Toyota supplier Toyotetsu is transferring stamping work to Ontario from Kentucky to supply the new Lexus RX, which is built in the province. It's also expanding operations in preparation of the soon-to-be redesigned RAV4.
Toyota builds the Lexus RS at a plant in Cambridge, Ont., while the RAV4 is assembled in Woodstock, Ont. Both facilities are less than a one-hour drive from the Toyotetsu plant in Simcoe, Ont.
Toyotetsu is moving the stamping work to Simcoe from its Somerset, Kentucky, plant, eliminating the need to import parts and then assemble them for shipment to the Lexus RX assembly line.
“Over time, as their customer demand increased but their capacity could only increase so far, the logical next step is to ask where else can we install this process closer to the plant it supplies,” Toyotetsu assistant general manager of administration Andrew Elkin said of the move from Somerset.
Because the parts have always been stamped in the United States and assembled in Canada, the move had nothing to do with the possibility of a renegotiated North American Free Trade Agreement throwing a wrench into the supply chain, Elkin said.
“It’s pretty straightforward,” Elkin said of the move.
About 93 per cent of all Toyotetsu’s product made in Simcoe ends up in Toyota vehicles built in Ontario, Elkin said.
The total cost of the expansion is $29.4 million, but the government of Ontario is kicking in nearly $1.2 million from the Southwestern Ontario Development Fund. The fund will cover up to 15 per cent of eligible project costs.
With that expansion now complete, another is already underway. The next phase of expansion — the plant’s fourth since it opened a decade ago — is in preparation of the next-generation RAV4.
The compact crossover RAV4 now is Toyota's best-selling vehicle in the United States. It was freshened for the 2016 model year and is on track to move to a Toyota New Global Architecture (TNGA) platform sometime next year as a 2019 model.
Elkin couldn’t put a price tag on the next phase of the plant currently being constructed.