43THEBOTTOMLINE RapidlychangingtasteshaveledToyota
toinvest$238milliontoaddtheassemblyofmorepopular
modelstoitsKentuckyplant.◼SOLUTIONS BloombergBusinessweek October 7 , 2019
churning outmorepopularcrossovers,SUVs,andtrucks.
When thefactoryopenedin1988—thefirstwholly
owned Toyotaplantin theU.S.—itwasdesignedtoassem-
blehundredsofthousandsofmass-marketvehicles,such
asthemidsizeCamry.For 27 yearsthatwasToyota’sbest-
selling carinAmerica.TheGeorgetownplant’soutput
peaked at514,590vehiclesin 2007,justbeforetheGreat
Recession.Americans’appetiteforsedansdidn’tkeep
pace with arecoveryin autodemandoverthepastdecade.
ToyotaboostedannualcapacityatitsKentuckyfacil-
ity to 550,000vehicleswiththeadditionofa thirdassem-
bly line in 2015fora Lexusluxurysedanthatsharesparts
withtheCamry.Butit’sonlyclearedthehalf-millionpro-
ductionmarkoncesincethen—itmade500,766vehi-
cles in 2016.In2018,Georgetown’sproductiontotaled
430,224 cars,a signofrapidlychangingautotastes.Now,
says Jim Jordan,anengineeringmanagerin chargeofthe
plant’s RAV4project,thefocusis onbringingtheplantup
tocapacity.“That’sa pointofprideforus,”hesays.
That’smeantinvesting$238millionin Kentuckytoadd
the RAV4hybridaswellasa hybridversionoftheLexus
ESsedan,bringingToyota’stotalinvestmentin theplant
to$7billionsinceit wasfirstannouncedin 1985.
Braggingrightsalsoarehardertocomebythanin
years past,whenGeorgetownhadfewerrivalsinsideand
outside thecompanyandit rackedupa stringofquality
awards. Thefactorytooktopplaceforfewestdefectsin a
J.D. Powerrankingin 2016foritsnewLexusassemblyline.
But it earnedthehighestawardonlytwiceoverthepast
10 years, comparedwithfourtimesin itsfirstdecadepro-
ducing theCamry.TheJ.D.Powercitations,basedoncon-
sumer feedbackonnew-carpurchases,areanimportant
barometerofplantefficiencyin theindustryandofvehicle
quality, whichcanaffectdemandandpricing.“Inthepast
it would winfairlyfrequently,buttodayit’smuchtougher,”
says DaveSargent,vicepresidentofJ.D.Power’sglobal
automotivepractice.
Georgetown’sebbingfortuneshaveincreasedpres-
suretocutcostsandboostefficiency.In 2017,Elkington’s
predecessor,WilJames,warnedemployeesthattheplant
faced an uncertainfutureif it didn’tdomoretoreduce
costs. Hesaidit waslessexpensivetobuilda Camryin
Japan andshipit toKentuckythanit wastomanufacture
one locally.“I’mnotsharingthistoscareyoubuttoheighten
your awarenessofthecurrentriskwenowhave,”James
said, urgingworkerstomakeasmuchprogressoncost
reduction andefficiencyastheyhadin safetyandquality.
His messagewasclear:If theplantdoesn’tstaycom-
petitive withpeers,it couldputjobsatriskin Georgetown.
That resonated deeply with the 8,000 full-time
workers, noneofwhomhaveeverbeenlaidoff—even
when Toyotacompletelystoppedproductionforsev-
eral weeksduringtheworstoftherecession.Butthe
plant’s 1,600temporary workers don’t have the same jobsecurityandbenefits,andcriticssayToyotahasused
theselower-paid employees as a buffer and allege it has
underpaid some of them for years.
Toyota has denied the claims and says it always
complies with legal requirements. But it agreed to set-
tle a class-action suit filed last year by temporary work-
ers against Toyota Motor Manufacturing Kentucky for
alleged pay violations over a six-year period starting in
2013, according to public filings. Terms of the deal, which
a federal court preliminarily approved in August, are con-
fidential. “We elected to make an early resolution and end
the costly litigation,” a plant spokesman said in a state-
ment. “Toyota values its team members and offers fair pay
and benefits in accordance with the law.”
Elkington was made plant chief after a three-year
assignment at headquarters in Toyota City, Japan, during
which she oversaw global manufacturing operations and
toured more than 200 Toyota facilities in every region out-
side the U.S. The Georgetown posting is the result of an
effort by the company to nurture future leaders who are
well-versed in Toyota production and empowered to run
their plants more autonomously. Overseas plants are no
longer required to use blueprints from Toyota City and are
adopting smart-data-led production practices sometimes
more advanced than those in Japanese plants.
“Headquarters doesn’t interfere in the day to day
unless they need to,” says Steve St. Angelo, a former
Georgetown plant head who recently retired after head-
ing Toyota’s Latin America operations. “Local plants are
more on their own now.”
Kentucky is installing advanced flaw-detecting cameras,
self-driving supply carts, and systems for sequencing com-
ponent delivery so fewer parts need to be stored on the
factory floor. That will require fewer workers doing man-
ual tasks and will boost efficiency in line with newer fac-
tories that integrate parts production on-site. Toyota also
is reconfiguring equipment to match its most flexible fac-
tories in Japan, which make a half-dozen different models
on the same assembly line. “One of the big things that is
changing is the plant layout,” says Elkington, who’s creat-
ing space by eliminating a large meeting area and moving
training rooms to an administrative area of the plant.
A gasoline-powered RAV4 in addition to the newly
arrived hybrid might also be in Georgetown’s future as
one of several possible new models, she says, something
which could lift output closer to the plant’s capacity.
Raising annual production above half a million vehicles
looms large as a make-or-break goal for the plant head. “I
think we can,” Elkington says. “When we’ll get back there,
I’m not sure.” �Chester Dawson