Toyota mulling ways to cut U.S. costs

CHICAGO (Reuters) -- Toyota Motor Corp.'s North American president said today that the automaker is considering ways to cut U.S. labor costs without reducing wages for workers.

Speaking on the sidelines of a luncheon at the Chicago Auto Show, Jim Press said the Japanese automaker needs to be more efficient in producing vehicles because rising costs are cutting into profit margins.

Press said Toyota is looking at smaller plants, improved manufacturing processes and fewer parts that require less labor.

The U.S. auto industry, particularly Detroit automakers, is battling rising health care, labor and commodity costs.

"What we want to do is head off the issues," Press said.

In a wide-ranging speech, Press also said industrywide U.S. sales of cars and trucks could top the 16.5 million units forecast for 2007.

"My hunch is that it could be a lot better than (16.5 million)," he said.

Most industry executives have forecast U.S. auto sales to be flat at best this year, with some calling for total industry volumes as low as 16 million units.

That would be down from 16.55 million sold in 2006, which was itself down 2.2 percent from the year before.

Fueled by the popularity of fuel-efficient models such as the Camry, Prius and RAV4, sales at Toyota bucked the trend, surging 13 percent last year at the expense of the Detroit 3.

Press said the Detroit 3 will recover, adding that they are taking the right steps by reducing production in North America and reinvigorating their vehicle lineups.

He said Toyota's expansion in the United States is part of the automaker's effort to localize manufacturing.

Building vehicles in the market where they are sold helps the company reduce foreign currency exposure, he said.