Toyota might hire 750, produce new vehicle as part of Georgetown expansion

A state official told the Kentucky Economic Development Finance Authority that Toyota is planning that its Georgetown plant produce a vehicle model new to the plant, and that the plant would produce 50,000 of the cars annually beginning in 2015.
A state official told the Kentucky Economic Development Finance Authority that Toyota is planning that its Georgetown plant produce a vehicle model new to the plant, and that the plant would produce 50,000 of the cars annually beginning in 2015.

FRANKFORT — Toyota is planning an ambitious new project for its flagship Georgetown plant that might see it producing a new vehicle and adding 750 jobs.

The news came Wednesday when the Kentucky Economic Development Finance Authority gave preliminary approval to $146.5 million in tax incentives for the project, which is shrouded in mystery.

Toyota spokesman Rick Hesterberg declined to comment on the project other than to say, "We continue to look for opportunities to localize production and build where we sell. However, we have nothing to announce at this time." Toyota later announced a Friday morning press conference with the governor.

Katie Smith of the state's Cabinet for Economic Development told the KEDFA board that the project is a vehicle model that is new to the plant, which would produce 50,000 of them annually beginning in fall 2015. She declined to name the vehicle model.

The Georgetown plant "is competing with other Toyota plants for the opportunity to build this new model in North America and incentives are essential for the project to occur in Scott County," Smith said.

The model's annual production of 50,000 would be a small addition for the factory, which produced 462,080 vehicles in 2012. The majority of those were the Camry (300,186 produced). Others were the Camry Hybrid (59,646), Venza (59,806), Avalon (40,337) and Avalon Hybrid (2,105).

With the latest generation of the Camry selling well, the plant is on track to potentially have one of its largest years ever in 2013, Hesterberg has said.

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

The 750 jobs to be created include temporary and contract workers. The state documents suggested 570 of the 750 new jobs would be full-time employees. Their average hourly compensation would be $26. That's significantly below the average of $44.12 in compensation paid to existing employees, many of whom have been with the plant since its opening in the 1980s.

The new employees would bring Toyota's full-time employment to 6,739, according to state records.

Michelle Krebs, a senior analyst for automotive information service, speculated the project's price tag and employment numbers indicate it's likely to be the expansion of production of a model that Toyota is already producing. She said it could also be a variant or model change of an existing vehicle, such as the Camry, rather than "building a brand-new model from the ground up," she said.

"They redo a vehicle every four years," she said. "It could be a redesign of the Camry, and they're expecting more production. It could be something like that."

Krebs also pointed to the possibility of Toyota building a vehicle from its luxury Lexus line in Georgetown. "There has long been talk about building a Lexus vehicle in the United States," she said.

"That has always been mentioned as a possibility."

Almost all Lexus models are produced in Japan; the RX sport-utility vehicle is also being manufactured in Canada.

She said such an action by Toyota would follow moves by other automakers to build luxury vehicles in the United States.

"Toyota has been saying for some time that it's going to produce more vehicles and more parts in the United States," she said.

The state tax incentives offered to Toyota are part of the Kentucky Jobs Retention Act program, which was initially designed to convince Ford to keep production at its Louisville plants. The program was modified last year to apply to other automakers and certain other facilities.

As part of the program, previous incentives approved for Toyota would be consolidated into this project.

"The beauty of this particular incentive program is it allows a company to have the flexibility for future growth," said Mandy Lambert, spokeswoman for the state Cabinet for Economic Development. "So if, for instance, a company has a project that is approved under this incentive program and then in the future additional investments were to be made, they can be rolled into the agreement and renegotiated."

Key events in Toyota's history in Georgetown

December 1985: Toyota announces Kentucky will be the location of its first wholly owned U.S. automotive manufacturing facility. The company already operated a plant as a joint venture with General Motors in California.

May 1986: Ground is broken.

November 1987: Power-train plant is announced.

May 1988: A ceremony celebrates the first car produced, a 1989 model of the second-generation Camry.

July 1988: Volume production begins.

June 1991: Construction begins on the plant's second assembly line.

January 1992: Toyota announces expansion of power train operations to produce V6 engines.

October 1993: The plant produces its millionth Camry.

March 1994: Production begins on the plant's second assembly line.

August 1994: Start of V6 engine production.

September 1994: Start of first-generation Avalon production.

September 1996: 2 millionth vehicle produced and start of fourth-generation Camry production.

October 1996: Toyota expands its presence in Kentucky by establishing its North American manufacturing headquarters in Erlanger.

August 1997: Start of Sienna minivan production.

September 1999: Start of second-generation Avalon production.

July 2001: Start of fifth-generation Camry production.

July 2002: The plant produces Toyota's 10 millionth North American vehicle.

December 2002: Production of the Sienna is transferred to a Princeton, Ind., plant.

July 2003: Start of second-generation Solara production, transferred to Georgetown from Ontario.

February 2004: Start of Solara convertible production.

December 2004: Start of third-generation Avalon production.

May 2005: Toyota announces the plant will build a Camry Hybrid.

February 2006: Start of sixth-generation Camry production.

November 2008: Start of first-generation Venza production.

August 2009: Plant builds its 8 millionth vehicle.

September 2009: Toyota announces massive recall that includes the Camry and Avalon.

January 2010: Toyota announces it will idle one of its assembly lines in Georgetown as it investigates the cause behind recalls linked to sticking gas pedals.

April 2011: The plant begins idling production at times after a tsunami and earthquake in Japan leads to shortages of parts.

August 2011: Start of seventh-generation Camry production.

May 2012: Executives announce plans to expand engine production at the plant and create 80 jobs.

October 2012: Start of fourth-generation Avalon production.