Section 3. Local Production Starts in North America
Item 4. Plant Operations Establish Local Roots
Efforts made to raise local procurement rates
At TMM, as efforts toward mass production progressed, so did those for another challenge-setting up Toyota's first full-fledged overseas powertrain plant. Local production of engines, axles, and other parts was essential in order to achieve the target local procurement rate of about 75 percent, and in November 1987, TMC announced the construction of a powertrain plant.
Toyota engines were already produced in Australia, Indonesia, and other countries, but annual production volume was only several tens of thousands of units. Establishing a full-scale engine production plant would not only require massive investment for raw material (casting and forging) and machining, there were many technical issues to overcome such as securing materials. It was decided to install transfer machines with high production capacity for machining at TMM and to set annual production at more than 200,000 units based on considerations of profitability and efficiency. This scale would be sufficient to cover annual vehicle production of 200,000 units, and any amount that was produced over what was necessary would be exported to Japan. Thus, as a trade issue solution, this measure was also intended to address TMC's need to import more overseas parts to Japan.
Construction of TMM's powertrain plant began in April 1988. Starting with engine and axle assembly, the effort turned into a long-term project to establish integrated production and led to local machining by the spring of 1992. By sending personnel to the Kamigo Plant, where the same engine was produced, and putting greater efforts into human resources development, TMM was able to hold a ceremony marking the start-up of the first locally assembled engine in November 1989. Installation and process development of the machining line began in the autumn of 1990 and was completed in March 1992, right on schedule. With the start of operations at the powertrain plant, the local procurement rate of the Camry manufactured by TMM rose to 75 percent in 1991.