Toyota Motor Corporation (NYSE:TM)
Design Matters Conference
April 19, 2013 9:30 am ET
Julie A. Hamp - Chief Communications Officer for North America
Akio Toyoda - President and Director
James E. Lentz - Director
Wil James - President of the Georgetown Plant (Ky)
Mark S. Templin - General Manager of Lexus Product Marketing Planning Division
Ladies and gentlemen, please welcome Chief Communications Officer for Toyota North America, Julie Hamp.
Julie A. Hamp
Thank you, and good morning, everyone. We thank you very much for joining us today because today is a very special day for us and for our Lexus brand. And in just a few minutes, we'll make a major announcement about the brand. Later tonight, we also will continue the celebration with the design community. We're going to have a very fun and inspiring event called Design Matters. You'll hear about this more later in this event. And you'll also hear about our global plans and how we'll celebrate design around the world.
Now before we start, I'd like to say to those of you here in New York, we appreciate you coming into Manhattan and to spend some time with us here this morning. And to those watching the simulcast at our manufacturing plant in Georgetown, Kentucky, hello, from all of us from here in the Big Apple.
Now here's an overview of what's going to happen this morning. First, from New York, you will hear from Toyota's Global President, Akio Toyoda; followed by Jim Lentz, our new Chief Executive Officer of the North America region; then we'll turn it over to Mike Goss of our External Affairs group in Kentucky, who will introduce the governor of Kentucky, Steve Beshear, and the President of our Kentucky plant, Wil James. After that, we'll close our broadcast and follow with the press Q&A session here in New York and one at the Kentucky plant. For those in the news media, this press conference is being simultaneous translated. Channel 1 is English and Channel 2 is in Japanese. And now that you know the agenda, it is my very great pleasure and honor to introduce the gentleman whose love of cars, love of design and personal enthusiasm has brought style and fun back to Lexus and Toyota products. Ladies and gentlemen, please welcome Mr. Akio Toyoda.
Thank you, Julie, and good morning to everyone here in New York, and to those of you in Kentucky. I have a special place in my heart for America, its people and its communities. In fact, I went to graduate school in Boston and worked in California for a few years. Before I gone, after hearing the news about the tragedy in Boston, I know all of us are united in our feelings of sadness and are also united in our support for the victims and their families. Let us take a moment of silence to reflect upon this.
Thank you. Let us continue. Today, I am pleased to announce one of our worst kept secrets that, starting in 2015, we'll build the popular Lexus ES 350 sedan in the United States on a new dedicated assembly line at our plant in Georgetown, Kentucky. It is fitting that the first country to build the ES outside of Japan is at United States, because this is home for Lexus. It is where the brand was founded, and it is still the biggest market for the luxury brand, and Americans love the ES. Since 1990, we have sold nearly 1.3 million ES sedans in the U.S., and it has one of the highest customer loyalty rates in the Lexus lineup. This decision is in line with 2 key goals: first, to serve our U.S. customers; and second, reduce the effect of the exchange rate on our customers. Here in the United States, we choose Kentucky because of our successful 25-year partnership with the state. I want to personally thank Governor Steve Beshear for creating a positive business environment and supporting our partnership, which is still going strong after more than 1/4 century. I also want to thank local officials in Georgetown and Scott County for their strong support over the years.
It is also fitting that we chose Kentucky because it was Toyota's first standalone plant in America. So in a way, for manufacturing, Kentucky is Toyota's home. It also has some of the most experienced Toyota team members in the world. To all Kentucky teams watching this webcast, this is tribute to your extraordinary effort and hard work you have put into every single car for the past 25 years. Congratulations, and keep up the good work.
Now along with bringing ES production to the U.S., we recently made organization changes to make first decisions that will better serve our customers. For instance, Jim Lentz is now CEO of Toyota North America regions. Mark Hogan, who I worked with at NUMMI in California, has been appointed a Toyota board member. And Mark Templin, who ran Lexus USA, is now the Executive Vice President of Lexus International. I am very confident in this new American leadership team. In fact, the first decision they made in less than 1 month is to bring production of a Lexus model to the United States. This is a new team, a new beginning and new Lexus. We are changing at Toyota, but one thing will never change, and that is our strong commitment to the United States. We are united and committed to fulfilling the needs of our customers and strengthening local communities here and around the world. Thank you.
And now it is my pleasure to turn it over to our new CEO for the North American region, Mr. Jim Lentz.
James E. Lentz
Thank you, Akio, and good morning, everyone. And thanks for coming to New York as we announced major steps that will help us put our customers first and to better serve them. Now I'm happy to tell you that the story of our Lexus expansion at our Kentucky plant gets even better because we'll add 750 new American jobs, and in partnership with the state, invest $360 million for the expansion and other plant improvements. Our target is to build 50,000 ES sedans annually here in America. Now this is on top of the expansions in North America that we've been announcing and completing during the last 17 months. In all, Toyota's spending nearly $2 billion and adding nearly 4,200 new jobs to expand and improve our North American manufacturing plants and to build products that our customers want. Now this is in addition to an already massive presence that we've developed in America for more than 1/2 century. Today, Toyota operates 14 plants across North America to produce 7 out of every 10 vehicles that we sell here. And the North American content of many of our vehicles continues to rise. For example, 90% of the parts and materials that go into Toyota Camrys and Avalons are sourced here from local suppliers. And other models locally built average about 75% North American content. In terms of local jobs, Toyota directly employs more than 31,000 Americans. And according to the Center for Automotive Research, every direct job created by Toyota, our dealers and our suppliers creates 10 spinoff jobs. So by that measure, Toyota is actually responsible for over 365,000 American jobs today. And that's roughly equivalent to the population of St. Louis.
In addition, our U.S. Toyota and Lexus dealers have made huge commitments to their businesses and their communities. In just the past 8 years, our dealers have invested $7 billion to rebuild and upgrade their facilities to improve their customers' experience. These investments and our dealers' ability to create an industry-leading customer experience have helped our customer loyalty remain high and provided much-needed community support all around the nation. And there's one other great benefit from expanding our U.S. manufacturing base. We've been able to increase exports of our North American-built vehicles to 23 countries all around the world. In fact, our exports jumped by 45% last year, and we'll export even more vehicles this year. So all in all, today's Lexus ES announcement is a logical extension of Toyota's strategy to better serve customers in the largest market for Lexus. Governor Beshear, I'd like to extend my personal appreciation to you and the state of Kentucky for all of your support for Toyota and now, for Lexus. So Governor, thank you very much.
And now let's go live to our Kentucky plant, where Mike Goss has some special guests. Mike, over to you.
Thanks, Jim, and welcome to Georgetown, Kentucky. We have a big crowd with us this morning, including state and local elected officials, community leaders and many of our team members, the true stars of this show. We are all very excited about the good news just announced there in New York. And Akio and Jim, we don't know if you could hear us but there was huge applause here this morning. Our success over the years would not be possible without all of these people in the room today, and especially the leader we will hear from next. Please welcome the Governor of Kentucky, the Honorable Steve Beshear.
Thank you. Thank you very much. In Kentucky today, it's a day of celebration. And quite honestly, as governor, I feel like the state has just won the Kentucky Derby. We're excited, we're honored by Toyota's decision to build its top-selling, top-of-the-line Lexus sedan right here in Georgetown. And frankly, we're also very proud. You see, although Toyota is a Japanese-owned company, here in the bluegrass, because of our long history together and our close ties, we actually see Toyota as a Kentucky company. I was lieutenant governor back in the 1980s when Toyota began scouting the country for a location for its first U.S. manufacturing plant. And I had a front-row seat when Kentucky won that fierce competition. That announcement transformed our economy and helped propel us to the top echelon of U.S. auto manufacturing. It also began a long-term relationship. Today, tens of thousands of Kentucky families owe their livelihoods to Toyota, employed either at the manufacturing plant in Georgetown or the corporate headquarters in Orlando, or at the many dozens of companies which supply parts and services to Toyota.
Many times that number of Kentucky citizens rely on Toyota's family crafted cars and trucks to get their families back and forth from work, school, church and numerous other activities. And Toyota and its employees have set the standard for community involvement, with millions of dollars and tens of thousands of volunteer hours. That relationship deepens with today's announcement. The numbers alone are impressive. A total new investment of over $531 million, including $360 million for Lexus, plus 750 new jobs, not to mention many others that will be created as suppliers are chosen to produce Lexus parts. But ladies and gentlemen, there's also the prestige.
President Toyoda, we are deeply honored that you have entrusted the manufacturing of your top-selling Lexus sedan to us here in Kentucky. We realize the care and the pride that you take in that vehicle and that it requires the utmost in a skilled workforce, not to mention top-quality components. Your confidence in the quality of Kentucky's workers, especially our team here in Georgetown, is appreciated and is well placed. We know how to build vehicles in Kentucky. Last year, we built over 1 million of them. We also know how to partner with our corporate citizens to help them succeed in competitive industries, changing markets and challenging economic times. Since becoming governor, I've made 3 trips to Japan, including one last November, to meet with Toyota executives. I talked to Akio and others on many occasions about helping Toyota's Kentucky operations to grow. And I listened intently to their ideas and their concerns. Last year, I signed into law, House Bill 400, a critical piece of legislation that broadened the reach of the Kentucky Jobs Retention Act to make it applicable to other qualifying companies, including Toyota.
And I'm proud that Toyota is using that incentive program to create 750 jobs for Kentucky families. So I want to congratulate Akio, Jim Lentz, Wil James and the entire Kentucky team, as well as the many state and local officials who had a hand in this exciting news. This is a great day for Toyota and for the Commonwealth of Kentucky. Thank you.
Thank you, Governor, for your support today and over the past 1/4 century. Now we've done the easy part, making the announcement. Please welcome the leader of the team who's going to make it happen, Kentucky Plant President, Wil James.
Good morning, everyone. What a glorious day this is, and not just because it happens to be my birthday. It's because just a few feet away, there are thousands of Kentuckians building the award-winning Camry, Avalon and Venza. And today's announcement is all about them and their families. Now just a few minutes ago, I told the team that we were chosen to build the Lexus ES, and they're really pumped up about it.
The past couple of years have been very busy for us in Georgetown. We launched the best-selling Camry, announced a substantial capacity increase for 4-cylinder engine production and last fall, started production of the all-new Avalon. With today's announcement, it appears we're going to stay busy, and I'm pretty excited about that. This production move will bring our plant employment to nearly 7,400 team members and Toyota's investment here to more than $6 billion.
Now that's great news for Toyota and Kentucky, and we appreciate the support of Governor Beshear, as well as our local elected officials and partners.
Ladies and gentlemen, it's a pleasure working with you to bring additional jobs and investment to the Commonwealth of Kentucky. Thank you, all, for supporting Toyota and this new expansion project.
Finally, I'd like to say a special thank you to Akio Toyoda and Jim Lentz. I know I speak for all of us in Kentucky when I say, we sincerely appreciate your faith in our team members here. Since 1988, our plant has been dedicated to manufacturing excellence, winning 10 J.D. Power Top Plant awards. And you have my word, we will not let you down, I can promise you that. Thank you.
Mark S. Templin
Thank you, Wil. And let me just say with Kentucky's 25-year history of assembling great vehicles, I'm confident your team will provide the same level of quality and craftsmanship Lexus products have been known for, for more than 2 decades. I'd also like to thank Akio for coming to our event. But to be honest, I don't think we could have kept him away. He has a very keen and deeply personal interest in seeing Lexus become one of the world's top luxury brands, not just in the automotive segment but among all luxury brands. Now as most of you already know, Akio is an avid car enthusiast and a racecar driver. However, I'm still waiting for him to take me out on the track. And his personal passion for cars has made its way into Lexus products from great driving dynamics to more expressive styling. Now as part of our global expansion, we have to speak to a broader audience. And what better way to do that than to put a much stronger and sharper focus on design. Because let's face it, design matters. We started last year with the launch of the all-new GS with our signature spindle grill. We followed that with the new LX, RX, ES, LS, and it continues with the upcoming launch of the new all new IS. Think about it, in just 24 months, we'll have transformed the design of our entire lineup. And it doesn't end there. We also showed our award-winning LF-LC and LF-CC concepts, and people love them. Now with these concept cars and the new cars that we've launched, we're changing people's perception of Lexus. And to further demonstrate our design focus, as Julie mentioned, tonight, Lexus is celebrating the international design community with an event called, Design Matters. It's hosted by Akio Toyoda right here in this building. We'll showcase our commitment to design, both in our products and our global brand initiatives. With these initiatives, we're collaborating with established and up-and-coming creative talents to both inspire and be inspired.
For instance, working with the Weinstein Company, who, by the way, have produced films that received 75 Academy Award nominations. Together, we commissioned up-and-coming filmmakers to create Lexus short films based on the theme, Life is Amazing. Last year, during the Tokyo design week, we launched the Lexus Design Award. And then just a few days ago, during design week in Milan, we showcased the works of the top 2 winners. They earned the opportunity to be mentored by 2 world-famous designers, Sam Hecht and Junya Ishigami. We're also creating a gallery space that we call Intersect by Lexus. It's not a dealership nor a traditional retail space. It's a place for people to engage with Lexus through design, art, food, fashion, culture, movies, music and technology, all in one space. The first Intersect gallery will open this summer in Tokyo. And next year, we'll bring this unique experience to Dubai and right here to New York.
This is an exciting time at Lexus. We have all new products with great designs, dynamic performance and advanced technologies that people love. And now, with ES production moving to Kentucky, our 2 highest volume products will be manufactured here in North America.
Ladies and gentlemen, as Akio said at the beginning of this press conference, this is a brand-new global Lexus. Thank you.
Julie A. Hamp
Thank you, Mark, and thank you to all of our speakers here and in Kentucky. And as you can see, we are indeed very excited about the news that we shared today and to have the ES manufactured here in the U.S. It will certainly help us meet the needs of our customers, and that's exactly what Toyota and Lexus brands do best. So thanks again for joining us. This concludes the broadcast portion of our conference.
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