Toyota Revives Mississippi Plant, Plans Boost in U.S. Production Despite Faltering Sales
Toyota Motor (TM) plans to rev up its vehicle production in the U.S., despite November's 7.3% drop in U.S. sales. While that bodes well for domestic employment figures, whether it will pay off for Toyota's investors is less clear.
Toyota has hired the first of an expected 2,000 workers at its partially completed Mississippi manufacturing plant, which will be brought online to assemble Corollas, according to a Wall Street Journalreport. That's good news for the economically depressed Northeastern Mississippi region, where unemployment reportedly is running as high as 11%. Toyota initially announced plans for the plant in 2007, but halted work on it a year later as the global economy tanked.
The Japanese automaker says it expects to boost capacity utilization at its U.S. manufacturing plants to 90% this year, compared with last year's lackluster 60% plant utilization, according to the report.
Last year, Toyota hit the brakes on its operations at its New United Motor Manufacturing (NUMMI) plant in Fremont, Calif., after its joint-venture partner, General Motors, filed for bankruptcy. That put 4,700 NUMMI workers out on the street. But the Japanese automaker, which is teaming up with Telsa Motors to produce an electric RAV4, is reportedly considering manufacturing the vehicles at the former NUMMI plant, which Telsa now owns.
Though Toyota's reputation continues to take a beating as a December recall of its Sienna minivans and concerns over about the brake systems on the Prius hybrid add to its earlier recall woes, the automaker did manage to post a 5.8% sales gain to reach $59.5 billion in the fiscal second quarter and a $1.2 billion profit.
During the quarter, however, it was the only major automaker showing sluggish sales growth in the U.S., and those gains it made can be credited to a hefty list of incentives it offered to buyers. Toyota's lackluster U.S. performance continued into November, when it reported a whopping 21.5% year-over-year decrease in passenger car sales to 58,701, with Corollas accounting for 16,202 of those cars. Sales of the RAV4, however, rose 2.4% in the month to 12,306 units shipped.
That poor U.S. performance, announced on Dec. 1, cut short Toyota stock's rally: In November, it rose nearly 15% to $79.81 a share on the wings of the strong quarterly results announced at the start of November. Investors today may be feeling a sense of cautious optimism about Toyota's ability to turn its U.S. prospects around. Its stock was up a tad in Monday trading as of 1 p.m., while the broader markets were marginally in the red.
Get info on stocks mentioned in this article:
