By David Boldt
"Toyota trucks" not only rolls off the tongue; in San Antonio they also roll off an assembly line. On the city's sparsely populated south side Toyota recently built its 1 millionth vehicle, an impressive milestone for a facility where production began October 2006 — just seven years ago. Despite that numeric success, some automotive industry experts regard the plant and one of its two products — the full-size Tundra pickup truck — as underachievers. By adding production of the midsize Tacoma in 2010, Toyota certainly bolstered the plant's numbers and, by extension, its business model. However, questions persist regarding Toyota's original strategy and what Toyota can do to bolster the Tundra (and its plant) going forward.
Texas is rarely regarded as a go-to state for vehicle assembly. Ford operated assembly operations in Dallas — beginning in 1914 — for almost 60 years but left "Big D" before President Richard Nixon left Washington, D.C. And General Motors has assembled sedans, pickups and — most recently — large SUVs in the Dallas/Fort Worth suburb of Arlington since 1954. So there was precedent for Toyota's decision to locate in San Antonio.
It was the Texas appetite for trucks, however, that closed the Toyota deal. Ford sells as many F-Series pickups within Texas during a calendar year as Honda sells Acuras within the Lower 48. And with an economy only slowed — not rattled — by the recent economic downturn, the market's appetite for pickups is not only ongoing, but growing.
The seeds for the San Antonio plant plant began with conversations between former Mayor Henry Cisneros and at least one individual from San Antonio's Japanese sister city, Kumamoto, Japan, who had a family member working for Toyota. With a very real need for jobs in San Antonio outside tourism and agriculture, the Cisneros discussions led to ongoing talks between San Antonio, the state of Texas and Toyota. And that led to a groundbreaking for the plant in the fall of 2003, a Texas-sized job fair (with roughly 100,000 applicants pursuing 2,000 initial jobs) in 2005 and the first redesigned Tundra rolling off the line in the fall of 2006. Students of recent history will remember that Toyota experienced turbulent headwinds — the U.S. economic crash, Japanese earthquake and tsunami, and continued economic recession — almost from the beginning.
It's one thing to insert your well-considered Camry into the veritable swamp of ill-considered, noncompetitive Chevys and Fords. It's quite another to tackle the pickup side of the domestic equation, where the Ford F-Series is a perennial best-seller and GM — with Chevrolet's Silverado and GMC's Sierra — follows at a very close second. If the domestic industry, until very recently, has been lackluster in its development of compact and midsize cars, it's been the exact opposite in the engineering, development and marketing of full-size pickups.
Into that fray came Toyota's first full-size Tundra. You couldn't fault the execution: a fusion of domestic brawn blended with Toyota design themes. An almost Lexus-like level of refinement, from both V-6 and V-8 variants, was an added bonus. But with no subsequent heavy-duty variant, and an aversion on the part of Toyota marketing executives to match Ford and GM dollar for dollar on the discount and incentive fronts, Tundra volumes were almost condemned to stay closer to Ram than Ford's F-Series.
To say the timing of the San Antonio plant was unfortunate is an understatement. Just as the finishing touches were applied, the recession hit in full force and sales of full-size pickups fell off a cliff. Rather than lay off workers, though, Toyota paid its employees to work in shifts and the need for line workers shrank. Conveniently, in the absence of greater demand came the very real need to assemble Toyota's highly regarded Tacoma — which essentially owns the midsized market with more than 60 percent of that market — somewhere other than its plant in Fremont, Calif. That facility, which was a cooperative agreement with GM (which had gone bankrupt), was shed during the U.S.-mandated restructuring of the General. The two shifts operating in San Antonio could comfortably accommodate the Tacoma's production volumes, but some industry naysayers suspected full-size and midsize trucks could not coexist on the same production line. It had never been done before. Nevertheless, assembly of the Tacoma began in San Antonio in June 2010.
With the hint of a recovering economy and San Antonio's two shifts running at (or above) full capacity, the need for a full redesign of the Tundra was deemed unnecessary. A mix of reduced expectations was confirmed with the debut of the 2013 Tundra at the Chicago Auto Show in February 2012. While GM was publicly discussing plans for a ground-up redesign of its full-size Silverado and Sierra half-tons, and Chrysler was finishing an all-new Ram platform with recently updated sheet metal, Toyota did a major/minor refresh on the 2014 Tundra's existing chassis and drivetrain. There was nothing wrong with the existing platform, but in the intensely competitive landscape of full-size pickup trucks, Toyota's strategy could be likened to not bringing enough weapons to an important and life-threatening Thunderdome cage fight.
During a recent tour of Toyota's San Antonio facility no one seemed overly concerned by what many see as a strategic misstep. With nearly 3,000 of its own employees supported by another 3,000 working for 21 outside vendors, the plant's one line and two shifts produce a truck every 62 seconds. And that production runs the gamut, from a fleet-specific Tacoma regular cab to the latest upmarket derivative of the Tundra, dubbed the 1794 Edition. Demand for both the Tacoma and Tundra currently exceeds supply, and inventories on dealer lots are running short (in many cases just two weeks supply) of what dealers typically regard as optimal.
Despite the ongoing skepticism leveled at both San Antonio and its principal product, some in the industry believe Toyota to be on the correct truck track. One is analyst Jeff Schuster, senior vice president of forecasting at LMC Automotive, an auto industry prognosticator. Schuster suggests looking at the numbers.
"Toyota certainly is well behind the dominant domestic brands in the large truck segment," he said. "With the launch of San Antonio and the Tundra they have been able to take share of the segment from under 2 percent to 6 percent today. Toyota also builds the Tacoma at the plant … [its] share went from 20 percent of the segment 10 years ago to more than 50 percent today. Their primary focus remains on the car side of the market and with green technology, but Toyota has successfully used San Antonio to build competitive trucks and broaden their appeal in a very important market for them."
Chris Nielsen, president of Toyota Motor Manufacturing Texas, and the plant's senior official, concurs. Connected to the San Antonio plant's planning, development and construction since 2003, Nielsen has been serving in its leadership role since 2009. Appropriately proud of the plant's assembly of two different trucks serving two distinct truck markets, Nielsen describes Toyota's internal measurements and barometers as secondary to Toyota's ultimate measure of success: customer satisfaction.
"At the end of the day, our success is based on how the end user perceives our truck," Nielsen said in a phone interview. "And in any number of surveys, both Tundra and Tacoma are at the top of their respective segments. … Texas has proven to be a great place to build great trucks."
In the end, regardless of what analysts, auto writers and amateur pundits contend, Toyota will pursue its goals in the steady, straightforward manner with which it approaches all opportunities. Not too long ago Toyota had no share of the full-size pickup market and but a small share of the small truck market. When observing Toyota, a good historian constitutes a good futurist. And who can argue with a truckload of optimism?