hen Shoichiro Toyoda, chairman of Toyota, waves the first Carina E off the line at his company's new car factory in Burnaston, Derbyshire, next Wednesday, he will help to usher in a new era for Britain as a vehicle manufacturing base after almost two decades of decline.

Toyota's pounds 840m project - pounds 140m of which is taken up by an engine plant in Deeside, North Wales - is, according to the DTI, 'the biggest single inward investment ever made in the UK'. Along with the production facilities at Nissan and Honda, it will play a part in the record British production of 2 million vehicles forecast for 1997 by the DRI/ McGraw-Hill organisation.

'Burnaston has been the largest construction project in Britain after Canary Wharf,' Bryan Jackson, Toyota's director of human resources, says. The staff of 1,700 will increase to 3,000 when full production is reached. The engine factory's 200 staff will increase to 300. These are low levels in comparison with traditional car factories, but they are typical of the lean production methods pioneered by Toyota.

The factories represent the Japanese company's first full-scale manufacturing foray into Europe. Once this decision to invest was made, however, Toyota moved quickly to construct the factories at Burnaston and Deeside. Building work began only in the middle of 1990. Deeside started making its first engines in September this year, exporting many of them back to Japan. Now Burnaston is about to start rolling.

A more cautious pace has been set for cranking up production. Toyota will produce about 30,000 Carina Es in 1993, reaching 60 per cent local European content by mid-year. It will move steadily to 100,000 and 80 per cent local content in the next two years, and seems certain to double output after that. There is speculation that it will then add a gearbox factory, which would take local content to about 90 per cent.

Toyota's arrival in Europe is not viewed with unmitigated pleasure by all. It will put considerable pressure on established European companies, including the US- owned Ford and Vauxhall/Opel. Both the old and the new, however, can take a little comfort from last week's reported 6 per cent rise in new car sales.

The Europeans know Toyota has a lot going for it. Every year its cars are at or near the top of the ownership satisfaction surveys done in the United States by J D Power & Associates. Of the Europeans, only Mercedes-Benz can compete.

Toyota has a different perspective of itself. It may be rich and powerful in other countries, but it has to play second fiddle in Britain and the rest of Europe to Nissan. That rankles. Nissan is a much smaller company, but still manages to out-sell Toyota in most European countries.

Toyota is the world's third- largest vehicle manufacturer after General Motors and Ford. Its tally of 4.5 million cars and trucks each year is one- fifth more than Nissan. By contrast, Britain's Rover Group is a half-million producer these days. In Japan, Toyota sits on a dominant 43 per cent of the new car market compared with Nissan's 24 per cent. Toyota has more than 9 per cent of the car business in the United States, a little behind Honda but ahead of the local Chrysler company. It is not the same in Europe.

If this state of affairs irritates, Toyota has only itself to blame. Hemmed in by various restrictions on built-up imports in Britain, France, Italy, Spain and Portugal, Japanese car makers can improve sales only by building locally.

In simple production numbers, Burnaston and Deeside will do little for Toyota. Even 200,000 vehicles will be less than 5 per cent of the company's present production. Neither will that number go far when spread across Europe. It would satisfy no more than 1 per cent of annual European car demand by the end of the century, according to sales projections by Junji Numata, Toyota's top-ranking official in Europe.

It is also hard to imagine how Toyota will achieve its aim of catching its arch-rival, Nissan, in Europe, given last year's agreement between Japan's Ministry of International Trade and Industry and the European Commission to restrict car exports to Europe up to the end of the century. Any sales gains will have to come largely from locally made cars.

But Nissan now makes two models in Britain, the Primera and Micra. The Micra, which goes on sale next month, managed to lift the latest European Car of the Year award - the first time a Japanese car has done so. The Carina E was well down the list in the same competition.

Nissan's Washington New Town factory will produce 270,000 vehicles next year. There are plans to lift that to 300,000 shortly after. In addition, Nissan's factory in Barcelona started making the Serena people- carrier in September. Next summer it will put into production a new four-wheel-drive off-roader to compete with Land-Rover's Discovery.

So, with higher local numbers and a wider variety of models, Nissan's European sales lead over Toyota seems safe. The advantages have persuaded many car dealers to throw in their lot with Nissan, rather than Toyota, and that is another hurdle for Toyota to overcome if it wants to reverse the positions.

But Toyota's venture is much more symbolic than simple numbers. Burnaston and Deeside must be regarded as only the beginning. The long-term aim is to be seen as a European producer, just as Vauxhall and Opel (owned by General Motors) and Ford are. The industrial build-up during the next few years will be accompanied by increases in Toyota's ability to design and engineer vehicles in Europe.

The symbolism extends way beyond Toyota itself. It is a significant plank in the steady reconstruction of the motor industry in Britain. Garel Rhys, motor industry economist at Cardiff Business School, is convinced the arrival of companies such as Toyota is good for the country. 'The Japanese in Britain are almost an MBA programme, forcing the rest of the industry to learn,' he says.

It is an overdue lecture. Britain's motor industry reached its peak in 1972, when 1.92 million vehicles were produced. A decade later it was half that, thanks to the emaciation at British Leyland and the death throes of Chrysler, the former Rootes Group.

Car output was just under 1.24 million last year. It will be a little higher this year, thanks to Nissan and to the belated rediscovery by Ford, Vauxhall and Peugeot of the joys of exporting. By 1997 the figure is forecast by DRI to be two million.

That change will occur largely because of Japan's factories in Britain, DRI says. Toyota, Nissan and Honda (just starting Accord production at Swindon), will turn Britain into an important vehicle- building centre once more.

(Photograph omitted)

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