Toyota Motor Corp. (TM), along with the government of Canada, plans to invest C$545 million ($567.7 million) to upgrade its two assembly plants in Ontario. The Canadian federal government and the Ontario government will each invest C$70.8 million ($73.7 million) in the plants while the rest of the amount will be invested by Toyota.
The investment program, Project Green Light, is aimed at making the Cambridge and Woodstock plants more efficient and environmentally friendly. It will upgrade the paint shop at the Cambridge North plant, switching over to a water-borne system from a solvent-borne one and lower emission levels.
The investment will boost production level in the Canadian plants. The plants manufacture Toyota Corolla, Toyota Matrix, Toyota RAV4 and Lexus RX 350 vehicles. Among them, the Cambridge facility is the only one outside Japan that assembles vehicles for Toyota’s luxury lineup Lexus. The plants current worforce is 6,500.
The deal with Toyota is the governments’ first major investment for an automaker since they spent about C$13 billion to bail out Chrysler LLC and General Motors Co. (GM) during the global economic crisis in 2009. The federal government revealed that their contribution to the investment program is refundable.
Toyota has been struggling with its series of safety recalls and the consequences of the earthquake and tsunami in Japan on March 11. It has already lost its position as the world’s biggest carmaker to GM and Volkswagen AG in the first quarter of the year.
The Zacks #3 Rank (Hold) company expects the full year profit to fall 31% to ¥280 billion ($3.5 billion) from ¥408 billion a year ago driven by lower sales on the back of earthquake and tsunami in Japan and stronger yen.
The automaker has projected global sales to decrease to 7.24 million vehicles from 7.31 million vehicles in fiscal 2011, which will reduce earnings by ¥120 billion. The automaker revealed that strong yen will reduce its yearly profit by ¥100 billion.
Toyota expects production at its North American plants to return to its normal level in September, sooner than it expected. It also anticipates to gear up its production level from 90% normal to near full level in July and then to completely normal by the end of the year.
The automaker plans to make up for the lost production in Japan by manufacturing an additional 350,000 cars and trucks from October through March 2012.
