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Old 02-13-2007, 04:11 PM   #1
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Toyota fears U.S. backlash over gains

Toyota fears U.S. backlash over gains
It cites political, social risks
February 13, 2007

BY JOE GUY COLLIER and JUSTIN HYDE

FREE PRESS BUSINESS WRITERS

Toyota Motor Corp. is bracing for possible political and consumer backlash caused by its rapid U.S. growth, according to an internal report obtained by the Free Press.

Toyota executives have publicly downplayed the importance of predictions that the Japan-based company will pass General Motors Corp. this year as the world's largest automaker. But the Toyota report says the company could face criticism because its U.S. sales are increasing while Detroit's automakers are losing sales and shuttering plants.

"With recent market-share gains and sales continuing to increase, we are becoming the de facto leader of the industry -- that brings risks and responsibilities," according to a presentation by Seiichi (Sean) Sudo, president of Toyota Engineering & Manufacturing in North America. "Our competitors are jealous of our success."

Detroit's congressional allies of GM, Ford Motor Co. and DaimlerChrysler AG's Chrysler Group say it's not jealousy. They say Japanese automakers are exploiting an artificially weak yen to make their products more affordable.

U.S. Rep. Sander Levin, D-Royal Oak, said he is considering legislation aimed at pressuring Japan and other countries to stop manipulating their currencies to boost exports.

Japanese automakers "are importing the more expensive cars to the U.S., and getting the benefit of the yen imbalance," Levin said. Japan has "a clear-cut set of policies, and we don't have any."

In the briefing to other Toyota managers, Sudo cited political and social risks. The report, left unsecured on computers at the company's Georgetown, Ky., complex, said Toyota could come under fire for:

• Selling vehicles to U.S. customers with high proportions of foreign-made parts. Less than half of all content of Toyota vehicles sold in the United States is made in the United States or Canada.

• Not including enough minority-owned businesses in its supplier base. The Rev. Jesse Jackson, leader of the Rainbow PUSH activist group, has asked Toyota to improve diversity efforts.

• Leaving a vacuum in U.S. communities as GM, Ford, Chrysler and their suppliers shed plants and workers.

"A Democratic Congress, particularly those members with districts hit by Big 3 and supplier plant closings, may call for further oversight of the industry and Japanese companies in particular," the presentation said.


Michigan Dems threaten to act

Toyota's concerns are not far off the mark. With a new Democratic majority in Congress, Michigan's Democratic lawmakers have pledged to press harder on trade and other issues where Detroit automakers say Japanese companies have an unfair advantage.

Last week, two Democratic House members from Michigan -- Levin and Rep. John Dingell of Dearborn -- sent a letter to Treasury Secretary Henry Paulson, urging him to press Japan over the value of the yen during a meeting of world economic powers.

Dingell, Levin and two other congressmen said that a weak yen had helped Japanese automakers increase their exports to the United States by more than 30% in 2006. Detroit automakers and their congressional allies say the yen bestows up to a $4,000-per-vehicle benefit for Japanese automakers.

The Harbour-Felax Group, a Royal Oak automotive consulting firm, estimated the yen benefit at $1,054 per vehicle in a study it released last fall.


"It is a little-understood fact that Toyota's exports to the United States are almost as great as the number of vehicles produced in the United States by Toyota," the lawmakers wrote. "We are certain that the weak yen is also boosting Japanese exports in other economic sectors and is having a significant impact on many U.S. producers."


Toyota's public image and ability to operate with few barriers in the United States are significant because this is the world's biggest market and a source of huge and profitable growth for Toyota. Its U.S. sales rose 12.5% last year, and it is expected to have $13 billion in profit this fiscal year.

Toyota passed Ford and the Chrysler Group in global vehicle sales and could pass GM thanks, in large part, to its ability to beat Detroit on its home turf. The Camry has been the best-selling car in the United States in nine of the past 10 years. Toyota's U.S. market share has doubled since 1996.

Toyota as a scapegoat?

Toyota would not comment about Sudo's presentation except to say it was a 5-year planning document that looks at challenges the company faces. The Free Press reported last week the report also contained information about Toyota's plans to hold down increases in U.S. labor costs and its worries about maintaining quality.

"Toyota will continue to focus on further enhancing productivity, quality and safety, and this was the essence of the planning document," spokesman Daniel Sieger said.

Toyota officials have said the possibility that their company would pass GM as the world's largest automaker is irrelevant to them and to consumers. Sudo's presentation, though, shows that Toyota sees a possible downside, especially in light of U.S. automakers' financial difficulties.

"Toyota will be a 'scapegoat,' " one slide says.

"Society expects that we will make the same economic and social contribution as the companies we replace," the accompanying text says. "And we need to position ourselves to respond to corporate image attacks."

Toyota has been putting millions of dollars into efforts aimed at promoting its benefits to American society. In Washington, subway stops frequented by policy makers are plastered with ads extolling Toyota's U.S. employment figures.

Next weekend, Toyota will hit the track in Daytona Beach, Fla., for the start of the NASCAR Nextel Cup season, the first entry by a Japanese automaker in the nation's most popular racing series. In the past year, Toyota also has run TV ads and put up billboards touting its economic impact on the United States.

'Beat but don't drub'

Toyota executives are acutely aware of their position in the United States, said Matthew May, author of "The Elegant Solution: Toyota's Formula for Mastering Innovation."

Toyota has a culture that stresses both competition and humility, said May, who spent eight years as a senior adviser and instructor for the University of Toyota, the company's Torrance, Calif.-based corporate college developed to teach the Toyota Way principles.

Toyota has ambitious goals, he said.

"At the same time, you have to balance that with the mother ship who is saying, 'Beat them but don't drub them,' " May said. " 'You don't need to spike the ball in the end zone' is really the message."

Toyota has one major factor in its favor as it tries to prevent backlash. The U.S. sales growth also has fueled a rapidly growing manufacturing base that hits more states and congressional districts each year.

Toyota has 13 U.S. plants, from West Virginia to California. Its first was a joint venture with GM in 1984 in California. Now states are lining up for what is expected to be several more in the next 10 years.

Last month at the auto show in Detroit, Bob Lutz, GM's head of global product development, said: "It is my considered opinion that Toyota has more clout in Washington than GM."

Contact JOE GUY COLLIER at 313-222-6512 or jcollier@freepress.com.
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Old 02-14-2007, 05:29 PM   #2
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Good! I hope they (Toyota) squirms!!! Oh, sorry, do I sound biased?
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Old 02-14-2007, 06:04 PM   #3
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Good! I hope they (Toyota) squirms!!! Oh, sorry, do I sound biased?
You're not alone. I'm looking forward to seeing the reaction they get at Daytona...:middlefinger: < my "welcome" for them to NASCAR WC.
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Old 02-14-2007, 06:49 PM   #4
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When they break into NASCAR, what else is there? The last bastien of Americana. Seems kind of wrong to me.
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Old 02-14-2007, 06:56 PM   #5
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When they break into NASCAR, what else is there? The last bastien of Americana. Seems kind of wrong to me.

Seemed wrong to me as well. But I blame NASCAR. I know it's a business, but having followed it for over 15 years, it's less about competition and racing, and more about money.

There's no "tradition", ie; keeping it "American makes only", there are too many, overpaid, lack of respect, cry babies anymore. And NASCAR has so many rules anymore, "real racing" is a thing of the past. Witness the number of mile and a half, single-file tracks...that way they don't actually have to race side by side! (Oh the horror!!!)

I definately don't enjoy it nearly as much as I used to. :(
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Old 02-14-2007, 07:00 PM   #6
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Toyota raises dust in NASCAR
Boo if you must, but automaker covets circuit's fan base

By MARK RECHTIN | AUTOMOTIVE NEWS

AutoWeek | Updated: 02/12/07, 3:03 pm et

LOS ANGELES - Toyota never set out to wear the black hat in NASCAR, but things have sure worked out that way.

NASCAR's good ol' boys are up in arms about the juggernaut from Japan. One of them - Jack Roush, who heads Ford-powered Rosh Racing - says he is ready to "go to war" with Toyota.

"I'm definitely preparing myself for siege," says Roush. "Toyota will not find that the established teams and manufacturers will wither in their path."

To raise a war chest, Roush plans to sell as much as 50 percent of his operation to Fenway Sports Group, a sports marketing company.

Toyota will find out what it means to be the villain this Sunday, when it enters the Daytona 500 for the first time. Although Toyota has raced in NASCAR's Craftsman Truck Series for three years, this is its first season trading paint with the big boys in the Nextel Cup.

From a PR standpoint, going into NASCAR while the Detroit 3 gush red ink is unfortunate timing. Roush and some other team owners allege Toyota is trying to buy the NASCAR title George Steinbrenner-style, with Yankee-earned dollars.

Toyota has already lured veterans Dale Jarrett and Michael Waltrip, among others, to race the NASCAR Camry. Then again, spending more than other automakers has yet to earn Toyota a checkered flag in several years of Formula One racing.

Dave Illingworth, a senior vice president of Toyota Motor Sales U.S.A. Inc., calls Roush's allegations "unfounded."

'Enormous sum of money'

Says Illingworth: "There is a lot of concern over the amount of money we are spending. But we are in line with what everyone else is doing."

Not all race team owners agree with Roush. The more the merrier, some say, because it helps maintain the health of the racing series. But even NASCAR's official Web site uses the phrase "keep up with Toyota" in discussing how incumbent teams will compete financially this year.

One Toyota insider, who spoke on the condition of anonymity, admits the automaker is spending "an enormous sum of money."

But bad guy or not, Toyota has lots of reasons for going into NASCAR. Over the past decade, Toyota sales have soared in the coastal regions and Sun Belt. But Toyota still lags in heartland America. That is where the affiliation with NASCAR comes in.

Toyota executives complain about misconceptions that many Americans still have about their company. Many internet firebrands rave that NASCAR is a pure American sport.

But the Camry is built in Kentucky, while the Chevrolet Monte Carlo is assembled in Canada and the Ford Fusion comes from Mexico. And isn't DaimlerChrysler owned by a German company?

And if Americans don't mind watching the races on Sony or Samsung TVs, why should they care if someone is racing a Camry?
NASCAR's audience is largely a demographic that purchases pickup trucks. Toyota is hoping they'll warm to considering it's all-new Tundra.


It's about pickups, stupid

"We're racing Camrys to sell Tundras," says Jim Farley, Toyota Division vice president of marketing.

How effective that will be remains to be seen.

Says one Toyota source: "'Win Sunday, sell Monday' is mythical creation. It makes sense for Toyota to race, but it's to reach the pickup truck culture."

NASCAR has 75 million fans. Of the top 20 sporting events in the United States in terms of attendance, 18 are NASCAR races. What do these fans drive to races? Mainly pickups.

And with a redesigned, pumped-up Tundra arriving this month, Toyota needs to get folks to try out its Texas- and Indiana-built truck.

Toyota isn't just spending money on racing. The NASCAR marketing effort is equally formidable. "Street teams" will patrol the racetrack grounds in a heavy grassroots marketing effort.

"Auto manufacturers reallly haven't leveraged their NASCAR efforts," Farley says, with a hint of bewilderment.

Just as important is business-to-business marketing. Toyota is pairing up with carefully chosen race team sponsors to leverage their corporate connections. Partnering with UPS and Caterpillar allows Toyota to reach those companies' customers, many of whom buy pickups.

And, of course, there's the dealer angle.

"There is a value to a program that gives hospitality to our retail partners," Farley says. "A golf program doesn't ring the bell like meeting Dale Jarrett."

Toyota executives don't figure Toyota-powered drivers will win right away. But when Toyota joined NASCAR's Craftsman Truck series in 2004, it won four races in its rookie season. And it took only three seasons for Toyota to win the championship.

Worth the effort

The Nextel Cup is a different beast. For one thing, early season qualifying is based on each driver's past performance, regardless of the driver's team last year. That means only two Toyota drivers are guaranteed starting spots in Sunday's Daytona 500 grid. The rest have to qualify for the remaining positions in the 43-car field. Similar restrictions apply during the early part of the season.

So is the effort and expense worth it? Toyota says the answer is a resounding yes.

"For us, NASCAR pencils out," Farley says. "Every sponsor I talked to says it is the last thing they would get rid of. Where else are you going to see a grown man wearing a Cheerios jacket?"
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Old 02-14-2007, 09:49 PM   #7
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Someone needs to put their car in the wall or out of commission.....anyone here know how I can get in the pits?
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