Jayski.com  is reporting that Joe Gibbs Racing will close their engine shop, lay off half of its engine shop employees, and get their engines from Toyota Racing Development. The deal is reportedly for three years, and may start immediately or in 2012.
Rumors are also circulating that JGR will expand to four teams, adding Carl Edwards next season.
FoxSports.com  recently quoted Lee White, president of TRD, as saying:
No, they’re not shutting down their engine shop and no we will not be building their engines. Of course, hell can freeze over and pigs can fly, but not in this world.
At this point, this is an unconfirmed rumor and should be taken as such.
Update: Joe Gibbs Racing president JD Gibbs said that the team does not plan to close its engine shop. Gibbs, speaking on SiriusXM NASCAR Radio’s Sirius Speedway with Dave Moody, said:
I think a lot of that started when Red Bull Racing announced they were going to cease operation. A lot of people started trying to plug things into different spots. There are some things that TRD and Toyota do really well, and there are some things that we do really well. For several years, we’ve been working on how to bring all those strengths together. [JGR Head Engine Builder] Mark Cronquist has got some real sharp guys and the question again is how do we bring all that together? If we can do that, I think there will be some real value. But there is no shutting down our shop, or shutting down theirs. We’re going to keep working on combining what they do well with what we do well.
He also said about the rumor of Carl Edwards joining JGR:
We get the most attention because we have an open spot. If other [teams] had spots, they’d all be in the rumor mill, too. The reality is that Carl is a gifted, talented driver. But you have to have all the parts; driver, crew chief, team and sponsorship. And that sponsorship piece is difficult to put together. From our standpoint, we are far from having any concrete decisions or directions. We have the availability to add a fourth car. We look at it each year and examine the possibilities. But we haven’t been able to make it work.
He also said that Joey Logano’s job is secure, even if they do add a fourth team.