7.11.2008

Toyota Cuts Back – But Not on People

Not surprisingly, I see a significant difference between Toyota and the U.S. automakers in how they respond to changes in the market for cars and trucks.

In terms of production, Toyota’s response is similar to what every other car company is doing: cutting back on gas guzzlers and focusing more on hybrids and smaller vehicles. Every auto company is following that path because of the sudden and dramatic market shift resulting from rising gas prices.

Toyota announced on Thursday the details of its production changes. The company said it will be:
- Manufacturing the Prius at a new plant in Mississippi, starting in late 2010.
- Shifting production of the midsize Highlander SUV (scheduled for the Mississippi plant) to a plant in Indiana (which had been slated to make the fullsize Tundra pickup). Tundra production will be consolidated into a Texas plant.
- Temporarily suspending Tundra and Sequoia production, and production of V8 engines in Alabama, beginning Aug. 8. (No word on how long the suspensions will last.)

What distinguishes Toyota from everyone else is its dedication to the lean principle of respect for people. The
announcement of the production suspensions included a statement the likes of which I don’t recall hearing from any other carmaker:

Team members at both facilities, as well as the Huntsville, Ala. plant that builds Tundra and Sequoia engines, will continue to be provided work…

Jim Wiseman, vice president/external affairs for Toyota Motor Engineering & Manufacturing North America (TEMA), said "By using this downturn as an opportunity to develop team members and improve our operations, we hope to emerge even stronger."

Toyota is sending the message that it views holding on to skilled, experience workers as more important than whatever savings might result from temporary layoffs. Now that is how you encourage employee loyalty.

And yes, Toyota is probably better able to afford to do that than GM or Ford, for example. But Toyota is stronger today precisely because it has engaged in these kinds of practices in the past.

I hope the executives in Detroit are paying attention.

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