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Kentucky contender for planned Toyota expansion

Roger Alford and Tom Krisher, Associated Press

FRANKFORT, Ky. (AP) -- Toyota is considering expanding in Kentucky to add an unspecified vehicle model that would create 570 full-time permanent jobs, pushing employment at its Georgetown plant past 6,700 workers.

The automaker has scheduled simultaneous news conferences for Friday morning at the Georgetown factory and in New York.

Company spokesman Steve Curtis said that further details of Toyota's investment in Georgetown would be revealed Friday. He would not say if additional models would be built there or if the announcement would include any other Toyota factories.

Speakers at the New York event include Toyota Motor Corp. President Akio Toyoda, the company's top executive, and Jim Lentz, CEO of the North American region.

The company also plans to hold a marketing event Friday night in New York for its Lexus luxury brand, raising the possibility that it plans to transfer production of a Lexus model from Japan to Kentucky.

In an interview with The Associated Press last month, Lentz said Toyota studies sales trends for each particular model series and will add North American factory capacity when necessary.

"If we get to a point where we're forecasting greater demand than there is capacity, depending on what series it might be in, we would raise our hand to build that increased capacity here in North America," he said.

The Lexus ES series fits that description. Sales of the midsize luxury cars, which are offered in conventional and gas-electric hybrid versions, have nearly doubled so far this year compared with 2012. Last year, ES sales rose 37 percent. Toyota sold just over 56,000 ES models in the U.S. last year, about the amount that the addition to the Kentucky plant will be able to produce.

Lentz said Toyota would continue to move production to North America as a hedge against fluctuations in the value of the yen versus the dollar. The company now builds in North America roughly 70 percent of the cars and trucks it sells in the region, he said.

The strong yen had caused Japanese automakers to produce more cars in North America. But recently the yen has weakened against the U.S. dollar, helping Japanese exporters. Lentz said the weaker yen is short term, and Toyota's broader strategy is to build where it sells.

"It's difficult for a manufacturer to know where currency is going to be at any point and time in the future," he said. "So whether the yen is moving up or whether the yen is moving down, we're going to be in a good position in the U.S. because a vast majority of our business is done in dollars. I think what you'll see is even more investment in the U.S."

Kentucky Gov. Steve Beshear is among a long list of dignitaries who have been invited to the Georgetown event Friday, two days after the state approved a tax incentive package for the automaker. Invitees haven't been given specifics about the pending announcement. Beshear spokeswoman Kerri Richardson said the governor was unavailable Thursday morning.

Toyota Motor Manufacturing Kentucky is in the running to produce an unspecified new vehicle model and add 570 permanent full-time workers at its Georgetown plant, according to details the carmaker provided to state officials to qualify for tax incentives.

The Kentucky Economic Development Finance Authority approved $146.5 million in state tax incentives on Wednesday to help with the cost of the proposed $531 million expansion.

"Securing this significant investment at Toyota Motor Manufacturing Kentucky would be a huge economic development victory," said Mandy Lambert, spokeswoman for the Kentucky Economic Development Cabinet. "It would not only bring new jobs and capital investment to the state, but would greatly enhance Kentucky's already strong reputation as a leader in the auto industry."

The Georgetown plant, which already has 6,100 full-time workers, is competing with other Toyota factories for the opportunity to build the new model.

Toyota produces the Camry, Camry Hybrid, Avalon and Venza as well as engines and other vehicle components at the Georgetown plant. The tax incentives would kick in when employment at the plant reaches 6,739.

Rick Hesterberg, spokesman for Toyota Engineering and Manufacturing in Georgetown, declined to provide details about the proposed expansion.

"We continue to look for opportunities to localize production and build where we sell," he said in a statement Wednesday. "However, we have nothing to announce at this time."

According to details of the incentives outlined in government paperwork, Toyota is considering an expansion that would produce an additional 50,000 units per year. The project would involve expanding and modifying existing buildings and would require replacement and refurbishment of equipment. The paperwork says the expansion would generate a total of 750 jobs, including contractor workers, and that average compensation for the new jobs would be $26 an hour.

Kentucky is home to nearly 450 motor vehicle-related facilities, employing nearly 80,000 people.

Besides the Georgetown Toyota plant, Kentucky has two Ford plants in Louisville and a GM plant in Bowling Green where the Corvette is made.


Krisher contributed to this report from Detroit.