Toyota redesigned the car from the ground up, with 100 percent new parts.

Masato Katsumata, chief engineer and senior vice president for research and development, says Toyota hopes to use Georgetown’s overhauled manufacturing process as a template for how the company can mix and match components between the Camry and its other vehicles, something it hasn’t traditionally done. “This is a total system overhaul of design and manufacturing,” says Jeff Liker, a University of Michigan professor who’s written nine books about Toyota. “It ... gives them principles and processes they can repeat when they develop the next set of platforms.”

Toyota’s road to the Georgetown overhaul started in 2009, when the global financial crisis dragged the company to its first loss in 59 years, and as a rash of sudden-acceleration accidents forced the recall of more than 10 million of its vehicles. Toyota had surpassed General Motors Co. to become the world’s biggest automaker, but that growth was the result of a costly complexity: Workers were putting together cars using about 800 different types of engines and roughly 100 variants of underpinning platforms.

Antis has spent much of the past four years looking for ways to reduce the complexity at Georgetown, which has 8,200 permanent and 1,500 temporary workers. In an area where workers prepare engines for final assembly by installing oil filters and other small components, for example, the engines have arrived at the main assembly line via overhead conveyors since the factory opened in 1988. But conveyors are inflexible, Antis says, carrying too many engines when Toyota wants to slow production during recessions and too few when sales are booming. So he’s had the overhead conveyors ripped out over the past year. Engines now arrive on robot-controlled pedestals that follow the path of electronic sensors buried in the floor. If Toyota needs more or fewer engines as sales ebb and flow, workers change the number of pedestals and reroute the sensors.

Adding to the process’s efficiency, the top of each pedestal comes with fixtures that resemble basketball hoops that can be flipped back and forth to hold each size of engine the plant makes. This allows the company to vary the flow engine-by-engine if, for example, buyers shift from conventional gasoline engines to hybrids and back again.

Some changes, Antis says, were aimed at promoting better looks and sportier driving, not only factory flexibility. Up until now, pliable body structures and mushy suspensions stuck drivers with sedans that swayed from side to side or front to back during turns and speed changes, says Katsumata, who characterizes past Camrys as too white-bread. “If you’re a not-so-enthusiastic guy about the car, then you can select Camry,” Katsumata, who’s been the auto’s top engineer for more than a decade, says of past models.

Now Toyota is aiming higher. It’s installing lasers that will weld metal parts in 0.3 seconds, compared with 2.0 seconds for the current Camry, allowing for quadruple the number of welds on each car without slowing the assembly line. That change, along with the addition of a double-­wishbone rear suspension system, has given the car a firmer ride.

The company also installed stamping machines that use massive electricity jolts to heat sheets of steel so they won’t splinter while being molded into the subtle, less generic shapes Camry ­designers wanted to give the car.

As additional vehicles such as the Corolla and RAV4 migrate to Toyota’s new manufacturing system, global costs for the 100 major components they’ll share with Camry should fall, Katsumata says. And since the shared components were designed as a flexible foundation for future vehicles, engineering time for new models should be reduced 20 percent. Plus, based on all that’s been learned from makeovers at Georgetown and other plants, the investment needed to launch future production lines should drop 40 percent.

Toyota won’t say how much it’s spending on the new manufacturing methods, other than that in the fiscal year ended in March, they’re largely responsible for an 88.2 billion-yen ($785 million) increase in capital spending. The investment community has been less than enthusiastic about the outlays. “Toyota is predicting its second straight profit decline for the first time since 1994, but it may be the third or fourth year before they can see even a small recovery,” says Koji Endo, an analyst at SBI Securities Co. in Tokyo. Because of such pessimism, plus a stronger yen and falling U.S. sales, Toyota shares have dropped about 17 percent this year.

But Toyota’s Katsumata says the investment will eventually pay off both in a Camry that’s more attractive to buyers and in the company’s enhanced ability to manufacture vehicles profitably. “In two years, three years, four years, five years, the total benefit might be bigger,” he says, than the ­cumulative costs. —With Kevin Buckland

    BOTTOM LINE - Toyota has spent more than $1 billion on an extreme makeover of the plant in Georgetown, Ky., where it builds Camrys. It will serve as a template for future factories.
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