Spinoff benefits for local suppliers from Toyota announcement
Tuesday, April 30, 2019
The Windsor Star/Dave Waddell
Toyota Canada’s announcement Monday of new vehicle production at its Cambridge site is good news for southwestern Ontario automotive suppliers.
Toyota President Fred Volf confirmed the company had picked its Ontario operations to produce the luxury SUV the Lexus NX and its hybrid version for the North American market. The new vehicles will begin rolling off the line in 2022.
Joining Volf for the announcement were Prime Minister Justin Trudeau and Ontario Health Minister Christine Elliott.
“Besides getting a new plant, this is the next best thing,” said Jonathon Azzopardi, president of the Canadian Association of Mold Makers and the Windsor area’s Laval Tool.
“I’m more excited about this than the FCA announcement of investment in Windsor. This sends the message that they’re going to be around for a long time.”
President of the Automotive Parts Manufacturers Association Flavio Volpe said on average an auto plant will spend $10 to $12 billion per year with 30 per cent of that staying local.
“Today’s announcement should add at least another half-billion per year,” Volpe said.
There will also be new opportunities for regional suppliers because the vehicles being added at Cambridge carry Toyota’s flagship nameplate – Lexus.
The premium-priced crossovers will come loaded with more content than a vehicle priced in the $30,000-$35,000 range such as the RAV4.
“You’re looking at about $15,000 or more content per vehicle,” Volpe said.
After the recent announcements of GM closing its Oshawa plant and FCA Canada eliminating the third shift and 1,500 jobs at its Windsor minivan plant, Toyota’s decision is a welcome reversal of dwindling production numbers in Ontario.
Azzopardi said what’s exciting about this announcement is the nature of the products being added to the plant. The Cambridge site, which also produces the RAV4 and Lexus RX SUVs, is the only Lexus plant outside of Japan.
“Getting a high quality, high value and highly profitable vehicle is a very good thing,” Azzopardi said. “These vehicles represent stability.”
Volpe added Toyota is also sending an important message to the automotive sector in Canada.
“The world’s biggest automaker is committing another luxury model to Ontario,” Volpe said.
“Any OEM plant investment is valuable, but Toyota is number one and Lexus is their number one brand. They’re trusting their two best-selling vehicles to the workforce and suppliers of Ontario.
“If you have Toyota as a customer, as long as you serve them well, you’re going to have business for a long time.”
With the just-in-time concept used in the industry, a lot of the new parts, tools, some machinery and moulds will come from within 200 miles of Cambridge/Woodstock.
One of those companies already serving Toyota’s Ontario and California operations is Windsor-based Radix Inc.
The technology and software firm, which is now a division of Windsor’s AIS Technologies Group, supplies vision inspection systems and its Link2Logic software to Toyota. The software stores and backs up all the systems and information needed to run a plant.
“It’ll put more stress on the supply chain, but good stress,” said Shelley Fellows, co-founder of Radix Inc. and vice-president of communications for AIS.
“Toyota has always paid close attention to quality and, with the Lexus, suppliers will be even more under the microscope to meet stringent standards. It’ll (new business) work its way down to companies like ours to help suppliers and Toyota. This is great news for Ontario.”
As the balance of production in Ontario shifts towards a 50-50 split between U.S. and the Japanese automakers, so does the composition of the supply chain.
With Toyota and Honda producing some of their best-selling vehicles in Ontario, the automotive supply chain is further strengthened by Monday’s announcement that Toyota’s in for the long haul in Canada.
“Balance is the keyword,” Fellows said. “It allows us to diversify our customer base.
“This is a wonderful vote of confidence in Ontario’s supply chain. It’s up to suppliers and the workforce to cooperate to produce world-class vehicles.”