Toyota Announces Plan to Release Temporary Workers


Got Boondoggle?: Toyota Releases Temp Workers

I got asked today why I hadn't yet commented on Toyota planning to fire some temporary workers in Indiana. Mike commented on it on his “Got Boondoggle?” blog. A news article can be found here and Toyota's statement is here. Here is another newspaper article with some spirited reader debate. I guess I haven't commented because I don't know exactly what to think about the news.

Mike was optimistic in his reaction and I agree with his take on it and the spirit of his comments.

Although I feel saddened for the 350 families affected by the pain of losing of a job, I also feel hopeful. For one, the announcement stated a timeline “by the end of the year” for the elimination. That is a seven month horizon to ease the burden. From my manufacturing experience, temp workers are typically given little notice that their services were no longer needed. This meant same day or next day notice with the “Thanks for your work, here is your last check and don't come back tomorrow” speech. 

We often talk about how Toyota hasn't had layoffs in over 50 years. This flies in the face of that right? But aren't the expectations different for a temporary worker? They knew that they didn't have permanent jobs, that as business conditions changed (sales slowing or loaned-out workers returning from the San Antonio plant startup) they might not be needed.

Accuse me of being a Toyota apologist, if you will, but if temporary was the deal promised, I don't see how this violates the “Respect for People” principle. It all depends on how it was handled with people. If they were given notice and fair assistance in finding something new, that's more than many temporary workers get in similar situations.

It's impractical for any company, yet alone Toyota, to promise “lifetime employment” for all employees. By having some temporary workforce, this allows Toyota to maintain its commitment to the full timers. As long as the temporary workers are treated with respect during their employment (by managers and by permanent workers), are they really getting that raw of a deal? Is the alternative for Toyota to bring them on as permanent employees, finding things for them to do during the slow periods?

I can see both sides of the coin here – is Toyota being hypocritical in bragging about zero layoffs, but getting around that with a technicality of temporary workers? Does anyone have first-hand experience with Toyota in this way? Am I being hypocritical in attacking IBM Global Services on the one hand and being ambivalent about Toyota letting some temporary workers go?

I think what IBM is allegedly doing is a whole different game. Toyota isn't looking to move their factory overseas.

Once again, I'm not downplaying how painful it might be to lose the temporary job at Toyota. I'm just wondering how Toyota should have or could have managed this. Your thoughts?

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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.


  1. I agree Toyota creates a system to assure (as best they can) no layoffs (which I take to mean of permanent employees). Part of that system is a “release valve” of temporary workers to give the system flexibility to add and remove labor.

    They also cross train workers which allows workers to be moved from one task to another if demand warrants (among other benefits). And they pay substantial bonuses (in lieu of salary) which is easier to adjust – allowing Toyota to reduce “salary” (bonuses) without layoffs.

    One of the economist solutions to the traditional boom bust cycle (which we have been avoiding the last few decades overall) was to make wages more flexible (which means labor costs can be reduced without layoffs – or with reduced layoffs). Paying a portion of pay in bonuses allows this to be practiced (here I mean bonuses like 5-40% of salary – not $200 million dollars to one CEO…).

  2. I think Toyota has gotten a little bit of a free pass on this one. Now, some could argue that they have earned it, but that’s for a different time.

    I think the biggest deal locally is the perception that Toyota is laying people off, with no concern as to the people being Toyota full timers or PMI “temps”. There is also a pretty well understood unspoken rule in this area that if you want to get hired on by Toyota as a team member on the production floor that you have to serve your time as a PMI employee. With that as the background, I think most people didn’t view themselves as “temps” but as future Toyota employees just waiting to transition from PMI to Toyota.

    (In the interest of full disclosure, I don’t work for Toyota, never have, but I do live about 5 minutes from TMMI.)

  3. When you make a “no layoff” guarantee you always qualify the difference between having extra people due to productivity improvements (ie. Lean) and having to let people go due to a change in market conditions – ie. a layoff.

    The news article clearly indicated that this was due at least in part by a downturn in their SUV sales. This, to me, doesn’t fall under the “no layoff” guarantee with Lean.

    I know, a job loss is a job loss, no matter how you spin it. I’ve been there myself a couple of times and the end result is the same – you’re out. But to say that this violates a “no layoff” guarantee vis-a-vis Lean – no, I don’t agree with that.

    I do, however, feel that no one should be a “temp” for as long as some of these folks apparently were – 2 plus years. That’s just too long. Obviously I don’t know the specifics as I have nothing to do with the company, but that, to me, is a knock against the “respect for people” pledge. If you were told when you were hired that you were going to transition from outside temp to permanent, full time in 2 years then Toyota should have made good on the promise or had the decency to revisit the pledge and give the employees the reasons behind their decision not to hire them and allow those employees to make the decision to stay or go somewhere else in search of FT employment.

  4. While I have never worked for Toyota, I have worked for companies that use “temp” labor.

    Those employees are usually paid by a “temp” agency that is working in conjunction with the company needing labor. They are never promised a permanent position.

    Even companies using temporary labor still lay off regular, permanent staff. In my opinion, if Toyota were to lay off permanent employees and replace them with temporary labor, that would be an injustice to Lean (sound like any companies you know?)

    Mike Thelen
    Lean Coordinator
    Hub City, Inc.

  5. I do work as a V.T.M. variable team member. I was hired and told after one year of working I would get hired as a full time employee. Well with the economy the way it is I am about to be let go. Yet they have hired people off the street when it was in writing they would not do that. They did this so they would not dwindle the vtm workers because they saw the layoffs coming. What they are doing is ethically wrong but from a business stand point its brilliant. The sad part about this is American management is the cause of the underhanded dealing. The Japanese were honorable, were cutting our friends throats just to look good to them.


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