CHICAGO—Toyota is investing $400 million to create 400 jobs to increase capacity of its Highlander SUV, at its Princeton, Ind. plant.

The hiring and expansion will begin in 2013.

The Japanese automaker hopes to increase production of the Highlander by 50,000 at the Indiana plant, wher it built more than 100,000 in 2011. The company also says it plans to stop making Highlanders in Japan, eventually moving that production to Indiana.

once the upgrades are complete, Toyota will have capacity to build about 255,000 Highlanders a year in Princeton and in China.

The Princeton plant in southern Indiana employs more than 4,000 people who make Sienna minivans and the Highlander and Sequoia SUVs.

Last week, lawmakers in Indiana voted to pass legislation prohibiting labour contracts requiring workers to pay unio representation fees.

It is the first state in a decade to enact a “right-to-work law”—a move that could majorly increase investments in the state’s manufacturing sector.