Toyota Gets Ready to Rule

Carmaker Mounts PR Offensive as it Gains on GM

Posted March 2, 2007 at 6:17pm

Toyota Motor Corp. is mounting a lobbying and public relations offensive on Capitol Hill to head off a political backlash as it prepares to pass General Motors as the world’s largest car manufacturer.

With bad news continuing to pile up for domestic automakers out of Detroit, Toyota officials are pushing the message that the Japan-based company is a major source of American economic growth.

“It’s Lobbying 101. We’re informing people about our jobs and investments here, and most people are pleasantly surprised,” Toyota spokeswoman Martha Voss said.

The push comes as the Big Three car companies — Ford, General Motors and DaimlerChrysler — strapped by legacy labor costs and declining sales, are closing plants and shedding thousands of jobs. To jump-start a turnaround, those companies are turning to the new majorities in Congress.

House Democratic chairmen have answered in part by focusing on the value of the yen.

They charge the Japanese government has deliberately undervalued the currency to effectively subsidize car exports to the United States, to the tune of up to $4,000 per car. Just over half — 54 percent — of Toyotas sold in the U.S. last year were produced here, and the company aims to boost that ratio to two-thirds. But Detroit’s advocates say North American production was steady last year, while imports surged nearly 40 percent. (Toyota explains the figure as the unanticipated result of high demand for fuel-efficient cars produced primarily in Japan).

“It’s an unbalanced playing field,” said Rep. Sander Levin (D-Mich.), chairman of the Ways and Means subcommittee on trade. “What we’re dealing with is the future of the domestic auto industry, and this new Democratic Congress is highly sensitive to it.”

Levin has joined with Ways and Means Chairman Charlie Rangel (D-N.Y.), Energy and Commerce Chairman John Dingell (D-Mich.) and Financial Services Chairman Barney Frank (D-Mass.) to press the White House on the issue. He said the administration has so far ducked, and while he is hopeful they will reassess, Democratic lawmakers will start to pursue a legislative fix, with hearings likely in the coming weeks.

Senate Finance Chairman Max Baucus (D-Mont.) is teaming up with ranking member Chuck Grassley (R-Iowa) and others to craft a bill that tackles the problem of currency manipulation more broadly, a Finance aide said.

Voss said the value of the yen is beyond the company’s control. And Toyota officials are quick to note the company is committed to expanding production in the United States.

To press Toyota’s American credentials to policymakers, the company recently launched an advertising blitz inside the Beltway. For the past several weeks, the hordes of Congressional and administration staffers who ride the Metro to work have been greeted by eye-catching ads as they exit the Union Station, L’Enfant Plaza and Capitol South stations.

The campaign features oversized numbers to tell the story. One poster carries a number 8, and beside it, the words: “Members on tug-of-war team. Maids a-milking. Toyota models built in U.S.” The ads also have run in the political press.

American carmakers are answering with numbers of their own. A Big Three-funded group called the Level Field Institute is circulating figures that show for every 1,000 cars sold here, Toyota supports 12 American jobs, while a domestic producer, on average, sustains 34.

“We should welcome the foreign auto jobs, but we should also be looking at policies that may be undermining the domestic automakers, because that’s where the jobs are,” said Jim Doyle, president of the institute. He said the group last month briefed about 25 House staffers on the findings.

As Toyota seeks to make its case, it is facing Detroit’s formidable lobbying muscle. Last year alone, domestic carmakers spent more than $20 million on their lobbying efforts, according to Senate reports. Over the 2006 election cycle, those companies collectively doled out $2.1 million in campaign cash, according to CQ PoliticalMoneyLine.

Toyota has labored to catch up as its stateside profile has risen. The company has increased its lobbying spending four-fold, from $872,000 in 2000 to $3.4 million in 2005, according to Voss. (She said the company had been inadvertently over-reporting its spending in Senate reports and is working to fix the mistakes).

In 2004, it added Jo Cooper, a former aide to then-Rep. Dick Cheney (R-Wyo.), to head the Washington, D.C., office. She has expanded the in-house team from four to seven people.

Until now, the company has not operated a political action committee — a result, several industry sources said, of a Japanese cultural aversion to the idea of campaign contributions. But Voss said the company is in talks about whether to start one.

In the meantime, Toyota has found other ways to translate spending into goodwill in town. It’s a sponsor of both the Kennedy Center and Ford’s Theatre, and it underwrites local community programs. Like most corporate offices, it throws an annual holiday party and kicks open the door to administration and Hill staffers. This year, however, the company went a step further, renting out the Mellon Auditorium for an affair that attendees said attracted about 1,000 people. “You just don’t see those size events anymore,” one guest said.

It has its work cut out. The November power switch installed in the majority Michigan’s two Senators, in addition to Dingell and Levin in the House. All are fierce defenders of their struggling home-state industry, and, significantly, all have enjoyed the backing of the United Auto Workers.

The union, which has seen its membership steadily slide, is working with Detroit car companies on a number of their top legislative goals — including the currency issue. “We share concerns about currency manipulation, and we’ve talked quite a bit about the need to re-establish a level playing field,” said Alan Reuther, the UAW’s legislative director. He noted that no U.S. plant wholly owned by Toyota is completely unionized.

But in choosing to locate its American operations across a swath of Southern and Midwestern states with low labor costs, Toyota has deliberately laid the foundation of a political support network that can act as a foil to the Michigan-based powerhouses.

The company last week unveiled plans to open its fifth U.S. assembly plant, outside Tupelo, Miss. Industry sources said it is no accident the carmaker decided to site the $1.3 billion investment, and 2,000 high paying jobs, in a state home to Senate Appropriations ranking member Thad Cochran (R) and Minority Whip Trent Lott (R). At an event announcing the news, Lott told Toyota officials, “We are warriors on your behalf.”

The company’s presence in so many states prompted Bob Lutz, General Motors’ head of global product development, to suggest recently that Toyota’s influence in Washington had eclipsed that of GM. GM spokesman Greg Martin said the comment did not reflect the view of the company.

Voss said the company is working closely with a domestic automakers on a range of issues, including fuel efficiency standards. As for its new push, she said Toyota’s expanded footprint explains the lobbying campaign. “We have a new story to tell, and we’re not shy about telling it.”