DETROIT — Toyota will likely announce a site for a No. 7 assembly plant in North America by the end of this year and begin a site-search for a No. 8 plant soon thereafter, according to senior company executives in a report by the Wall Street Journal on February 25. Toyota earlier this month officially opened a plant in Mexico that will make small pickups and truck beds, and is gearing up to complete a big new factory in Texas that will start next year building a new line of large pickups aimed at the heart of the American market. Currently, Toyota has five North American final assembly plants in operation, with a sixth one under construction in San Antonio, Texas. By 2006, Toyota is expected to have capacity to manufacture more than 1.6 million vehicles a year in North America. Toyota's five current factories in the U.S. employ approximately 22,230 people. The Texas plant, which is still under construction, is expected to eventually employ 2,000. The Toyota executives said its No. 7 and No. 8 plants are likely to be picked from locations the company considered in the recent site search that zeroed in on San Antonio for production of full-size Toyota Tundra pickup trucks. Sites examined in that search included locations in northern Mississippi, western Arkansas, an area near Memphis, and the Canadian province of Ontario, they said. Toyota executives said the No. 7 plant may be devoted to production of small cars -- most likely the Scion tC sports coupe and others from Toyota's new youth-oriented brand, as well as the compact Toyota Rav4 car-SUV crossover. One executive noted, however, a definitive direction hasn't emerged on the question of what models to produce at the new plant. It wasn't immediately clear what the No. 8 plant would produce. Dennis Cuneo, a senior Toyota executive who is often involved in a manufacturing site selection in North America, confirmed the search is under way for a site to build a No. 7 assembly plant but he declined to elaborate. "If we continue to grow in North America, we will have to add capacity to meet the demand," he said. "We haven't made any decisions on the timing or place of the capacity expansions." Toyota Chairman Hiroshi Okuda has argued that a continued population growth in the U.S. through 2030, thanks largely to a strong pace of immigration, would most likely keep American's consumers relatively young and demand for vehicles vibrant. The planned expansion and site-search for a No. 8 North American plant will likely come in addition to separate moves to boost manufacturing capacity at its existing U.S. factories to produce heavy-duty pickup trucks in Texas and gasoline-electric hybrid vehicles possibly in Kentucky and California. Toyota's Cho said at the Detroit auto show last month he would make an announcement by June where the company plans to produce hybrids. Cuneo, who is based in New York, said Toyota weighs a wide range of factors in picking a manufacturing site. To qualify for a Toyota manufacturing plant, a successful site has to have good access to major freeways and a "good size" airport, he said. It also must be served by two railroads and be away from residential areas and rival plants. The company also considers factors like an area's cultural attitude toward the Japanese and "political factors," Cuneo said.

Originally posted on Fleet Financials