Ten months into planning its new plant in Tupelo, Miss., to supply interior parts for Toyota's Highlander sports utility vehicle, Toyota Boshoku America Inc. received word that the carmaker had changed its mind.
Toyota Motor Corp. told TBA it would build the Prius hybrid car in Mississippi, while the Highlander SUV would shift to one of TBA's plants in Princeton, Ind.
Changing production plans for the Tupelo plant was not that difficult of an adjustment for TBA, said Chairman and Chief Executive Officer Kiyoshi Furuta.
Now carmaker Toyota of Toyota, Japan, is trying to determine where to fit its Highlander SUV into its base of plants near TBA's Princeton site, Furuta said at the auto industry's Management Briefing Seminars, held Aug. 11-15 in Traverse City. The carmaker operates wholly owned plants as well as joint venture facilities in Indiana, Kentucky and Tennessee. It also is in the midst of expanding its U.S. headquarters in Erlanger, Ky.
TBA, which is majority owned by Toyota, has a lot of balls in the air right now, Furuta said in an Aug. 11 interview. But that is precisely the complexity and flexibility suppliers must juggle to succeed, especially now that business conditions are tough,
``No one can predict these changes with precision,'' he said. ``The question is who can adapt quickly.''
Furuta calls it the auto industry's version of Darwin's theory of evolution. It is not a question of who is the biggest but who can respond quickly to what customers want, he said.
For TBA, which is still building up its North American base, it is a matter of being able to sell to traditional U.S. carmakers like General Motors Corp. And it is being able to adjust quickly when Toyota decides to build the hybrid Prius, rather than the Highlander SUV, at its car factory in Blue Springs, Miss., near Tupelo.
TBA also has had to balance existing joint venture agreements with Johnson Controls Inc. and Lear Corp. to make interior parts for North American customers, while it competes against those same firms for future business.
The supplier, a subsidiary of Toyota Boshoku Corp. of Kariya City, Japan, has worked to hire engineers for every area of its North American operations, such as designing future products at its research and development center in Novi, Mich.; packaging the wiring in seats and overhead systems; and overseeing the manufacturing flow of seats, door panels, headliners and other parts.
TBA has been expanding its business reach to become a complete interior supplier in the region since 2004. Its more than 80-year history as part of Toyota has given TBA a competitive advantge, by helping the firm get its foot in the door at North American carmakers.
In addition, the automotive supplier is busy seeking contracts for the future, including at a Volkswagen AG factory slated for Chattanooga, Tenn., according to Furuta.
``Because of our short history [in North America] people are not aware of our existence. But we produce 100 percent of Lexus seats, so they say, `OK, their quality is already proven, so how about cost, how about delivery, how about everything else?' '' he said. ``They are very much curious about us.''
Toyota Boshoku Corp. was founded in 1918 in Japan by Sakichi Toyoda, the father of Toyota Motor Corp. founder Kiichiro Toyoda.
Furuta, a former Toyota Motor executive in the U.S., Europe and Japan, said he sees a turnaround for the tough auto industry as it adapts to current market conditions just as it made needed transitions during the oil shocks of the 1970s. Auto suppliers, especially those making parts that are big and bulky to ship, will benefit if they can adapt, he said.
``Today, there is fierce competition to produce the small car. How quickly can we respond and how quickly can [the automakers] change?'' Furuta said.
``If you are really quick and can reduce lead time, then this may be your chance to knock on doors and say, `I can do that.' ''