TOYOTA ROAD USA

Monday, Oct. 07, 1996 By JOHN GREENWALD

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George Taylor fought the Empire of Japan as a U.S. Marine in World War II, and he still has bitter memories. But now as mayor of Princeton, Indiana (pop. 8,100), he gladly put them aside last spring when Toyota unveiled plans to build a $700 million pickup- truck plant in his economically sagging town. "I've changed my mind a little bit," Taylor, 74, says. "The way I look at it, the Japanese are coming over here and giving American workers good jobs, while American companies are closing factories and taking work overseas for low wages." In a sign of appreciation, Taylor recently traded in his 1987 Chrysler Fifth Avenue for a new Camry sedan that Toyota built just down Highway I-64 at its plant in Georgetown, Kentucky.

Maybe I-64 should be renamed Toyota Road. Along the 500-mile stretch of interstate that winds past Georgetown and Princeton on its way from West Virginia to St. Louis, Missouri, the world's No. 3 automaker--after General Motors and Ford--has quietly become America's fastest growing automaker. Amid the rich corn, wheat and soybean fields, Toyota is building a vast industrial empire in the center of America's heartland, with I-64 as the hub for some $8 billion of North American investments. By 2000 Toyota hopes the public will view the company as the fourth member of the Big Three automotive family--though Detroit has no intention of extending a membership invitation. Vows Toyota president Hiroshi Okuda: "We will be the first [foreign manufacturer] to be recognized as a U.S. company."

This Americanization of Toyota aims to remove the last shreds of resistance that some consumers--particularly in the blue-collar Midwest--still have for foreign nameplates. A recent Toyota study found that 30% of the Americans surveyed said they would not buy a Japanese vehicle. Certainly, for this part of rural, small-town America, the high-paying manufacturing jobs that Toyota is creating will go a long way toward overcoming historic prejudices.

Toyota's new direction reflects political necessity following decades of U.S.-Japanese trade clashes and a yin-yanging yen. Going to America not only defeats barriers like the current 25% duty on imported pickup trucks but also lowers manufacturing and distribution costs. Toyota's nonunion U.S. workers shave some 10% from its wage bill vis-a-vis Japan, and a like amount from shipping costs. The savings can knock about $2,000 off the sticker price of a Camry that would cost $20,000 if imported from Japan.

By any measure, Toyota is well on its way to becoming a Yankee Doodle lookalike. Japan's largest industrial corporation (1995 sales: $101 billion) already has more than 19,000 U.S. employees and holds a 6.9% share of the U.S. car and truck market. That puts it in fourth, ahead of Honda (4.8%) though still well behind Chrysler (16.6%). But it's coming on. With the expansion along I-64, Toyota plans to boost U.S. output by a third, from 900,000 passenger vehicles in 1995 to 1.2 million in 1998. When it does, 75% of the cars the company sells in the U.S. will be assembled there.