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4 Aug, 2017 17:31

Toyota to build $1.6bn US plant, shift some production from Mexico

Toyota to build $1.6bn US plant, shift some production from Mexico

A new Toyota assembly plant will provide 4,000 new jobs as part of a $10 billion investment in the US over the next five years, according to the Japanese automaker.

Toyota purchased a 5 percent stake in Mazda as it announced the plan and said it hoped the first vehicles would roll off the production lines in 2021.

The location of the factory, which will make the Corolla model, has not been decided but is likely to lead to a bidding war among states seeking to spur economic development, according to USA Today.

President Trump swiftly heralded the move.

"A great investment in American manufacturing!" he tweeted Friday morning.

Toyota spokesman Scott Vazin said the company would also continue to make the Corolla at its Mississippi manufacturing plant, with no changes planned there.

Toyota said it would make the Corolla sedan at the factory instead of Mexico as previously intended.

Trump has previously been critical of the Japanese manufacturer’s plans. Just prior to taking office, he took to Twitter to threaten Toyota with a “big border tax” if the company built a factory in Mexico.

Akio Toyoda, chief executive of Toyota, said in January the carmaker would invest $10 billion in the United States over the next five years. The investment will include the construction of new headquarters in Texas and a revamped manufacturing facility in Kentucky.

The partnership between Toyota and Mazda will lead to collaboration on development of electric vehicles and self-driving car technology, according to the New York Times. With the Prius and other hybrids, Toyota has dominated the market for lower-emission vehicles for years but is behind on fully battery-powered car development. Mazda is known for making powerful and fuel-efficient internal combustion engines but it lacks its own electric alternatives.

Toyota acknowledges it has been falling behind in research and development and is being challenged by innovation coming from Silicon Valley.

“In the future, mobility won’t belong only to carmakers,” Toyoda said in a news conference announcing the Mazda stake, noting that Silicon Valley was looking to disrupt the auto industry with new design, manufacturing and retail distribution.

“Totally new players like Google and Amazon are right before our eyes,” Toyoda said. “We need to cooperate and compete."

Toyota said Friday that it would maintain investment and hiring plans at its Mexico plant, but it will locate additional production of the Tacoma mid-size pickup truck at the factory instead of the Corolla, which had been set to move there from an operation in Ontario, Canada.

Taken together, the plans are likely to be trumpeted as a victory for Trump's push to manufacture more locally-sold vehicles in the US, even if it had no impact on the decision.