Toyota to restart Miss. auto plant

Published 12:00 am Friday, June 18, 2010

TOKYO (AP) — Toyota will resume construction of a dormant plant in Mississippi, hiring 2,000 workers with the goal of building compact Corolla sedans by the fall of 2011, the Japanese automaker said Thursday.

The plant in Blue Springs, Miss., has been on hold since late 2008, when Toyota suspended construction as the economy fell apart and sales of new cars and trucks collapsed in the U.S.

Toyota Motor Corp. hopes to revive sales in the U.S. and move past a recall crisis that sullied its reputation for safety in its key North American market.

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Still, Toyota’s U.S. sales have been shaky in recent months and propped up with heavy promotions.

The decision to finish the Mississippi plant also comes just weeks after the company sold off a shuttered factory in California that itself used to build Corollas.

‘‘You’re basically moving Corollas from California to Mississippi. It’s a bit of zero-sum game here,’’ said Erich Merkle, president of the consulting company in Grand Rapids, Michigan.

The company has been working to patch up its reputation and win some goodwill in the U.S. following its recalls of more than 8 million vehicles worldwide over reports of unintended acceleration across numerous models.

U.S. authorities slapped Toyota with a record $16.4 million fine for acting too slowly on the recalls. Toyota dealers have so far installed fixes on millions of vehicles, but the automaker still faces more than 200 lawsuits tied to accidents, the resale value of Toyota vehicles and the drop in the company’s stock.

Toyota also drew fire when it closed down a 25-year-old plant in Fremont, Calif., called New United Motor Manufacturing Inc. The unionized plant, also called Nummi, is a former joint venture with General Motors Co. But GM pulled out of the project after it filed for bankruptcy protection last summer, leaving Toyota to deal with the unprofitable facility.

Last month, Toyota announced it found a buyer for the plant: Tesla Motors Inc., the Silicon Valley startup that plans to build high-end electric cars at the site.

Thursday’s announcement that the Mississippi plant will build Corollas — the company’s No. 2 seller in the U.S., behind the Camry — marks yet another shift in plans. Initially, Toyota wanted to build Highlander SUVs there. But in mid 2008, as fuel prices soared above $4 a gallon and hybrid sales soared, Toyota said the plant would produce the Prius instead.

Merkle said the plant should be flexible enough to build both Corollas and Priuses if Toyota chooses to build both models there. The company said the Mississippi site will produce 150,000 Corollas a year.

Toyota sales are up 10.5 percent in the U.S. so far this year, according to Autodata Corp. By contrast, industrywide sales are up 17.2 percent. After its recalls, the company announced a slate of generous incentives designed to revive sales, including zero-percent financing across most models and two years of free maintenance. The promotions sent Toyota sales soaring in March and April, but sales last month lagged the industry.

The company returned to profitability for the fiscal year ending March 31 after racking up the worst loss in its history the previous year.