4.25.2007

Toyota’s Long-Term Thinking on Imports

Will Toyota ever stop importing vehicles into North America?


            I raise that question after reading some statistics in a recent New York Times article, which noted that Toyota is increasing its imports into the United States.


            Imports and exports are not the goal of a lean strategy, which would be to build products as close as possible to your customer, eliminating the waste of transportation. And of course, that is why Toyota has been on a steady and continuing path of building plants in North America.


            But the capacity of those plants doesn’t yet meet North American demand. Toyota sold 2.54 million vehicles in the United States in 2006, and, according to the article, 46 percent of those were imported.


            That percentage was up from figures of 38.4 percent in 2005 and 37 percent in 2004. And it may rise further this year because of what Toyota expects will be a significant increase in sales for the hybrid Prius – which is only made in Japan.


            Toyota has been steadily increasing its capacity to build Camrys in the U.S., since that is the most popular car here. And, not surprisingly, it has cut back on Camry production in Japan. But that cut is being offset by an increase in Prius production.


            It takes time to build new plants. That may be one reason Toyota just announced that it will build Camrys at a Subaru plant in Indiana, which saves it from building another new plant from scratch.


            But at least in my mind, the situation raises some intriguing questions about the long-term thinking at Toyota – which is a company known for long-term thinking.


            Did Toyota recognize that demand here would grow as quickly as it did? Could or should the company have built U.S. plants at a faster pace? Will it ever have enough plants in North America to fully satisfy demand here – or is that not Toyota’s goal?


            What do you think?


            By the way, the Times article quotes an organization called the Level Field Institute, a group founded by retirees of the Detroit automakers, as saying that Toyota accounts for 9 percent of automotive manufacturing jobs in the U.S. and roughly 16 percent of the vehicle market here. Meanwhile, the group says, GM accounts for 29 percent of the jobs and about 24 percent of the market.


            Assuming those figures are accurate, I find that fascinating. The figures mean that GM employs more than three times as many people here as Toyota, but only has 50 percent more market share. I believe that says a great deal about what you can achieve through lean manufacturing methods.


            Don’t get me wrong; I don’t enjoy seeing employees of the Detroit companies lose their jobs. But it’s wrong to paint Toyota as the villain, as some people do, saying it is responsible for the huge decrease in automotive jobs that has occurred in this country. If Toyota is exploiting or taking advantage of anything, it is the inefficiencies of the Detroit companies and their failure, at least at first, to produce high-quality vehicles that provided the greatest value to customers.


 

1 comments:

Anonymous said...

I have a hard time with people "quoting" numbers to make a point. First the number of people employed by Toyota and GM need to be broken down as to workers who build parts here, and who assembly the cars here. You also need to pull data on the man hours it takes to build a car and as I remember the US workers were more efficient according to a study by reliable poll. Second Toyota should not be painted as the villain but more of a shrewd salesmen by their practices of totally controlling their image as a car builder and seller of cars here. Just ask the person on the street these questions. How many cars Toyota imports? What is the percentage of parts do they build here and how much do they pay their workers at the parts plants? And of their workers in the assembly plants how are the workers pay scales determined from the person unloading the trucks and rail cars to the final person loading the finished units on transports.