/Toyota to manufacture luxury Lexus NX models in Ontario

Toyota to manufacture luxury Lexus NX models in Ontario

Toyota Motor Manufacturing Canada plans to manufacture two luxury SUVs at its plant in Cambridge, Ont., bolstering Canada’s auto sector as its competitors General Motors and Fiat Chrysler Automobiles cut production in Ontario.

The Japanese automaker will start making the popular Lexus NX and Lexus NX hybrid at its Cambridge facility in 2022 to serve the North American market, executives confirmed Monday at a news conference attended by Prime Minister Justin Trudeau and Ontario’s deputy premier Christine Elliott.

The announcement comes a year after Toyota said it would spend $1.4-billion – including $110 million apiece from the provincial and federal governments – to upgrade its Cambridge facilities so they could shift to produce SUVs such as the RAV4 and RAV4 hybrid.

Toyota Canada president Fred Volf said last year’s investment “certainly supported” the decision to expand production in Canada.

“It allowed us to lay the groundwork,” Volf said in an interview.

Still, Toyota Canada had to prove it was cost-competitive to convince headquarters to produce the vehicles in Canada instead of Japan, the only place the NX models are currently manufactured.

History was in its favour. In 2003, Toyota chose Canada as the first location outside Japan to produce Lexus vehicles. Toyota Canada, now the largest auto manufacturer in Canada with annual production of about 500,000 vehicles, has since produced more than 1.3 million Lexus RX and Lexus RX hybrids.

Volf credited the Canadian workforce’s focus on efficiency for Toyota’s ability to stay competitive, even as other auto manufacturing jobs shift to Mexico from the U.S. and Canada.

“Our secret sauce, if you will, is our team members,” he said. “Our members have a strong sense of what it costs to build our vehicles. It’s really that dedication.”

Employment numbers are expected to remain stable with the announcement, Volf said. As it stands, Toyota Canada employs about 8,500 people at three facilities in Cambridge and Woodstock.

Prime Minister Justin Trudeau

Cole Burston/Bloomberg

Trudeau also credited the workforce as the driving factor behind Toyota’s investment.

“Toyota has always been a company that has recognized the extraordinary quality of Canadian workers in the manufacturing industry,” he said at a news conference. “That has always been a hallmark of what Canada’s competitive advantage is in global manufacturing.”

It’s unclear whether or how the yet-to-be-ratified USMCA or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership affected Toyota’s decision to build the compact SUVs in Canada.

But the move comes as consumers increasingly ditch sedans and minivans in favour of SUVs, crossovers or pickup trucks.

“That’s what the customers want, and fortunately here at TMMC that’s what we build,” Volf said in the interview.

Shifting tastes have hurt other Ontario automakers. GM plans to end production of sedans at its Oshawa plant by the end of 2019, a move that could affect nearly 3,000 workers. FCA plans to axe one of three shifts making minivans at its facility in Windsor in September, a decision that will affect 1,500 workers.

Automakers built about 2 million vehicles in Canada in 2018. That’s down from a peak of about 3 million vehicles in 1999, according to BMO Economics.