Toyota & Honda Are Leaving America — 840,000 Jobs at Risk!

Summary

Toyota and Honda, once integral to the US auto industry, are quietly shifting production away from American factories to countries like Mexico, Canada, and Asia. Driven by rising labor costs, trade uncertainties, and the shift to electric vehicles (EVs), these moves threaten over 840,000 jobs in the US. While Mexico and Canada benefit from lower costs and favorable trade agreements, US communities reliant on these factories face economic decline. This silent exodus signals a broader shift in the global auto industry and poses critical questions about the US’s future competitiveness in manufacturing and mobility.

Takeaways

• 😀 Toyota and Honda are quietly shifting production from the US to Mexico, Canada, and Asia, with major implications for US workers and towns dependent on car manufacturing.
• 😀 Honda is reducing operations at its Ohio and Indiana plants, while Toyota is reallocating production of key models like the Tacoma and Corolla to Mexico and Asia.
• 😀 The US-Mexico-Canada Agreement (USMCA) offers favorable trade terms for automakers producing in Mexico, making it an attractive option for Japanese carmakers.
• 😀 Labor costs are a major factor in the shift, with wages in Mexico and Asia being significantly lower than in the US, making production more cost-effective.
• 😀 Japanese automakers are also facing political and trade uncertainty in the US, making countries like Mexico and Canada more predictable and stable for long-term investments.
• 😀 The shift in production could result in 840,000 US jobs tied to Toyota and Honda's manufacturing network being at risk or impacted.
• 😀 The transition is part of a broader trend of Japanese automakers rebalancing their global manufacturing footprint to focus on emerging markets and lower costs.
• 😀 In the US, towns like Marysville, Ohio, and Mississippi are facing the economic repercussions of reduced production, with local suppliers and small businesses feeling the impact.
• 😀 Mexico, Canada, and Southeast Asia are the primary beneficiaries of this shift, with Mexico seeing significant investment in car manufacturing, and Canada focusing on electric vehicles (EVs).
• 😀 Honda and Toyota are ramping up production in Southeast Asia, including Vietnam, Thailand, and Indonesia, capitalizing on growing consumer markets and favorable trade terms.
• 😀 The shift signifies a larger trend in the US auto industry, where rising labor costs, trade uncertainty, and a lack of robust policy incentives are causing foreign automakers to move production elsewhere.

Q & A

Why are Toyota and Honda shifting production away from the United States?

Toyota and Honda are moving production out of the US primarily due to lower labor costs, more favorable trade agreements, and the need for greater political stability and predictable manufacturing environments in countries like Mexico, Canada, and parts of Asia.

How much are Toyota and Honda investing in their operations in Mexico and Canada?

Toyota is investing $328 million to expand its plant in Guanajuato, Mexico, while Honda is investing billions into EV production in Canada, particularly in Ontario.

What are the labor cost differences between the US and countries like Mexico and Asia?

In the US, auto workers earn around $28 to $35 per hour, while in Mexico and parts of Asia, factory workers make less than $5 per hour, resulting in significant labor cost savings for automakers.

How does the USMCA agreement affect Toyota and Honda's decision to move production to Mexico?

The USMCA (United States-Mexico-Canada Agreement) offers favorable trade terms for automakers producing in Mexico, allowing companies like Toyota and Honda to export vehicles to the US and Canada without high tariffs, making Mexico an attractive production hub.

What impact will Toyota and Honda's shift have on American workers and communities?

The shift will result in job losses in the US, with an estimated 840,000 jobs at risk, including factory workers, logistics staff, and local suppliers. This will also affect local businesses and entire communities that depend on these manufacturing jobs.

What has been the response from the US government to these changes in production locations?

There has been little political response or action from the US government to address the shift in production, leaving many workers and communities to deal with the consequences of the job losses and factory closures.

How are the economies of Mexico, Canada, and Asia benefiting from Toyota and Honda’s shift?

Mexico benefits from low labor costs, skilled technicians, favorable trade terms, and tax breaks, making it an ideal location for Japanese automakers. Canada is attracting investments for EV and battery production, and Southeast Asia is becoming an emerging hub for automotive manufacturing due to its improving infrastructure and growing markets.

What is the significance of Toyota and Honda’s expansion into Southeast Asia?

Toyota and Honda are expanding into Southeast Asia as the region offers low labor costs, rapidly improving infrastructure, and emerging consumer markets. Countries like Vietnam, Thailand, and Indonesia are becoming key players in the global auto industry.

How do US-based unions view the transition to EV production and offshoring?

Unions, especially the United Auto Workers (UAW), have expressed concerns that the transition to electric vehicles (EVs) and offshoring will lead to a decline in the American auto labor market unless strong domestic incentives are implemented.

What does the shift in Toyota and Honda’s production strategy mean for the future of US manufacturing?

The shift signals a broader trend where the US is becoming less attractive for global automakers due to rising labor costs, trade uncertainty, and regulatory challenges. This could lead to a decline in US manufacturing unless the country adapts with more competitive, stable policies for industries like automotive production.