Toyota looks to expand in America

Toyota Motor, struggling to meet U.S. demand and facing a possible political backlash over its shipments of cars and trucks from Japan, may build as many as five North American assembly plants in the next 10 years, according to people with direct knowledge of the plans.

Five more plants would give Toyota 12 in North America, about the same number Ford Motor will have after its current round of closings. Based on Toyota’s recent investments, five factories would create about 10,000 jobs and cost $5 billion.

Toyota has six assembly plants in North America and one under construction.

Toyota’s U.S. sales surged 13 percent last year to 2.54 million vehicles, pushing its market share to a record 15.4 percent from 13.3 percent a year earlier. Toyota overtook Daimler Chrysler for third place in U.S. sales behind General Motors and Ford. It may pass GM as the world’s biggest automaker this year.

Toyota’s North American capacity last year was 1.5 million vehicles, and it sent in an additional 1.18 million cars and trucks from Japan.

The concern of Toyota executives about U.S. criticism of its mounting shipments of Japanese-built autos to America is the source of the urgency behind production plans. Toyota also wants to limit exposure to currency fluctuations against the Japanese yen by building more vehicles where they are sold.

The International Herald Tribune, January 12^th, 2007

№ 22

EXPANDING ABROAD – AND GROWING AT HOME

Foreign investment by U.S. businesses and investors is on track to be the second highest on record. Meanwhile manufacturing employment fell for a ninth straight year. Based on those trends, it would be easy to conclude that Corporate America is engaging in widespread outsourcing with potentially detrimental effects on the U.S. economy. But more detailed figures from America’s big companies paint a different picture: about 88% of sales among foreign subsidiaries of U.S. multinationals are made outside the U.S.

In 2004 output of nonfinancial U.S multinationals accounted for 22.7% of nonfinancial gross domestic product, virtually unchanged from 1994. And while manufacturing’s share of the U.S. workforce and economic output have fallen, the government data show the rate of decline among multinational and non-multinational is very close.

The results do not imply a large-scale movement of operations abroad by U.S. business. Rather, companies want to expand their global presence, and this larger scale of operations requires more workers at home to manage the business. That means greater demand for high-skill jobs in areas such as business services, where hiring is strong.

With global growth expected to hold up quite well this year, U.S. multinationals are likely to keep up with their foreign expansion plans and invest heavily abroad.

Business Week, February 12^th, 2007

№ 23

TECH: SLOW AT HOME, GROWING ABROAD

The strongest US companies may be the ones with the biggest footprint abroad

Any hope that the surprisingly strong financial results from IBM signaled the technology firms’ rebound was quickly dashed. One key factor in how these companies perform will be geography. While tech spending in US is expected to slow down with the economy, spending abroad remains relatively healthy. As a result, the tech companies with the most presence in overseas markets stand a better chance than those more dependent on US consumers.

Large bellwethers with international presence will probably perform better in this type of business environment. IBM is among the most diversified abroad, with just 39% of its revenues coming from inside the country. Other companies that get less than half their revenues from home include HP and Oracle, according to financial filings. In contrast, AT&T and Yahoo! pull in the majority of their sales from US.

Of course, geography isn't necessarily destiny. Strong products generate sales even in a soft economy. Google and Apple get more than half of their revenues from US, and both are expected to see strong growth in the year ahead. Still, for most of the tech companies dependent on customers at home, the future looks full of challenges as US economy is clearly heading down the drain.

Businessweek, 2009

№ 24

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