UK Toyota suppliers fend off rivals

18 January 2001
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18 January 2001

UK suppliers to Toyota, especially those that have adopted the euro, have maintained their profile in the face of stiff competition from continental companies as the car maker gears up for expansion in Burnaston.

"We have been working with suppliers for several months on this and the vast majority will supply us for the three-door Corolla model," said Rob Johnson, general manager of the purchasing division at Toyota Motors Europe Manufacturing.

Toyota announced this month that it will move production of the three-door Corolla from Japan to its UK operations, where the five-door model has been built since 1998.

This decision will raise the company's overall annual UK car production by 30 per cent from 170,000 units to 220,000 - near the plant's capacity.

The split between continental and UK component suppliers remains roughly 50:50 and the UK major suppliers number around 100, Johnson said. "Around 75 per cent of production goes to the continent and we have explained to our suppliers that we operate in a euro environment," he added.

"We have not met a strong reaction from suppliers [against using the euro]."

Toyota began to discuss the switch from sterling to euro invoicing with suppliers last summer. "I would say that from about 2003 all suppliers will be invoicing in euros," Johnson predicted.

Toyota's expansion plan is good news for first, second and third-tier suppliers, according to Edward Roberts, chairman and chief executive of Midlands-based Peterson Springs and a second-tier Toyota supplier.

"We have to accept that the market is euro-based and find the best way to work with it," said Roberts, whose company invoices several clients and pays several suppliers in euros.

"No business is turned away because of euro requests. Toyota happens to be in the right place at the right time," said Peter Cooke, professor of automotive industry management at the Centre for Automotive Industries Management at Nottingham Business School.

"Toyota built the plant for future growth and it will now step up a gear to get the real economies of scale out of its infrastructure, which will be good for them and for its first-tier suppliers," Cooke added.

Toyota's announcement came as Nissan chief executive Carlos Ghosn warned again about threats to the firm's highly productive Sunderland plant.

Making a profit by manufacturing outside the euro zone is increasingly difficult and production of the Micra could be switched to Renault's Flins plant in France.

Renault has a 37 per cent stake in Nissan.

SMjan2001

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