Toyota tells Georgetown plant it needs to cut costs or else, media reports say

Toyota, the Japanese-based automobile manufacturer, has told the workers at its Georgetown plant to cut costs or face an uncertain future, according to Bloomberg News.

In an internal video obtained by Bloomberg News, Wil James, president of the Toyota plant in Georgetown, tells plant workers there that Toyota can build a Camry in Japan, ship it to Kentucky and make more money selling that car than from one built at Toyota’s factory in Kentucky.

“I’m not sharing this to scare you, but to heighten your awareness of the current risk we now have,” said James, who has managed the plant for more than seven years, in the video dated in November, Bloomberg reported.

Toyota isn’t planning to close the factory and continues to invest in it for the next 30 years. “But all of this is on the assumption that we can make as much progress in cost reduction and efficiency as we’ve made in quality and safety,” James said.

The Georgetown facility, which employs more than 8,000 people, is the largest Toyota plant in the world. The Georgetown plant makes numerous vehicles, including the Lexus ES350 and the Camry.

Toyota President Akio Toyoda said the company would have to take a closer look at which areas to invest in after forecasting profit will decline for a second straight year.

“In an environment where sales are stagnating, it’s tough that we need to invest in areas which won’t generate profits due to paradigm shifts,” Toyoda said at a briefing in Tokyo in May, without being more specific, according to Bloomberg News. “We need to make the decision to look at where to stop when sales are stagnating.”

Supporters of the United Auto Workers called Toyota’s video an attempt to quell pro-union sentiments at the Georgetown plant, Bloomberg News reported. Joe Smiddy, 43, who works in Georgetown’s welding shop, said the video might have encouraged unionization.

“It actually made people mad,” he told Bloomberg. “We’ve had a spike in the number of people coming to sign union cards.”

In a statement provided to the Herald-Leader, Toyota downplayed James’ comments.

"This story surfaced from a routine internal video taken completely out of context. We are proud of our team members and our 30-year record of investment and sustainable employment at our Kentucky plant. Our record speaks for itself,” the statement read.

Toyota has announced more than one billion dollars of investment in the Georgetown facility since the beginning of the year. In April, Toyota announced a $1.33 billion investment that would be used to enable the plant to make vehicles using Toyota New Global Architecture, a system designed to make the company more nimble in car development.

In September, the company announced that $121 million would be used to produce more 2.5 liter engines. In October, Toyota unveiled an $80 million Production Engineering and Manufacturing Center which includes design and testing equipment, 3D-printing, augmented reality and virtual reality facilities.

This story was originally published November 22, 2017 at 3:20 PM with the headline "Toyota tells Georgetown plant it needs to cut costs or else, media reports say."