Granholm woos Toyota to Big 3 turf

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By Christine Tierney / The Detroit News
Granholm woos Toyota to Big 3 turf
Governor will head to Japan to court No. 2 automaker for Michigan plant.
On the evening of Sept. 9, Gov. Jennifer Granholm arrived at a diplomatic reception in Lansing in high spirits. At her urging, legislators had just salvaged a deal to sell state land to Toyota Motor Corp.
At the reception, David Cole, head of the Center for Automotive Research, was chatting with guests when someone tapped his shoulder. "There was the governor. She said, 'We did it -- and in a day.'"
Granholm's swift maneuvers to rescue the high-stakes deal and allow Toyota to expand its technical center in the state sent a clear message: Michigan was eager to do business with the mighty Japanese automaker.

Four months later, Toyota President Fujio Cho said Michigan was under consideration, among other states, for a plant.

This summer, Granholm will travel to Japan, in the next step of an unlikely courtship between the U.S. auto industry's home state and Japan's biggest carmaker.

As the relationship grows, it could lead to the first Japanese-owned vehicle plant in Michigan.

"We have been aggressively letting them know that we want to be in the running," Granholm said. "We're going to Japan in July to make another run at it."

Toyota has just opened a fifth North American assembly plant in Mexico, and it is building a sixth one in San Antonio. With U.S. sales topping 2 million a year, the world's second-largest automaker has concluded that it needs at least one more assembly plant in the region.

"As our sales grow, we'll need to add more manufacturing capacity in the United States, and of course we'd look at Michigan," said Dennis Cuneo, senior vice president for Toyota Motor North America. "We have a favorable impression of Michigan and recognize its pivotal place in the auto industry."

Toyota already employs 7,000 people in Michigan through its design and engineering operations and affiliate firms, such as Denso Corp. and Aisin Seiki Co., two suppliers partly owned by Toyota. Denso is the largest private employer in Battle Creek.

Last year, Toyota's heavy-truck maker Hino Motors decided to move its North American headquarters from New York to Bloomfield Hills.



A prize catch



Most Toyota watchers and auto experts say Michigan is still a long shot for an auto plant. But the state appears to be climbing from the bottom of Toyota's long list of candidates to the bottom of its short list.

For years, Michigan has been red-lined by the Japanese. The state is the stronghold of the Big Three and of the powerful United Auto Workers union. "They previously thought they weren't welcome," Granholm said.

Some Michigan residents see the Japanese as the enemy, a sentiment that has been stoked by predictions that Toyota will overtake General Motors Corp. to become the world's largest automaker in a few years.

A Toyota plant also would challenge the UAW, which has not been able to organize workers at Toyota's U.S. plants. Toyota's only U.S. plant with a union is New United Motor Manufacturing Inc., its venture with GM in California. Denso's two plants in Battle Creek are nonunion.

It's a delicate balancing act for Granholm, a Democrat elected with union support. She says union leaders increasingly understand the pressures automakers face and their need for more flexible work rules.

With Detroit's automakers struggling to make money and shedding jobs, Granholm wants to preserve and enhance Michigan's economic ties to the global car industry by attracting any and all automotive investment.

"We're not playing favorites," she said. "We want to favor job-providers across the board. In a global economy, that means international investment but it also means supporting those who bring us to the dance, as we say, which are the domestic Big Three."

UAW officials declined to comment directly on the state's pitch for a Toyota assembly plant.

"Gov. Granholm appreciates the vital importance of the automotive industry to Michigan's economic future," UAW Vice President Richard Shoemaker said. "We are proud to be a partner in her efforts to attract job-creating investment in Michigan from European and Asian automakers and automotive parts suppliers as well as from U.S.-based companies."

Granholm's strategy is paying off. Nissan Motor Co. has opened a new design studio in Farmington Hills. Hyundai Motor Co. is building a technical center in Superior Charter Township after obtaining state and local tax credits. DaimlerChrysler AG's Chrysler Group, Hyundai and Mitsubishi Motors are partners in a $380 million engine plant in Dundee.

Detroit's automakers still account for the lion's share of factory investment in the state. Chrysler will spend half a billion dollars to renovate two factories in Sterling Heights, and GM is building a new assembly plant in Delta Township.

But Toyota, the world's richest automaker, would be a prize catch. On Aug. 4, Granholm and Cho met for the first time at a Traverse City automotive conference.

Toyota and state officials had laid out the groundwork. "It was typically Japanese, in that the staff is doing the homework and there's a lot of connection going on, and then the leaders meet in a casual way," Cole said.

In dealings with the Japanese, the soft-sell approach works best. "They don't like to be pressured," Cole said.
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