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Toyota quits: Decision was a “close” call

End of an era: Toyota stared making the Australian Tiara, left, 50 years ago.

Toyota was reluctant to leave country where it first mastered offshore production

11 Feb 2014

“IT WAS close.”

That’s how Toyota Australia’s most senior executive, Max Yasuda, described the board decision that sealed the fate of Toyota’s local manufacturing operations after 50 years.

Mr Yasuda said the decision had been made after a detailed study into viability of making a next-generation Camry later in the decade concluded two weeks ago.

“This has been an extremely difficult decision to make. It is one of the saddest days in our history,” he said.

However, if Mr Yasuda was saddened by the decision, his boss, Toyota Motor Corporation president and chief executive Akio Toyoda, was desolate.

Although it is listed on the share market, Toyota is a family company. Mr Toyoda became president 10 years after his father Shoichiro stepped down in 1999. His great grandfather Sakichi founded the company.

“It is most regretful for Toyota, and for me, personally, simply heartbreaking,” Mr Toyoda told a press conference at the company’s plant at Altona, in Melbourne.

He said Toyota’s Australian operations had a special meaning for him. Australia was the first place that Toyota successfully produced vehicles offshore, although its first contact was 10 years earlier when the Thiess group imported LandCruisers to help build the Snowy Mountains Scheme.

“Since 1963, Australia and Toyota built cars together for 50 years. That represents two thirds of Toyota’s 75 years history,” he said.

He remembered that Eiji Toyoda, his great uncle who is credited with creating modern Toyota after becoming president in 1967, had always taken a keen interest in Australia and had visited several times.

“We started production here with the Tiara in 1963. In fact, Eiji Toyoda, who helped Toyota grow into a global company, was here to witness the line-off ceremony.

“He also laid two foundation stones at this plant. Eiji, who passed away last September, was also president of Toyota, and so I feel a personal connection with Australia.”

It is believed that this affection for Australia was one of the main reasons why Toyota persisted with local production through several downturns, when it would have been much easier to switch to importing.

Mr Toyoda would not comment on the suggestion that the change of attitude towards the car industry by the Abbott Government had prompted the pullout.

“We are grateful for the support the Government provided to us. This decision was not based on single factor, but on a number of factors.”

As recently as late last year, Toyota Australia was pursuing the possibility of investing not only in the next generation Camry but also in a second model, a sport utility vehicle based on the Camry, at a cost of hundreds of millions of dollars.

Mr Yasuda said the company and its local employees had done everything they could to transform the business over the last two years. One of the stated aims was to strip $3800 out of the production cost of a Camry, almost 20 per cent.

“Our employees dedicated themselves wholeheartedly to this transformation journey, which made it all the more difficult to announce this decision to our employees a little earlier.”

Mr Yasuda said the decision was based on a number of factors including the high Australian dollar, the high cost of manufacturing and low economies of scale.

He also said the fact that Australia was one of the most open and fragmented markets in the world played a role, as did “current and future” free trade agreements that greatly increased competitiveness.

He said the company’s focus now would be on the employees, the suppliers and the stakeholders as they help the company through its transition into a sales and distribution company.

“Support services will be available to all our employees and we will do everything that we can to minimise the impact from this decision.

“Most importantly, I would like to pass on our heartfelt gratitude to all our employees, suppliers, and community partners.

“They have all played a pivotal part in making Toyota the great company it is and we appreciate everything they have done.”Parts industry: “It’s a bloody disaster”Toyota quits: PM moots extra infrastructure fundingToyota quits: Akio Toyoda ‘heartbroken’Toyota quits: Australia to lose car-making in 2017Toyota quits: Decision was a “close” call.Toyota quits: Next-gen Camry was “close”Toyota quits: Devastating day for industry, says unionToyota quits: Axe hangs over tech centreToyota quits: Local industry ‘will never be the same’

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