Green light for $300 million Toyota engine plant

TOYOTA has dispelled any uncertainty surrounding the future of its Altona operations by committing more than $300 million to build a new four-cylinder engine plant.

The new plant will be a world-scale operation making 110,000 engines a year, more than half of which will be exported, adding another string to Toyota’s Australian exports, which have taken a beating recently.

The plant will replace the oldest plant on the sprawling Altona site and demonstrates Toyota’s confidence in the Altona operations.

Sources suggested the new investment was almost derailed twice, first by the global financial crisis and, subsequently, at the height of Toyota’s global recall dramas.

The new plant will make the new-generation 2.5 litre four to be used in regular Camry and a slightly modified version with Atkinson cycle timing for use in the Hybrid Camry.

It will be capable of meeting Euro 5/6 emission standards.

The plant will produce around 110,000 engines a year and – in a significant development – will supply engines for Camrys made in Thailand.

It is believed the exports of engines to Thailand will help better balance Toyota’s import/export ledger between the two markets.

Left: Toyota Camry Hybrid. Below: Then prime minister Kevin Rudd and industry minister Kim Carr (second from left) at the Camry Hybrid line-off ceremony at Altona last year.

The company aims to produce vehicles and parts in its major markets but the trade balance between Thailand and Australia has been well out of kilter in recent years as hundreds of thousands of HiLux utes and other vehicles have flooded into Australia from Thailand.

The engine exports – high-value parts able to carry the transport costs involved – will help redress this imbalance a little.

The new plant will be one of six around the world that make this engine and will make Toyota Australia a significant part of Toyota’s global supply chain, further securing the future of the Altona operations, which have taken some big hits recently.

First, sales of large and medium cars (Aurion and Camry) were hurt by the global oil price spike of 2007-08 and then the global financial crisis and heavy dumping by Japanese and American manufacturers saw Toyota Australia’s share of its Middle East markets shrink dramatically.

The strong Australian dollar, a result of the minerals boom, has also had an adverse effect on exports as it makes them more expensive.

Toyota Australia president and CEO Mr Max Yasuda welcomed the decision and praised the efforts of Toyota Australia's employees, unions and suppliers in ensuring the project proceeded.

"Securing the investment to produce the next generation engine is a huge vote of confidence for our local manufacturing plant and our employees, who have worked tirelessly to improve operational performance to demonstrate our ability to compete with Asia Pacific counterparts," he said.

"Toyota operations around the world are constantly vying for new investment to ensure local manufacturing operations can participate in the global car making industry." Toyota Australia acknowledged the strong desire of both the federal and state governments to see new, more environmentally friendly technologies introduced to Australia.

"The support provided by the federal government's Green Car Innovation Fund and the Victorian Government was a major factor in this project proceeding," he said.

"A partnership between local car makers, the government and suppliers is fundamental for ensuring we evolve our industry to deal with the challenges of a carbon constrained world." Federal innovation, industry, science and research minister Kim Carr said the decision secured the 4500 jobs at Toyota and there would be huge knock-on effect for the components industry.

Mr Carr said the company estimated that for every job inside its plant, seven jobs outside the plant were reliant on Toyota business.

The government chipped in $63 million to help with the construction plant, with the money coming out of the Green Car Industry Innovation Fund.

The new engine plant fulfills a wish by Toyota Australia president Max Yasuda to continue with the next-generation Hybrid Camry.

In a recent exclusive interview with GoAuto, he said he hoped that Toyota Australia would be able to work on localising the Hybrid Camry.

When asked if he had a local content target in mind, he said: “Fifty per cent would be good.” The new engine will represent about half of the hybrid drivetrain, leaving the electric motors and batteries to be imported.