Slices of Japanese business, politics and life
Toyota’s fortitude tested as jobs on the line
With global car sales sinking severely and rapidly in the past few months, automakers from Nissan to Volvo and Peugeot are reducing full-time staff in an urgent effort to slash costs. Contract workers — the first to go when business turns bleak — are gone or on their way out at most car manufacturers around the globe.
But when Toyota Motor so much as blinks at the question of whether they would let permanent staff go, the reaction is exaggerated. And it’s not just because Toyota is the world’s biggest automaker and was, until last year, the most profitable and envied in the business. Toyota is, quite simply, obsessed with job security.
In my many conversations with Toyota officials and executives over the years, 1950 has come up time and again as a major turning point in the company’s history. That year, a plunge in car sales and the risk of bankruptcy forced Toyota to sack thousands of workers after management and union workers — on strike
against the proposed steps — failed to reach a compromise.
Insiders describe it as a “traumatic” experience when founder Kiichiro Toyoda stepped down from being company president to take responsibility.
Toyota has not cut any permanent jobs in Japan ever since. It’s almost unheard of overseas too, though some were culled in Thailand during the Asian financial crisis in 1997.
But with the worst economic crisis in 80 years forcing Toyota to close factories for days, weeks and months at a time around the world, the jitters are back. This week, a company source said Toyota was considering cutting full-time employees in North America and Britain, most likely through voluntary buyouts. The reduction would be to the tune of 1,000 workers, according to the Nikkei business daily.
Labour issues are so sensitive that it took hours for Toyota to issue a statement regarding the report, which ultimately neither confirmed or denied that it was even considering the cuts.
Today, another Japanese newspaper reported that Toyota would produce 60 percent fewer vehicles in Japan in April. If those levels continued, the current domestic headcount would be untenable, the paper said.
Avoiding job cuts at any cost is commendable, or irresponsible, depending on whom you ask. Some market participants balked when Toyota said in November that it would spend some $300 million this year to keep U.S. staffers on the payroll while factories were idled. That figure is likely to have expanded since.
But Toyota has always stood steadfastly by its commitment to its workforce. Another well-known episode dates back to 1998, when Moody’s Investors Service lowered its top-notch credit rating on Toyota citing the automaker’s policy of effectively guaranteeing life-time employment.
Incensed, Toyota officials flew to the ratings agency’s offices in New York to argue that the commitment it showed to its workers was a strength, not a weakness, and vowed to continue the practice.
It would be difficult to single out Toyota if it does go ahead with the job cuts when rivals such as Nissan and Honda are already taking more aggressive steps to shed headcount. But nobody said being No.1 was easy.
Photo credits: REUTERS/Kim Kyung-Hoon (JAPAN); REUTERS/Kim REUTERS/Mark Blinch (CANADA)