Toyota to Put Brakes on U.S. Factory Construction, Report Says

Top executives at Toyota Motor Corp. (TM) are concerned the automaker has built too many factories in the United States and are urging it to hit the brakes on new plant building, the Wall Street Journal reported on Wednesday on its Web site.

Former Toyota Chairman Hiroshi Okuda, the architect of Toyota's aggressive expansion outside Japan, and Shoichiro Toyoda, a senior member of Toyota's founding family, have expressed concerns that U.S. sales may not keep pace with the company's capacity increases, the Journal said.

Both men sit on the automaker's board.

A weak yen, meanwhile, is making it advantageous for Toyota to expand manufacturing capacity and export cars from Japan.

The strategic shift means new U.S. factories are unlikely anytime soon, according to the report.

Tomomi Imai, a Toyota spokesman in Tokyo, declined comment on the report, saying only that the auto maker had made no decisions on new U.S. plants as it had announced a new factory in Mississippi earlier this year.

The Journal said as a result of its strategy shift, Toyota scaled back plans for the $1.3 billion Mississippi assembly plant.

The plant was originally to have an annual production capacity of 200,000 units and open in 2009, it said. Instead the company announced it would have a capacity of 150,000 and open in 2010.

If U.S. demand for Toyota vehicles continues to climb, the company would likely respond by adding second assembly lines at existing plants rather than building new ones, it said.

It would also reduce U.S. labour costs by revamping its pay policies, aligning hourly wages for new hires more closely with prevailing manufacturing pay in regions where each plant is located, the paper said.