Toyota to build Lexus ES luxury sedan in Georgetown

ssloan@herald-leader.comApril 18, 2013 

GEORGETOWN — Toyota executives and state officials announced Friday that the automaker's flagship North American plant in Georgetown will begin building the Lexus ES 350 luxury sedan in 2015.

It will be the first Lexus model to be manufactured in the United States.

The project is expected to add 750 jobs at the factory, which already employs more than 6,000 people.

"Americans love the ES," said Toyota president Akio Toyoda, whose announcement in New York was delivered live via satellite to the crowd assembled in the Georgetown plant. "Since 1990, we have sold nearly 1.2 million ES sedans in the U.S., and it has one of the highest customer loyalty rates in the Lexus lineup."

Bob Carter, senior vice president of automotive operations for Toyota Motor Sales, referred to the ES as the "foundation of the Lexus brand."

"The ES was one of the first two (Lexus) vehicles we introduced here globally," Carter said. "It is really the core. It's the foundation. It's the most important car that we have within the Lexus brand. That's our baby.

"We're really, really proud to have it manufactured here."

The news was foreshadowed Wednesday, when the Kentucky Economic Development Finance Authority gave preliminary approval to $146.5 million in tax incentives for the project.

The company plans to produce 50,000 of the vehicles annually, beginning in fall 2015. That production rate would be a small addition for the factory, which built 462,080 vehicles in 2012. The majority of those were the Camry (300,186 produced). Others were the Camry hybrid (59,646), the Venza (59,806), the Avalon (40,337) and the Avalon hybrid (2,105).

Toyota sold 56,158 Lexus ES sedans in the United States in 2012. That made it the second most popular Lexus model behind the RX sport-utility vehicle, which sold 95,381. The RX is the only Lexus vehicle manufactured outside Japan; it is assembled in both Japan and Canada.

Georgetown will build only the conventional version of the ES, which starts at $36,370. Its hybrid version will be built only in a Japanese factory, which will continue to produce the conventional versions, too.

The Georgetown plant's president, Wil James, said the automaker is working to determine how best to accommodate the production in Georgetown. The ES is built on the same general platform as the other vehicles that are made on two assembly lines in Georgetown, but Toyota will add a third assembly line dedicated to the Lexus.

That similar vehicle architecture made Georgetown a logical choice for the addition, said Michelle Krebs, a senior analyst for automotive information service Edmunds.com.

"It fits in well with what their workers are used to producing," she said.

Other than the platform, said Toyota executive Steve St. Angelo, who ran the Georgetown plant before James, the majority of the parts used in the Lexus are different.

"Lexus is a very special vehicle," St. Angelo said.

The plant will use some of its existing automotive suppliers for parts, St. Angelo said, but the addition might lead to some Lexus-only automotive suppliers moving to Kentucky.

Krebs said the addition helps Toyota deal with concern over the historic strength of the Japanese yen in recent years.

"The strength of the currency and Japan's policy positions have not sat well with some Americans, specifically American car companies, that have to compete with them," she said. "This is a bit of a way to counter that by creating jobs and making investments here in the U.S."

The 750 new employees would bring Toyota's full-time employment in Georgetown to 6,739, including temporary and contract workers, according to state records. State documents suggest that 570 of the 750 new jobs will be regular full-time employees.

Their average hourly compensation will start at $26, including benefits. After enough years of service, those employees will rise to the plant's overall average compensation of $44.12, including benefits.

The new project is expected to cost $531.2 million, with $326 million of that focused on equipment. The remainder would be for building expansions and improvements and for tooling. No new land is being acquired as part of the project, according to state documents.

At Friday's news conference, Gov. Steve Beshear thanked Toyota officials for their commitment to further investment in the plant.

"We're excited, we're honored by Toyota's decision," he said, adding that he was lieutenant governor when Toyota announced in the 1980s that it would build the Georgetown plant.

"We actually see Toyota as a Kentucky company," Beshear said. "That announcement transformed our economy.

"This is a great day for Toyota and for the commonwealth of Kentucky."

Scott Sloan: (859) 231-1447. Twitter: @HeraldLeaderBiz.

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