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Published: Saturday, 12/10/2005

Monroe County in running for Toyota engine plant

BY JULIE M. McKINNON AND MARY-BETH McLAUGHLIN
BLADE BUSINESS WRITERS

Monroe County could be home to a new Toyota Motor Corp. engine plant, at least one industry analyst said, a move that would give the Japanese automaker a presence in the heart of the nation's automotive world and which would give it ready access to a skilled work force.

Toyota, which is expected soon to overtake General Motors Corp. as the top-selling vehicle brand in the United States, is scouting for sites of 400 to 600 acres in North America for an engine factory.

Company officials decline to say where the firm is looking or whether Michigan or Ohio are being seriously considered, but sources told a Detroit newspaper this week that the Wolverine State is a top contender.

Monroe County, just across the Michigan border from Toledo, has available sites and already is home to two foreign-owned engine plants in Dundee. Plus, Toyota is planning a research center near Milan, which is partly inside Monroe County, making the U.S. 23 corridor a possibly prime spot for a new factory.

Such an operation in Michigan would be far from Toyota factories in Missouri and Tennessee that make engine blocks and other parts, not to mention most of the automaker's vehicle assembly plants.

But creating jobs in Michigan as the Japanese car maker takes market share from the Big Three and locating close to established suppliers are smart moves, said Marc Santucci, of ELM International Inc., an East Lansing, Mich., consulting firm.

"From a transportation perspective, it doesn't make the most sense in the world, but from a political perspective, it does," he said. "It makes sense, but it surprises me."

If a Michigan site proves true, it comes as the state is struggling to deal with tens of thousands of layoffs from GM and expected ones from Ford Motor Co., each of which has had vehicle sales decline while Toyota has gained market share.

Michigan has the headquarters of GM, Ford, and DaimlerChrysler AG's U.S. arm, as well as many auto assembly and supplier plants.

A new factory likely would attract skilled applicants whose jobs were lost at GM or Ford.

The Monroe County Industrial Development Corp. has talked with representatives from Michigan Gov. Jennifer Granholm's office about helping to lure a Toyota engine plant, agency President Bill Morris told The Blade.

A Toyota spokesman said the firm is studying whether to open another engine plant in the United States, Canada, or Mexico, but he declined to identify sites being considered.

A spokesman for Ms. Granholm referred questions to the automaker.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said Toyota has concentrated its Michigan efforts on the western part of the state.

Mr. Santucci, the consultant, said Kalamazoo is an area the firm might consider. But Dundee, where Chrysler and two foreign partners this year opened the first of two engine factories, is a likely contender for a Toyota project, he said. So is the Milan area, he added.

Toyota has a dozen North American factories, including engine plants in Alabama, West Virginia, Kentucky, and Ontario, Canada, and is opening a vehicle assembly plant in San Antonio next year and another in Woodstock, Ont., in 2008.

By that year, Toyota will be building 1.81 million vehicles a year in North America but making only 1.44 million engines on the continent, said automaker spokesman Dan Sieger.

"That's the reason we are looking at this as a possibility," he said. However, there is no time line, employee numbers, and other details about the engine or factory, he added.

Governor Granholm has worked hard to establish a relationship with Toyota, which is likely to stay far from Detroit, although not necessarily because of concerns about unions, Mr. Cole said.

Like other foreign firms, Toyota wants both to be the top-paying employer in a region and to have its pick of an educated, experienced work force, Mr. Cole explained. Toyota executives may have turned to Michigan after mostly locating its North American plants in the southern United States and possibly finding one of the two factors - a quality work force - lacking, he said.

"Those are absolutely essential factors in their decision on plants," Mr. Cole said. "They just are very, very concerned about the quality of the work force."

Toledo area and Ohio officials, in contrast, doubt Toyota is considering putting the factory in the Buckeye State.

"This particular project has not been a topic of those conversations," said Bill Teets, a spokesman for the Ohio Department of Development, referring to periodic meetings Gov. Bob Taft has with Toyota leaders.

"If Ohio is in potential competition, they'll come to us and let us know when we're in the running," he said.

Contact Julie M. McKinnon at:

jmckinnon@theblade.com

or 419-724-6087.



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