July 11, 2008 / 2:57 PM / 11 years ago

Toyota hunkers down to hold onto Texas truck market

SAN ANTONIO, Texas (Reuters) - Even though full-sized Tundra pickup trucks won’t be rolling off the production line of Toyota Motor Corp’s factory here next month, the world’s biggest automaker is keeping 2,000 plant workers on the payroll while it waits out a downturn in demand for its biggest gas-guzzling models.

The newly designed Toyota Tundra pickup truck is seen at the 2007 North American International Auto Show in Detroit, Michigan January 8, 2007. REUTERS/Gary Cameron

While its Big Three U.S. rivals are shutting down truck plants and laying off workers, Toyota is hunkering down to keep its foothold in the heart of U.S. truck country.

Toyota will suspend Tundra production at its sprawling San Antonio factory in early August for three months due to slow sales, which are down nearly 50 percent for the first six months of 2008 versus a year earlier. Record U.S. gasoline prices over $4 a gallon have sent consumers scrambling for smaller, more efficient models.

But that doesn’t mean the plant’s workers won’t be busy.

“Team members will continue to report to work and will continue to work as a two-shift operation, and they will continue to be paid 100 percent of wages,” said Toyota spokesman Mike de la Garza.

But instead of building trucks, workers will spend their time in “training and development, to continue quality improvement activities, and to perform community service work,” Toyota said.

The company’s decision has built up considerable good will in a state where big trucks are synonymous with blue-collar oilfield roughnecks and cattle ranchers.

“We’re appreciative of the fact that they are sticking with their employees during a very difficult time,” said Bexar County Judge Nelson Wolff, the county’s top elected official.

“Very few other companies in the United States would do something like that,” he said.

In contrast, General Motors Corp is closing four truck plants in North America and plans to sell or restructure its Hummer SUV brand. Ford Motor Co has delayed the launch of its redesigned top-selling F-150 pickup truck to clear swollen vehicle inventories.

GM’s decision to close a truck plant in Oshawa, Ontario, next year and cut 2,600 unionized jobs was met with a firestorm of protest that included a 12-day blockade of the automaker’s Canada headquarters.

Opening the $1.2 billion plant in San Antonio in early 2007 was part of Toyota’s public relations campaign to displace big U.S. truck makers like Ford, Chevy and Dodge in Texas, the world’s largest market for full-sized pickup trucks.

Toyota said it still plans to move all its Tundra production to San Antonio, shifting current production from a plant in Indiana in the spring of 2009.

Toyota’s decision to keep its San Antonio plant workers on the payroll could also be an attempt by the automaker to hold off the United Auto Workers union, which has a stronghold among U.S. automakers and suppliers. So far, attempts by the UAW to unionize Toyota’s U.S. plants have been unsuccessful.

Local officials say although Toyota has pledged to continue to pay its employees, some 2,300 people who work for two dozen Toyota supplier companies that ring the truck plant might not be as lucky.

Hit by an industrywide slump in sales of large, gas-guzzling vehicles due to soaring fuel prices, Toyota’s sales in the United States, its single biggest market, have fallen 6 percent so far this year. Its sales of light trucks such as SUVs and pickups are down 12.5 percent, forcing it to run its Indiana and Texas light-truck factories at a reduced pace indefinitely.

But Toyota is struggling to keep up with runaway demand for the gasoline-electric Prius model, which saves fuel by capturing energy lost during braking to power an electric motor.

Reporting by Jim Forsyth in San Antonio; Writing by Chris Baltimore; Additional reporting by Poornima Gupta in Detroit; Editing by John Wallace

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