Section 1. Heightened Presence in the North American Market

Item 4. Advance of Localization

Localization of Management

With the expansion of local production in North America, Toyota worked proactively from the mid-1990s to localize its management, building a framework for the overall management of local entities' operations. In addition, the company bolstered its public relations initiatives in the North American region.

In 1996, Toyota established Toyota Motor Manufacturing, North America, Inc. (TMMNA) in Erlanger, Kentucky, to conduct overall management of North American manufacturing operations. The purpose of the new company was to localize management of all parts of the manufacturing operations that had until that point been controlled from Japan by TMC, including production preparation, procurement, manufacturing, and distribution. A major shift toward North American production and component procurement was taking place. In 1993, the ratio of Toyota cars sold in North America that were manufactured locally reached 45 percent, and 5 billion U.S. dollars' worth of components was procured within the region.

TMMNA was later merged with the research and development division Toyota Technical Center (TTC) in 2006 in a reorganization that created Toyota Motor Engineering and Manufacturing, North America, Inc. (TEMA). The establishment of TEMA strengthened collaboration between functions such as research and development, production preparation, production engineering and procurement, speeding up North American operational decision-making and increasing interaction and communication among production sites and related entities.

Meanwhile, the manufacturing and sales holding company Toyota Motors North America, Inc. (TMA) was established in 1996. TMA subsequently absorbed Toyota Motor Corporate Service of North America, Inc. (TMCS), a survey and research and advertising company, in 2000. In doing so, TMA assumed public relations functions and, with the relocation of TMS's office in Washington, D.C., strengthened its public relations and survey and research functions.

Localization of management began in earnest in the late 1990s with the appointment of local managers to top positions at North American subsidiaries. The first subsidiary outside Japan to be headed by a local manager was the aluminum wheel manufacturer Canadian Autoparts Toyota Inc. (CAPTIN), with the appointment of Gary Smallenburg in 1998. In 2001 Gary Convis took the helm at TMMK, after working at Ford and then as part of the NUMMI startup team.

Localization of management continued in Canada and the United States with the appointment of Ray Tanguay as head of TMMC in 2002, and George Borst as President and CEO of Toyota Motor Credit Corporation in 2004.

Local managers were also appointed to the sales divisions. James Press become president of TMS in 2005, and was subsequently selected as the first American head of TMA in 2006.

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