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TOYOTA TESTIMONY AT CONGRESSIONAL TRADE HEARING CITES REDUCTION IN AUTO PARTS DEFICIT WITH JAPAN

 TOYOTA TESTIMONY AT CONGRESSIONAL TRADE HEARING CITES
 REDUCTION IN AUTO PARTS DEFICIT WITH JAPAN
 WASHINGTON, March 30 /PRNewswire/ -- The auto parts trade deficit with Japan has been reduced significantly by a dramatic increase in U.S. sourcing by Japanese automakers over the last two years, according to testimony by a Toyota Motor Sales (TMS) U.S.A. Inc., spokesman at a House Ways and Means Subcommittee hearing on trade.
 "U.S. sourcing of parts, materials and equipment by Toyota and others has increased dramatically over the past few years from $1.7 billion in 1985, to $9 billion in 1990," said James R. Olson, TMS vice president of external affairs. "The total will continue to climb to $19 billion in 1994 -- an elevenfold increase over nine years."
 This, said Olson, caused the 1990 auto parts deficit with Japan to fall 8 percent to $9.7 billion, with the 1991 deficit dropping another 14 percent to $8.3 billion.
 Olson also stressed that Toyota's investment in North America is accelerating. To support $3.6 billion worth of manufacturing facilities, over the last several years the company has invested $220 million to triple the size of its California design center, build a technical center in Torrance, Calif., erect a prototype parts assessment center in Michigan and begin constructing one of the world's largest test tracks on 12,000 acres of desert near Phoenix.
 "The new Michigan facility is perhaps the most significant step," Olson said. "It transfers to American soil the capability to involve U.S. suppliers in the early, 'design-in' phase of our future products and to perform testing and evaluation of many prototype parts right here in the U.S."
 Although some critics acknowledge a positive trend in domestic parts sourcing, many charge that companies like Toyota buy primarily from the "old boy" network transplanted here from Japan. In order to dispel the charge, Olson singled out Toyota's largest U.S. operation, its $2-billion Toyota Motor Manufacturing (TMM) plant in Georgetown, Ky., where the mid-sized Camry sedan and wagon are built.
 "TMM currently sources 1,350 parts from 174 U.S. suppliers," said Olson. "Of that number, 114 are U.S.- or Canadian-owned companies; 29 are U.S./Japanese joint ventures; seven that were U.S.-owned when TMM added them to its supplier family were later acquired by Japanese companies; 18 are Japanese transplant suppliers and only six are Toyota Group companies."
 The primary reason for Olson's testimony before the subcommittee, was to express Toyota's objection to H.R. 4100, sponsored by Richard Gephardt (D-Mo.). Known as "The Trade Enhancement Act of 1992," it would impose a fixed incremental schedule for Japan to reduce its bilateral trade surplus with the United States virtually to zero by 1996, or suffer automatic restrictions.
 "The bill would strike not only at imports, but at products built in Japanese plants here in the U.S. by defining any vehicle built in North America as -- in effect -- foreign if 60 percent of the parts in it are not sourced from domestic suppliers. The catch is the definition of domestic," he said.
 According to Olson, under the bill, none of the labor performed by American workers in Toyota's domestic factories would count as domestic. None of the steel and other materials it purchased even from wholly U.S.-owned companies would count as domestic. And none of the parts purchased from any U.S./Japan joint venture would count as domestic.
 "Firestone tires produced in Tennessee would not be domestic because Firestone was rescued by a Japanese company when it was near bankruptcy," said Olson. "However, Michelin tires -- even if they came from a European plant instead of one of Michelin's South Carolina plants -- would be domestic because Michelin is owned by the French. As little as 2.5 percent Japanese equity could brand a supplier 'foreign.'"
 Olson concluded that "H.R. 4100 and other trade proposals of its kind are anti-consumer, anti-trade and anti-competition. They will turn global trading back toward the unproductive, intensely nationalistic system the nations of the world wisely rejected 45 years ago."
 -0- 3/30/92
 /NOTE: The complete text of Olson's testimony will be faxed on request./
 /CONTACT: Mindy Geller of Toyota Motor Sales U.S.A., 310-618-5204/ CO: Toyota Motor Sales U.S.A. Inc. ST: District of Columbia IN: AUT SU: LEG


CH-AL -- LA008 -- 2887 03/30/92 12:16 EST
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Date:Mar 30, 1992
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