Japanese governor pledges support for Toyota suppliers as production dips

NAGOYA (Reuters) - As Toyota 7203.T prepares to nearly halve production at Japanese factories, a regional governor said on Thursday he would offer 400 billion yen ($3.72 billion) in emergency loans for small and mid-size companies including Toyota's suppliers.

FILE PHOTO: A Toyota Mirai fuel cell vehicle awaits final inspection at a Toyota Motor Corp. factory in Toyota in Aichi Prefecture, Japan, April 11, 2019. REUTERS/Joe White

Toyota Motor Corp’s headquarters are in Aichi Prefecture, at Toyota City, which was named after the company in the 1950s to reflect its role as the biggest employer in the region.

“(Toyota is) not only the backbone of Aichi prefecture’s economy but all of Japan,” Aichi governor Hideaki Ohmura told Reuters, adding that it kept valuable manufacturing jobs in Japan while other companies exported their factories abroad.

Japan is a major production hub for Toyota and its domestic manufacturing network is heavily concentrated in Aichi, Japan’s industrial heartland where more than 40% of the cars built in Japan are made.

Toyota and its affiliates operate more than half of Aichi’s plants.

Ohmura said Toyota and its top tier suppliers supported more than 55,000 jobs in the region and thousands more through smaller suppliers.

“We need to be able to support the demand when there’s a rebound and to do that we need to properly support the auto companies’ small and medium suppliers,” he said.

He said his proposal for the 400 billion yen in loans would be part of a package of measures the prefectural assembly was due to adopt on Friday.

Toyota has said it expects to produce 40% fewer cars than initially planned in May after it began to significantly reduce output at its Japanese plants this month, due to plummeting demand for export models including those shipped to the United States and the Middle East due to the coronavirus.

Toyota has said it will stop production on a staggered basis through mid-May at five of its domestic plants which produce high-volume models including the Prius gasoline hybrid, the Corolla hatchback and the Camry sedan.

For years, Toyota has pledged to maintain an annual domestic production level of 3 million vehicles, roughly one-third of its global output, in Japan to support jobs and hone manufacturing skills.

More than 11,500 people have tested positive for the novel coronavirus in Japan and nearly 300 have died. Aichi has had 443 confirmed cases.

Manufacturing plants in Japan have been permitted to keep operating during the outbreak, and the powerful auto lobby has said it would try to avoid suspending output while prioritising worker safety.

Automakers and their suppliers are also considering industry-led financial support for struggling firms.

Reporting by Mari Saito and Ami Miyazaki; Additional reporting by Naomi Tajitsu; Editing by Robert Birsel