Toyota Focuses on Application of Aluminum Trump Revises NATFA

According to Jim Lentz, head of Toyota's North American operations, the company is exploring the use of aluminum bodies. If the Trump administration applies trade remedies to steel and aluminum manufacturers, it will reduce cost growth. risk.

Lenz said that Toyota currently considers it necessary to use lighter weight aluminium instead of steel bodies in order to meet the tightened fuel economy standards. Only by adjusting the powertrain, it is impossible to meet the fuel economy standards. He disclosed to reporters on May 4, 2017 that the company spent US$154 million to expand its North American technology R&D center in the southern part of Ann Arbor, Michigan, USA.

Robert Young, vice president of Toyota responsible for procurement and supplier engineering design, said in a press conference that Toyota's next big exterior parts such as the Toyota engine hood will be replaced with aluminum. Replacement of such locations is relatively easy. The action is to make aluminum platform components.

He explained that in determining the choice of aluminum and steel, it is important to consider factors such as cost, reliability, paint compatibility, strength and quality.

Trump's Executive Order

This year, six U.S. steelmakers headed by US Steel Corp. filed three trade complaints with the Commerce Department due to overcapacity. U.S. President Trump recently ordered that according to 1962 Article 232 of the Annual Trade Development Law begins investigations to determine whether imported steel products pose a threat to US steel manufacturers and national security.

They said that due to low profit margins, U.S. steel and aluminum manufacturers are reluctant to invest in higher-grade metal products, but they have to maintain a large number of experienced operators. According to the U.S. Department of Commerce, eight US smelters have closed or reduced production since 2015.

A study shows that foreign industry competitors have seriously hurt the steel industry in the United States, or it will prompt Trump to use punitive tariffs or other means to “correct” the “imbalance” between trades.

Toyota is not affected by the imported steel and aluminum materials. If tariffs are imposed, it will impose undue pressure on the overall market price, forcing major car makers and steel mills to adjust the purchase price of existing contracts. Of the steel purchased by Toyota, 95% comes from North America, and most of it comes from the United States because imported steel is not a vehicle-grade material. Aluminium is also purchased directly from the local market, and some applications may be recycled back to imported alloys.

Apply for a duty exemption

Toyota's development of new high-end steel in Japan may be affected by tariffs, but it is confident that it can obtain a tariff exemption.

He said: “A new generation of steel is being developed by Toyota Motor Corporation. Steels of the same grade cannot be purchased in the North American market for the time being. In this case, if tariffs are still to be imposed, we will apply for a tax exemption because the company cannot be in North America. The market gets the same grade of steel."

“But we have anticipated this type of situation and are currently cooperating with its raw material engineering and design department and the North American domestic steel plant so that it can achieve localized production of this grade of steel in the United States in the future.”

The company aims to find and verify qualified steel and aluminum plants as soon as possible in order to start North American production as soon as possible. But even so, there is still a need for a small amount of imported steel to make up for its shortfall. After all, according to the US steel mills, their products meet the relevant standards and they still have to wait for some time.

Mexican Steel

Toyota's steel purchases in Mexico are relatively limited, and this situation may change in the future. Toyota built many new plants in the southern US-Mexico border. The company has a factory in Tijuana, Mexico, and a factory in Guanajuato, Mexico, is under construction. Toyota Corolla will be fitted in the future.

Toyota's construction of a plant in Mexico was pressured by US President Trump. Trump was able to win in the presidential election. To a large extent, Trump advocated "America-first" industrial policy, which aims to promote the development of domestic manufacturing in the United States and reduce business outsourcing. He had threatened to withdraw from the North American Free Trade Agreement, which has prompted many companies to relocate to Mexico. Now he is going to negotiate with the United States, Canada and Mexico. Lenz said that the common interest of all parties is to enhance the competitiveness of North American manufacturing.

Support the modification of the North American Free Trade Agreement (NAFTA)

Lentz said that the NAFTA does need to be revised accordingly, because the content of the agreement has been used for nearly 25 years, and this has reached a consensus in the industry. In general, the agreement has played a positive role for the U.S. economy and consumers.

The White House stated that it intends to modify the original content to ensure that the proportion of vehicles produced in North America will increase. In a Reuters television interview this week, Commerce Secretary Wilbur Ross said that the current NAFTA laws are "totally obsolete" because many terms Currently no longer applicable.

Lentz said that the contents of the entire NAFTA are too complex and difficult to clarify for a time, but they will review some of the contents first. Lentz is optimistic about whether Trump will eventually adopt trade protectionism and said: "I think Trump prefers to listen to different opinions."

Lenz prefers to make Toyota North America a U.S. company. In many respects, the value philosophy is consistent with Trump's executive orders and requires the purchase of U.S. products and employment of U.S. workers. He said: "Perhaps it can be said that Toyota's 60-year performance in the United States can be summarized as buying American goods and using Americans."

However, in the final analysis, a global company in Toyota City, the core of its advocacy is free trade. Lenz stated that the company has 69 manufacturing plants in more than 30 countries around the world.