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Potential suppliers exploring opportunities with Toyota

Phillip Ray wants to sell some boxes, and he figures Toyota would be a good customer. When the automaker’s new assembly plant in Union County opens in 2009, it will need more than engines, transmissions and windshield wipers to keep it operating.

Ray, sales manager of Chickasaw Container in Okolona, joined more than 200 other wannabe suppliers at a conference put on by the Japanese automaker October 2.

“We don’t know that Toyota would need boxes,” said Ray, “so we’re looking at the fact there are a lot of suppliers that are going to need boxes for shipping their parts.

“I actually came to see who the suppliers are going to be.”
So far, only two suppliers have been officially announced, an upholstery firm and a body parts maker, both of which could conceivably need Ray’s corrugated-cardboard shipping containers as the assembly plant ramps up.

Officials from the Toyota “mother” plant in Georgetown, Ky., outlined Toyota’s methodology of employing “indirect” suppliers. They also touched onto some of the $1.3 billion-plant’s specific needs.

Gray Swoope, executive director of the Mississippi Development Authority, explained to the participants at the BancorpSouth Conference Center that indirect suppliers provide “anything not attached to the car when it pulls out of the facility.”

According to a brochure provided attendees, those products and services range from material handling to advertising to painting to a total of 60 services and commodities.

Swoope assured the gathering that Toyota “has been committed from day one” to utilizing local providers wherever possible. “Local” at Tuesday’s event comprised potential suppliers from Mississippi, Tennessee, Alabama, Chicago and other distant locales.

Toyota, explained Keith Peel, manager of indirect purchasing for the automaker, spent $750 million in FY 2007. It will spend $65 million per year on indirect supplies for the new Mississippi plant being built in Blue Springs.

The company, said Peel, will identify and evaluate potential suppliers beginning this month, continuing that process through June of next year. Specific supplier requirements will be developed January through September.

Bid meetings start in February and will run through June. The first contracts, Peel said, will be awarded starting in April and continuing into June 2009. The plant’s preliminary production, including a year of training, breaking-in and fine-tuning, will start about that time.

Toyota’s commitment to its suppliers requires a likewise commitment from them to Toyota. Companies’ bid prices must remain in place for a year. An annual price review offers the only opportunity to lobby for raising those prices.

A slide projected onto three screens set up in the front of the room declared, “Cost increases should be controlled through internal cost reductions.”

Other supplier requirements include adequate safety training for onsite employees of suppliers, detailed cost analyses of submitted bids and standard requirements such as insurance coverage and adherence to Toyota contract terms.

“We really value our relations with our suppliers,” said Toyota supplier relations officer Gene Tabor. “And we believe strongly in the policy of inclusion.”

Minority-owned businesses were actively promoted at the event. Tabor said Toyota expects minority-owned businesses to be part of its supplier mix.

For more information about doing business with Toyota and to see a complete list of the company’s supplier needs, go to www.toyotasupplier.com. An online application form allows potential suppliers opportunity to get on the Toyota supplier list.

Officials said applicants should receive e-mail notification within approximately two weeks of filing their application as to whether they are being considered or not. They pointed out that suppliers not initially notified of being on the list will have plenty of opportunity in later rounds and to provide their goods and services to supplier companies.

“We’re trying to put our name in the hat and provide service to Toyota when they come here,” said Cayce Washington, owner of Valley Tool Inc. in Water Valley. The 33-employee machine shop, said Washington, could probably have the best chance with supplying its services to a tier one or tier two Toyota supplier. (Tier one supplies Toyota directly, while tier two supplies tier one.)

Washington was encouraged by an announcement during the conference that multiple suppliers could be contracted for a single product or service: “I think I have as good a chance as any of the big companies.”

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