Grace Schneider

@gesinfk

GEORGETOWN, Ky. — Toyota announced Monday that it will invest more than $1.3 billion in its factory here to upgrade equipment and modernize its production process.

Although the current workforce of 8,200 isn't expected to grow, the Japanese automaker has added about 750 people during the last year to support the launch of its redesigned 2018 Camry sedan.

Toyota's announcement drew widespread attention Monday because President Donald Trump has threatened a border tax on automakers that pour resources into manufacturing operations in Mexico. Trump previously targeted Toyota in his criticism of companies that make cars in foreign markets and sell them to Americans. But he praised Toyota's investment in a statement issued early Monday by the company.

“Toyota’s decision to invest $1.3 billion in their Kentucky plant is further evidence that manufacturers are now confident that the economic climate has greatly improved under my administration," Trump said in the release.

Gov. Matt Bevin said the investment will go down as part of a record year in economic development in Kentucky, along with the Amazon investment in Northern Kentucky. Sen. Mitch McConnell released a statement saying that the investment is further proof that Toyota is maintaining its promise to "grow our economy and solidify Kentucky as a world-class automotive state."

The investment is part of a planned infusion of $10 billion in U.S. operations over the next five years. The $1.3 billion will be used to retool the sprawling 7.5-million-square-foot Georgetown production complex to allow for a more flexible system to assemble vehicles under what the automaker is calling Toyota New Global Architecture, or TNGA. The modification also will include a new paint shop.

Toyota produced more than 550,000 vehicles plus 600,000 engines at the complex last year. Besides the Camry, the plant assembles the Avalon and Lexus ES 350 sedan, and produces axle steering components, machined engine blocks, cylinder heads, crankshafts and rod and axle assemblies.

At a special meeting before the announcement on Monday, the Kentucky Economic Development Finance Authority amended an existing incentive agreement through the Kentucky Jobs Retention Act. The amendment added up to $43.5 million in tax incentives, which make a total of nearly $190 million in incentives that span multiple projects. The performance-based incentive allows a company to keep a portion of its investment over the agreement term through corporate income tax credits and wage assessments for meeting job-based and capital investment goals.

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Toyota previously signed off on a $530 million initiative for building the Lexus in 2013 and is in the process of shifting several dozen engineers from Erlanger, Kentucky, to an innovation center and test lab at Georgetown that can accommodate up to 700 people. The automaker has moved most of its administrative functions from Northern Kentucky to new offices in suburban Dallas after Toyota decided to consolidate its North American headquarters in Texas.

Wil James, the plant's president, praised the local workforce during a brief press conference at the facility and said that the company's investment is a testament to employees and the products they produce.

While the Camry has been the best-selling car in America for years, Michelle Krebs, an executive analyst for Autotrader, said in an email, Toyota faces a challenge in keeping its mid-sized sedans at the top. Many younger buyers are shifting to SUVs. “The Camry always has been thought of as pretty vanilla. Toyota has jazzed up the styling (in) this round in hopes of dispelling that perception and gaining some sales against more stylish competitors."

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A study recently of Toyota's impact on Kentucky estimated that about 30,000 jobs are tied to the Georgetown operation and its supplier. Toyota's nationwide impact was 470,100 jobs, with $32.3 billion in private non-farm payroll income.

Tool and die maker Dave Haddix, of Erie, Pennsylvania, moved to Lexington in January after getting a spot in the Georgetown factory's skilled trades workforce. He's 42, and after being laid off by General Electric in his hometown, he had to find a job to support his family. He's been impressed with the quality of the training he's received. The fact that Toyota is investing in Kentucky means job security, Haddix said.

The company opened its largest facility outside Japan in Georgetown about 30 years ago after Gov. Martha Layne Collins pushed for $325 million in incentives to match the Japanese company's initial $850 million outlay.

Reporter Grace Schneider can be reached at 502-582-4082 or gschneider@courier-journal.com. Reporter Morgan Watkins contributed to this report.

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