Why Toyota Wins From the Auto Crisis
November 19, 2008 by Grant
From a blog posting I just read:
Do you know how many hourly jobs GM has laid off from 2006 to July 2008? Take a guess. How about 34,000? And now, they’re talking about another 5,500 layoffs.
…
OK, here’s a better question. How many hourly jobs has Toyota’s American production system laid off in the same time frame? Zero. That’s right. ZERO. How? Isn’t Toyota experiencing the same slow down in auto sales as GM is? Yes, it is. And yes, Toyota has halted production at its Texas and Indiana plants for the past 3 months. But the 4,500 people who work at those plants have not been laid off.
The answer: Toyota has a special culture, deep-rooted values, and respect for their workforce. Toyota’s tradition is to NOT lay off employees during hard times. This tradition hasn’t really been put to the test until now. And Toyota has stuck to its guns and its values.
“This was the first chance we’ve really had to live out our values,” says Latondra Newton, general manager of Toyota’s Team Member Development Center in Erlanger, Ky. “We’re not just keeping people on the payroll because we’re nice. At the end of all this, our hope is that we’ll end up with a more skilled North American workforce.”
For the full article: What Toyota knows that GM doesn’t
My thoughts on this is two fold. First, I’m impressed with Toyota as a consumer. Second, I’m sentimental to the fact that this really is the end of the American car industry.
Back in the 80s, when America stopped importing “cheap” Japanese cars and Lee Iacocca was making history at Chrysler, the American car industry seemed pretty much unstoppable. The “Big Three” were called that because they were actually the biggest – not because they are the only ones left standing – as is the case today.
Through mergers and acquisitions, the industry, even with all it’s clashes with the union, the auto industry had the history of supporting it’s workers and ensuring a career out of tens of thousands of skilled laborers at a time that many corporations dumped their workers en masse.
But that was then and this is now.
In a surreal flip, it would now appear that those clunky Japanese car companies are the industry leaders today; and have been for more than a decade. While Detroit was drinking the oil-is-forever koolaid and pumping out beefier and bigger engines, the Japanese were hard at work perfecting their engines and builds to six-sigma and improving efficiency.
With gas hitting $4 a few months ago and the credit crisis, it wasn’t so much that the Japanese won the bet, but rather, Detroit found itself with an empty hand. Saddled with factories meant to churn out beefy SUVs, Hummers and trucks, the new paradigm in energy and economics poured cold water all over the roaring party up until this point.
GM is losing a billion dollars a month and will likely buy out Chrysler. Layoffs in the 30,000 – 40,000 range are to be expected, along with 12 factories closing. Morale is no doubt at an all time low, with every worker wondering if he’s next on the cutting block. Even if GM is able to magically survive with an infusion of cash (bailout), the Volt is still years out and a grasp for straws.
Meanwhile, Toyota has taken a page straight out of the American automaker book by proving its loyalty to the company workforce. Though Toyota is halted on much of its production, they are taking the down time to train their workers to be even better skilled, educated and efficient workers. When the economy picks up again, Toyota will be the equivalent of a fully rested team going to the playoffs against a miserable and beat-up team that has just played 10 losing games in a row. It’s no contest who will win.
If the Seattle Auto Show was any indication, the consumers have already voted, as we saw crowds around Toyota, Honda and Jetta. All the while, the sprawling 2-ton Ford F150 rotating 360 degrees might as well been invisible. Chevy and Escalade Hybrids were looked on more with a sense of derision or perplexed bewilderment rather than consumer curiosity (though this is Seattle).
The new automotive landscape is already here – it’s just across the sea.
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