By February 15, 2009 1 Comments Read More →

Toyota’s Buyouts and New Leadership

Taking the Wheel as Toyota Skids – NYTimes.com

Toyota’s Cost Cutting Plan to Include Buyouts for Factory Workers

Toyota famously has avoided layoffs of permanent employees since 1950 and they’ve also taken extraordinary measures to avoid them in recent downtimes.

But, with vehicle sales down and Toyota not having an infinite pile of cash, they are starting to offer some voluntary buyouts:

The measures disclosed on Thursday affect about 18,000 employees at Toyota’s plants in the United States. Similar steps are being taken at company plants in Canada and Britain.

Toyota, which has a philosophy of lifetime employment for its permanent employees, said it did not plan to eliminate any of its full-time workers’ jobs.

But it is offering a voluntary exit program that includes 10 weeks’ salary, plus two weeks’ salary for every year worked, and a $20,000 departure bonus. It does not have a goal for the number of workers it hopes will take the plan.

In other moves:

Toyota said it expected to schedule another series of nonproduction days at some of its American plants in April. During those periods, its workers are paid, but take training classes and perform repairs on the assembly line.

Toyota said it was likely to impose a work-sharing program in some of its American plants, where the hours worked in a two-week pay period would be reduced from 80 to 72.

Toyota also is eliminating bonuses for salaried employees and executives and cutting pay for executives. It said there would be no pay increases “for the foreseeable future.”

The NY Times also has an article about the new President, Akio Toyoda. It was his grandfather, Kiichiro Toyoda, who was forced to step down after their last layoffs. It’s rare to get a shout out to the Japanese phrase “Genchi Genbutsu” (or its associate term, “Gemba“):

THE Japanese phrase genchi genbutsu translates as “go to the spot” — in other words, “see it for yourself.” Few executives embrace that philosophy as completely as Akio Toyoda, who is slated to become the next president of the Toyota Motor Corporation.

Last summer, during a trip so secret that Toyota’s public relations staff didn’t know he was here, Mr. Toyoda visited a dealership in Ann Arbor, Mich., and decided to satisfy his curiosity about a pickup truck recall.

Still wearing his business suit, he got down on his hands and knees on the warm blacktop to examine the undercarriage of one of the trucks, shocking his American hosts, who didn’t expect a corporate V.I.P. to be so hands-on.

They, and everyone else at Toyota, had better get used to it.

With the family legacy, it wasn’t always obvious Akio was going to run the company. Earlier career steps included stops in banking and consulting — two professions often blamed for ruining manufacturing companies:

Mr. Toyoda is fluent in English, perfected when he earned his M.B.A. at Babson College in Wellesley, Mass., and during the years he spent in New York, working as an investment banker and management consultant and living around the corner from the Frick Collection.

Akio won’t be expected to completely and radically overhaul the company, even after suffering its first operating loss since 1937:

Akio Toyoda is not expected to turn the company upside down. Toyota is governed by a series of management principles that collectively represent “The Toyota Way
” — practices that focus on consensus management, continuous production improvements and in-depth investigations before any strategic shifts occur.

So it seems like we won’t see any overreacting, nor will Akio be held up as a superhero CEO, as happens so often in Western companies.

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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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1 Comment on "Toyota’s Buyouts and New Leadership"

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  1. Brian says:

    I very much appreciate your posting the details of the reductions at Toyota. I was heartened to see how they are going about it. From news accounts it sounded more like a typical ” we will be laying off xxxx employees” and I had been discouraged by that misconception.

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