In 2009, a great recession hit, and preferences in products took major shifts. This included major changes in car likings. Different aspects became priorities. Efficiencies became musts. Toyota responded by opening a billion dollar plan to create a new manufacturing in Mexico City. The new facility is part of the Toyota New Global Architecture (TNGA) initiative. TNGA accommodates the new automotive industry trends by making vehicle design lighter and more flexible. Factories will be smaller and more readily able to accommodate product trend changes and overall, better equipped to maintain Toyota as a leader.
The development in Mexico City will be a next-generation Corolla factory by 2019 and will significantly impact current structures in design, supply chain, materials, etc. Not only has Toyota never established footing in Mexico, but the movement veers drastically from Toyota’s usual course.
At the surface, Toyota’s new initiative affects consumers. Cars will be different. But the moving pieces around consumption and number of people to expect change is all but infinite. A huge change to come is with suppliers. For the last two to three years, conversations have centered on collaboration with suppliers and focused on how to best accommodate one another’s new needs. It is reportedly imperative to Toyota that its relationships with North American suppliers stay in perfect standing.
Although the new TNGA Corolla is set to be built in Mexico City, there is a new TNGA style Camry on its way, as well. The Camry has an anticipated launch year of 2017, and will be produced in the Georgetown, Ky. Plant. So Toyota will see all the kinks of the TNGA model here in the U.S. before rolling out the same processes in Mexico. This significantly lowers the risk at hand in Mexico City, and will help lay the foundation for continued, flawless relations with existing suppliers.
So what’s to be expected of the new TNGA models?
One of the biggest changes to be observed will be weight. The TNGA facilities will promote manufacturing via lighter, more compact materials. This is a direct response to consumer consumption patterns and auto preferences. Customers want light cars with greater fuel efficiency and significantly improved visibility. As customers want to see the less is more mentality in their vehicles, Toyota wants to show its commitment to the mentality in the TNGA plants, too. The new manufacturing facility will use less raw material, less real estate, less energy and less investment.
Toyota is working to mend these shifts with suppliers, as well. In order for TNGA to evolve as planned, everybody has to be on the same page. Suppliers are now tasked with finding new methodologies for matching previous outputs with the TNGA mission and style. Really, it’s an opportunity for suppliers to learn from the auto leader and make moves into the future with a guide who in essence, is footing the bill for change.
Suppliers have been given free range and are encouraged to creatively come up with whatever answers they can for TNGA supply chain. Some changes we know TNGA will bring:
- Facility floor space reduced by 40 percent (compared to 2008)
- Investment reduced by 40 percent (compared to 2008)
- CO2 emission reduced by 52 percent (North America)
- Logistic costs will hopefully lower with the analysis or parts production. Some will be produced on-site; some off-site.
- Shifts in supply chain logistics. Parts produced on-site in Mexico City will obviously change what suppliers are used to.
- Corolla production discontinued at Cambridge, Ontario.
- Supplier standings will likely shift.
Change is going to require adaptability from suppliers. Methodologies are anticipated, of course, but now management and task force will be in the air and suppliers are expected to act on their feet, effectively.
The change will not be the only constant, though. In fact, some things are set to stay the same, such as the just-in-time philosophy.Of course, the pace of just-in-time is expected to increase.
Since by now you’ve heard the word change plenty enough, let’s look at a different word: new. Much of the Mexico City development will also bring new dynamics, like new partners. Instead of utilizing the plant in Central Mexico like a remote patch, Toyota plans to engage the already existing supplier community. Many suppliers in the area have strong, long-standing reputations with other brands and until now, have not had a reason to work with Toyota.
Some existing suppliers will be asked to set up new facilities closer to Central Mexico, as well. A big initiative will be to source materials locally as much as possible. For some materials, like steel and sheet aluminum, it won’t be an option. But if the product is available locally, Toyota is encouraging suppliers to source it there. Again, a move into Mexico (or closer to Mexico) helps make this a reality. Sourcing locally is no walk in the part. It must be meticulously thought through. Toyota plans to iron out the kinks as the new plant gets set up and the necessities for the next generation Corolla become clear.
One note that’s been made special concerns the subtiers of the supply chain. So far, there’s no solution readily available for local subtiers. Suppliers and automakers have certain experience expectations and finding them at the local level will be a process. It’s not too say that it won’t be possible or that the challenge is too great, but it’s a piece of the puzzle to which Toyota will give meticulous attention. This need further promotes Toyota’s initiative to develop a local supplier base.
The TNGA plant could be the first of many, and it will light the way for efficient, future-fitting adaptations to all Toyota manufacturing sites and supplier partners worldwide.
One thing is for sure. No matter what happens, Discount Parts Monster is committed to being a go-to source for Toyota parts. To stay up to date on the Mexico City plant, news about the Toyota Camry and Corolla, check back in with us. As always, if you need any consultation or auto parts, we are here for you!