Automotive News - February 12, 2018 - v2 - 32

32 * FEBRUARY 12, 2018

SUBARU OF AMERICA

50 YEARS

Below, an Impreza five-door hatchback makes its way down
the line at Subaru's Lafayette, Ind., plant. At bottom, the first
Indiana-built Impreza rolls off the line in 2016.

U.S. plant took brand on new journey
Joint venture in Indiana
helped Subaru gain a
foothold in new market

"We had not anticipated for Subaru to be all
of production."
But as Outback sales strengthened, combined with additional nameplates such as the
Baja and Tribeca, the plant bounced back.
In 2005, Toyota Motor Corp. became a major
Fuji Heavy investor and by 2007, the first project between the two companies began: Toyota
Camry production at the Indiana plant.
In 2007, at the U.S. launch of the Camry,
Ikuo Mori, then CEO of Fuji Heavy, praised
Toyota as a factory mate.
"The speed with which Toyota makes decisions is impressive," he said. "And in the area
of logistics, production management and
control, they have no equal.
"There are many opportunities for Subaru
here. We no longer have to study them from a
case file or book. We can do it on the plant
floor right by their side."

Jack Walsworth

jwalsworth@crain.com

itting at the crossroads of America's
Corn Belt and Midwestern industry
is Subaru Corp.'s lone manufacturing plant outside Japan.
Subaru of Indiana Automotive Inc., the
plant that stocks Subaru's U.S. retailers with
their most critical products, has operated for
almost 30 of Subaru of America's 50 years,
having begun production in 1989.
It has gone through rounds of investment,
expansion and improvement, turning Lafayette, Ind., from a rural community into Subaru country.
The plant began as the product of an improbable joint venture between two small
Japanese automakers: Subaru's parent company, then known as Fuji Heavy Industries,
and Isuzu Motor Co., the truck-oriented maker that operated at the time as American Isuzu
Motors. Their $500 million plant originally
was named Subaru-Isuzu Automotive Inc.
Tom Easterday, now senior executive vice
president at the plant, said after Indiana
missed landing the Mitsubishi-Chrysler
joint-venture factory that went to Illinois, the
Hoosier State craved an auto plant.
Having a renowned engineering school in
nearby Purdue University, as well as business
programs at Indiana University and the University of Notre Dame, helped bring the plant
to central Indiana, Easterday said.

Toyota's influence
JACK WALSWORTH

'Big win'
Landing the venture was seen as a potential
"big win" for Indiana, said Richard Marshall,
former director of communications at Subaru of America. Marshall originally worked at
the Indiana Department of Commerce while
the automakers searched for a site.
"Political leaders saw an opportunity for
jobs," Marshall said.
The Lafayette site was selected in December 1986 and a groundbreaking ceremony
took place in May 1987.
The first vehicle, a Subaru Legacy, rolled off
the line on Sept. 11, 1989.
Easterday, who started at the plant in July
1989 as its corporate counsel and sole attorney,
said the blend of automakers and cultures was
pivotal when the plant opened. The mix of personnel and philosophies from Fuji Heavy, Isuzu, Japan and Indiana provided a broader perspective on how to manage, Easterday said - a
sort of checks-and-balances for companies
that were new to the United States.
"It enabled us to make sure that our culture
was good from the beginning."
When production began, Subaru built a
sedan and Isuzu made the P'up small pickup. Subaru quickly added a Legacy wagon to
the line.
There were growing pains in the early days,
Easterday said. Japanese engineers sent to
launch the plant had to assimilate to their

The Indiana partnership between the two
automakers lasted until May 2016 when Toyota removed Camry production, and by doing so, freed up capacity of 100,000 vehicles to
fuel a new wave of Subaru sales growth.
"We certainly learned a lot from that period," Easterday said. Blending Toyota and
Subaru manufacturing techniques enabled
the plant to harness best practices from both
automakers, he said.
The line that once built Camrys now builds
Subaru's Impreza compact sedan and hatchback, which was shifted there from Japan in
late 2016.
The newest Subaru nameplate, the Ascent,
will be built starting in May in Indiana. The
plant went through a $140 million expansion
to prepare for the three-row crossover.

Small town

new surroundings. Many were
new to the United States.
"It was all sort of foreign to
them," Marshall said.
Decision-making could be
complicated because the joint
venture had to consider the wishes of not just Fuji Heavy and Isuzu, but the interests of the joint
venture itself.
And selecting and training employees took a lot of time.

"All of a sudden we had vehicles
somewhat
competing
against each other in the same
plant," Easterday told Automotive
News.
At one point, Subaru ran an ad
claiming that the Outback had
more interior space than the Rodeo. Later, Subaru changed the
comparison to the Honda Passport. That helped only slightly
because the Passport also was
Easterday: Plant plays
being built by Isuzu at the India vital role for Subaru.
ana plant as a rebadged Rodeo.
Partners become rivals
The venture ended in January
Competition between Subaru
2003 when Fuji Heavy bought Isuzu's interest
and Isuzu was a nonissue because Subaru
in the plant for $1.
built cars and Isuzu made trucks.
The last Isuzu was built there in July 2004,
But when Subaru introduced the Outback,
leaving Subaru to pick up the rest of the
a rugged, taller version of the Legacy wagon,
plant's slack. For some time, a portion of the
the brand was suddenly tiptoeing into SUV
plant that Isuzu had used sat idle.
territory. The Outback's intended segment
"That was a challenge," Easterday recalled.
was the same as Isuzu's Rodeo SUV.

Easterday said the plant has maintained a
small-town atmosphere even though it is far
larger today than in 1989.
The plant, originally 2.3 million square feet,
now covers 4.4 million square feet.
At first, plans called for annual production
of 240,000 vehicles, split between the two
original partners. But last year, Subaru obtained a new EPA emissions permit to cover
higher production, with authority to build
514,000 vehicles a year - all for Subaru.
The factory built about 367,000 vehicles in
2017, with annual output forecast to reach
around 400,000 once Ascent production has
begun.
"I would have not imagined over 400,000
units," Easterday said, remembering the
plant's original projections.
The number of employees at the plant originally was expected to reach 3,000. Once Ascent production begins, that number will top
5,800.
Easterday, who has been through the highs
and lows of the manufacturing venture, said
it has had a vital role for Subaru and will continue to do so.
"Subaru has done a tremendous job of
evolving the brand," he said, "but keeping its
basic DNA intact." a

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