Toyota Signals Shift on Plants

TOKYO—Toyota Motor Corp. has signaled it may relocate unprofitable manufacturing capacity overseas, a possible turning point for its longtime commitment to maintaining its production base in Japan.
Toyota President Akio Toyoda said his company will strive to keep its current manufacturing mix, but may move production capacity due to unfavorable foreign-exchange rates and other factors. "If we are simply unable to make a profit...we may be forced to move our production elsewhere," he said in a statement posted on the company's website on Friday.
Mr. Toyoda also said his company plans to begin implementing a more decentralized management structure globally. That effort to delegate more decisions to regional managers is part of a new corporate strategy to "not use the logic that Toyota has developed for Japan" for its overseas operations.
Mr. Toyoda said this was one of several measures planned as part of an effort that he dubbed "Toyota restart," an initiative by the company to cope with the fallout from a massive recall of a year ago. He designated the date of the "restart" as Feb. 24, a reference to the date that Mr. Toyoda appeared before a U.S. Congressional committee last year to testify about the recall of the company's cars.
The statement came in the form of a New Year's message ahead of the release of a long-term strategic plan in April called "20/20 Vision." It didn't provide details on any locations or specific factories.
Toyota typically has used exports from its factories in Japan to adjust to short-term changes in demand and supply abroad. That has become a more critical function for more of these facilities as the Japanese vehicle market has shrunk year-on-year for the past several years.
Mr. Toyoda's statement indicates this role may no longer be tenable as a result of the yen's rise close to all-time highs.
Japan's leading auto maker also produces all but one of its Lexus luxury vehicle models at its factories in Japan, which has crimped profit growth as the yen has appreciated rapidly over the past year.

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