San Diego Metropolitan - The Connection

Toyota’s Jan. 4 announcement that Tijuana had been selected for its new truck bed manufacturing plant merited one article in the business section of the local daily newspaper. Other than that, relative quiet greeted this event of immense importance to the San Diego-Tijuana region.

Toyota is the fourth largest automobile manufacturer in the world with 2001 sales of $106.03 billion. At the end of 2001, it employed 215,648 workers worldwide.

How much fanfare would have been made had San Diego been the chosen city? It could have been, except the other part — the manufacturing of the Tacoma pickup truck — will be built in Fremont, population 204,000, not San Diego.

The lingering question is, could San Diego and Tijuana have partnered to get both plants? Was San Diego even in the running? We may never know.

Could very strong arguments have been made for the two cities? You bet.

Consider: In May 2001, Toyota Motor Sales USA announced the incorporation of its Mexican affiliate, Toyota Motor Sales de Mexico, which will be in charge of sales, marketing and service operations in Mexico. By implication it means the Tacoma model will be sold in North America (Canada/U.S./Mexico). This in turn means the truck beds from Tijuana have to be shipped to Fremont, a city on the eastern shore of San Francisco Bay. There, the beds are attached to the pickup trucks, then shipped to market, which includes back to Mexico.

Beyond that, Toyota purchased 700 acres of industrial land in the southeastern fringes of the Tijuana municipality. That is a lot of acres. Just to build truck beds? I don’t think so.

In keeping with their business culture, Japanese are very private about future plans, and the Tijuana efforts are no exception. So we have to make educated deductions based on business experience for indicators.

An overkill for the production of pickup beds would be to utilize 100 acres. So what will Toyota do with the additional 600 acres? The Tacoma has become one of the best-selling Toyota products, but is not yet sold in Mexico. Sales in Mexico of Toyota products will begin with the Corolla and Camry. Toyota intends to invest up to $3 million on a technical institute in Mexico to train service mechanics.

For discussion’s sake, consider the excessive land purchase, the Mexican corporation, and Mexico’s market and free trade agreements with most Central and South American countries and the European Union. What you get is a springboard for Toyota products to gain favorable tariff treatment as long as those products can qualify as made in Mexico. In short, Toyota will more than likely expand manufacturing operations in Tijuana.

Musing about Toyota brought to mind another great episode that, since it first happened, has caused dramatic changes in Tijuana. That was when Mitsubishi opened the first television assembly plant in the mid-1980s, also with about as much notice in San Diego as the Toyota announcement.

It reminded me of a conversation I had with Manuel Pasero, who then was a managing partner of an international law practice firm, and today manages his own firm, Pasero y Abogados, in Tijuana. Pasero told me Mitsubishi would be the first of several plants, and that Tijuana was positioned to become the television assembly capital of the world. He urged San Diego and Tijuana to work to attract investment to the region for the manufacture of components, like screens, plastic parts, circuit boards, speakers, cabinets, etc.

In Pasero’s vision, the region would not only become the assembly capital but the television manufacturing capital of the world. His suggestion was met with feigned interest, amounting to, “Yeah, yeah, sure. Whatever you say.”

Today, Tijuana is the television assembly capital of the world, but the San Diego-Tijuana region never paid attention. The result is that only about 5 percent of the components used by the world’s giant television manufacturers in Tijuana use local components.

So I sought out Pasero to get his views on the Toyota announcement.

The Connection: “How does the Mitsubishi lesson apply today?”

Pasero: “That’s history — the question today is — What is the Toyota lesson? Did we learn anything?”

Pasero handled much of the recent legal work for Toyota, and he made it clear that he was not at liberty to discuss specifics. Since I knew that Monterrey (Nuevo Leon in northeastern Mexico) and Mexicali had been in the running for the Toyota plant, I asked why Toyota chose Tijuana.

The answer is that Tijuana measured well with the other two and agreed to install the needed infrastructure. What part did San Diego play in Toyota’s decision?

Pasero says the automaker considered that its executives could live in San Diego, a definite plus.

Did the San Diego Regional Economic Development Corp. participate in the pitch?

No.

My observation is that the EDC sends people to meetings, provides studies and seems to promote San Diego, but mostly in the bioscience and technology industries.

To learn the EDC's thoughts on Toyota and its involvement in that deal and others that improve the cross-border economy, I called its offices for an interview. Unfortunately, the person my question was passed on to did not return my call.

So what is the lesson of Toyota?

Patrick Osio Jr. can be reached through San Diego Metropolitan or by e-mail at posiojr@aol.com.