The latest US built Camry on the line in Georgetown. The automaker has told Kentucky workers Tsutsumi in Japan makes the model more cheaply

The latest US built Camry on the line in Georgetown. The automaker has told Kentucky workers Tsutsumi in Japan makes the model more cheaply

In an unusual move, Toyota has warned workers at its Kentucky plant building the just redesigned, top-selling Camry sedan to cut costs now or face an uncertain future.

According to Bloomberg News, which obtained a copy, the plant's manager told workers in a two and a half minute length video it was cheaper to build the car at Tsutsumi in Japan, ship it to Kentucky and make more money selling that car than one built at the state factory.

"I'm not sharing this to scare you, but to heighten your awareness of the current risk we now have," Wil James, who has managed the plant for more than seven years, said in the video dated this month.

According to Bloomberg, he said Toyota wasn't planning to close the factory and plans 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."

Bloomberg said the video demonstrated the cost-cutting drive spearheaded by Toyota Motor Corporation president Akio Toyoda to fund a record R&D budget from production system savings.

James' message also shows Toyota's willingness to include its US operations in cost-cutting efforts during politically sensitive times after US president Donald Trump pressured Toyota and Japanese rivals to produce locally more of the vehicles they sell in America.

Bloomberg noted that. after Trump attacked Toyota on Twitter in January over its plans to build a factory in Mexico, the company let him take credit for a US$1.33bn spend the company announced for the Kentucky plant in April. Earlier this month, Trump praised Toyota and Mazda's $1.6bn joint car factory planned for a still-undecided US site.

James reportedly said in the video that workers at the Georgetown plant would be hearing more about cost-cutting efforts over the next few weeks.

The investment announced for the factory earlier this year was to implement Toyota New Global Architecture. The Tsutsumi plant, which also makes the Camry, was the company's first factory to implement TNGA which helps explain why it's cheaper to manufacture the car there than in Georgetown, spokesman Rick Hesterberg told Bloomberg.

"If you can make more profit from a Tsutsumi Camry than a Kentucky built one, which plant would you pick to build it?" Kentucky plant chief James said in the video message. He told workers they'll learn more about the cost gap and asked for "a lot more ideas to reach parity."

Bloomberg noted that supporters of the United Auto Workers called Toyota's video an attempt to quell pro-union sentiments at the Kentucky plant, which employs more than 8,000 permanent employees and about 1,500 temporary workers.

"With this message Toyota is trying to make the choice not between joining a union or not, but between voting for a union or having a job," Harley Shaiken, a labour professor at the University of California Berkeley, told Bloomberg.

The report said a workers committee within the Georgetown plant was pressing the UAW to arrange a vote for the union to represent them.

Hesterberg, the Toyota spokesman, described the video message to Bloomberg as routine and said it had no connection with the UAW campaign.

"We're here for the long term," Hesterberg said in an email. "In keeping with a long-term mindset, cost competitiveness is always top of mind."

The ninth generation Camry, 010B, which Kentucky builds, uses the GA-K version of TNGA. Although it is thought of as a North American model, it first went on sale first in Japan during July (as a hybrid) followed soon after by the US, Canada, Mexico, Russia and other markets such as Australia where the eighth generation was the last model built locally. The car itself had its world premiere at the Detroit auto show in January 2017.

Speaking at the 2017 auto show, Bob Carter, TMS USA's senior vice president for automotive operations, said he didn't see the Camry hitting 400,000 sales this year but likely about the same level as 2016 (388,616). That was the first time since 2011 that the US' best selling car didn't reach the 400,000 mark. The Camry's highpoint was 2006, when total deliveries numbered 448,445. 

Georgetown commenced series production of the latest Camry last June. TMMK (Toyota Motor Manufacturing, Kentucky) is Toyota's largest manufacturing plant in its worldwide network with annual capacity of 550,000 vehicles and 600,000 engines.

See also: ANALYSIS - Toyota architectures and future models Part 2