Toyota Invests In Workers Instead of Laying Them Off

1) Guardian (U.K.) Story

2) Houston Chronicle Story

3) Chicago Tribune Story

ToyotaLook at those articles. How amazing is this illustration of Toyota’s “respect for people” principle? You can treat people as expendable costs or an asset to train and invest in. Even as Toyota’s truck sales have plummeted, are they resorting to layoffs? Nope!!

“Even though full-sized Tundra pickup trucks won’t be rolling off the production line of Toyota Motor Corp’s factory here next month, the world’s biggest automaker is keeping 2,000 plant workers on the payroll while it waits out a downturn in demand for its biggest gas-guzzling models.”

While its Big Three U.S. rivals are shutting down truck plants and laying off workers, Toyota is hunkering down to keep its foothold in the heart of U.S. truck country.

Toyota will suspend Tundra production at its sprawling San Antonio factory in early August for three months due to slow sales, which are down nearly 50 percent for the first six months of 2008 versus a year earlier. Record U.S. gasoline prices over $4 a gallon have sent consumers scrambling for smaller, more efficient models.

But that doesn’t mean the plant’s workers won’t be busy.

“Team members will continue to report to work and will continue to work as a two-shift operation, and they will continue to be paid 100 percent of wages,” said Toyota spokesman Mike de la Garza.

But instead of building trucks, workers will spend their time in “training and development, to continue quality improvement activities, and to perform community service work,” Toyota said.

The Tribune article points out that over 4,000 workers in Indiana won’t be laid off while that plant is retooled from trucks to smaller SUVs.

From a Business Week article:

“This is not an inexpensive proposition to pay them for no production,” Toyota spokesman Michael Goss said Thursday, but the company wants workers ready when production resumes. “We have a long-term optimistic view of the truck. It’s going to take some time to get through this economic downturn.” (The Guardian)

Many people would look at this story and think Toyota’s being stupid, right? Not the “Lean thinkers” out there, though. Bravo to Toyota.

Note: Toyota *did* layoff 200 temporary workers. But that’s different, right?


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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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10 Comments on "Toyota Invests In Workers Instead of Laying Them Off"

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  1. Anonymous says:

    Funny how our home town Detroit News barely mentions the workers not losing their jobs angle.

    DETNEWS

    Toyota can afford to train people while GM can afford to buy out 19,000 employees. GM can afford to close four truck plants and those 10,000 people are lucky to take one of the jobs freed up in the buyouts?

    Sure, Toyota can “afford” to invest in it’s people (they’re not teetering on the edge of bankruptcy), but how could GM afford NOT to look after it’s people the same way all these decades?

    Toyota is just people (they’re not perfect). GM/Ford/Chrysler are just people also. Toyota’s average employee IQ can’t be any smarter than the Big Three. They’ve just managed smarter over the past three decades.

    Is there any doubt the true Lean approach is best??

    But we’re preaching to the choir here.

  2. Neutron Jerk says:

    I’m guessing Toyota’s workers won’t be reading the paper in the cafeteria ala the infamous UAW “jobs bank” program the Big 3 agreed to.

  3. Mark Graban says:

    Interesting that Toyota supplier Dana, a company now run by CEO Gary Convis (formerly of Toyota), laid off 100 workers as truck production had slowed in Indiana. Now that trucks will ONLY be built in San Antonio, what will happen to the rest of the Dana workers in Indiana while that plant is being re-tooled to build Highlander SUVs?

    Toyota is in a MUCH better financial situation than Dana, which has been coming out of bankruptcy. I don’t think it would be fair to pin this all on Convis, since he’s not responsible for getting Dana INTO bankruptcy.

    I think the lesson is:

    1) Build financial security (cash position and profits) through long-term thinking and Lean

    and then (and only then)

    2) Can you afford to keep employees on board.

    Or do you have to do #2 to be able to make #1 happen? What would you do if you were Convis?

    ARTICLE LINK

  4. Karthik Chandramouli says:

    Comparisons of Toyota’s recent announcement to the UAW Jobs Bank program are not valid. Toyota is doing something fundamentally different than the Big 3.

    In the Jobs Bank program, you get paid NOT to work:

    “Ken Pool is making good money. On weekdays, he shows up at 7 a.m. at Ford Motor Co.’s Michigan Truck Plant in Wayne, signs in, and then starts working — on a crossword puzzle. Pool hates the monotony, but the pay is good: more than $31 an hour, plus benefits.

    ‘We just go in and play crossword puzzles, watch videos that someone brings in or read the newspaper,’ he says. ‘Otherwise, I’ve just sat.'”

    Toyota provides their team members with job security, but they invest in continuous training of their people. Team members get paid, but they are not sitting around idly, doing crossword puzzles.

    They will be doing 5S, training, and some kaizen (although kaizen without mass production is largely meaningless, in my opinion). Although it’s monotonous to do this for 3 months, this is exactly what Toyota did at their UK plant for one year, back in 1996-97, when the currency environment made their Burnaston factory highly unprofitable.

    Toyota’s first and only mass layoff off full-time employees was in 1948, when they were on the verge of failing. The juggernaut we see today started off as a small business that went through extreme growing pains.

    It’s hard to ascribe cause-and-effect here, but the promise of stable employment and long-term relationships are the foundation for Toyota’s success.

    In 60 years, when a Chinese or Indian company has achieved Toyota’s level of success using low-paid temporary workers, we can revisit whether financial success is a prerequisite for long-term commitment to front-line employees…

  5. Bob Graban says:

    You can say it’s not a jobs bank program, but the community service part leads me to believe otherwise. If it becomes long-term for some people, how much training can some workers get and stay attentive without the newspapers and crossword puzzles?

    I remember when the jobs bank program began in the mid-80’s at GM and the workers were assigned to help improve customer satisfaction and quality; a number of them became very good and conscientious go-fers.

    You’re dealing with people and the variation that comes with them. Some have gone on to get their PhD’s while in the jobs bank while others had more trivial pursuits over such a long-term assignment.

    For most assigned to this “training program”, I doubt their experiences would “energize them to look forward to the next morning with the positive anticipation for the awesome accomplishments to come that day”

  6. Anonymous says:

    Both Toyota and the Big 3 are letting people go with the downturn in large Pickups and SUV’s. In the Big 3 they are classified permanent, while at Toyota they call them temp. workers. The percentage of temps can run between 20-30%. They are expected to perform the same jobs and participate in continous improvement activities as permanent workers. Read “Toyota’s Assembly Line, A view from the Factory Floor” by Ryoji Ihara, for some insight.

    In both cases they are workers whose experience will be lost.

  7. Anonymous says:

    Dana is laying of 3000 employees… run by Gary Convis.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=ae8Gh93GbUfo&refer=home

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