Route to Recovery

A trip through the epicenters of the recession

Toyota plant workers sheltered from the downturn

November 16, 2009

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HUNTSVILLE, Alabama – When the call came in on July 4, 2008 that Toyota was going halt production for three months, Wes Woods was getting ready to watch a fireworks display with his children.

“I was told that not only were we going to stop production, but that we had to come up with a three-month training plan for all our team members within two days,” said Woods, assistant general manager at the Toyota engine plant here.

The extreme slump in auto sales, which peaked at 17 million in 2005 but are expected to barely pass 10 million this year, forced domestic auto companies GM and Chrysler into government-led bankruptcy, and they shuttered plants, slashed their dealership networks and cut tens of thousands of jobs in order to receive government aid.

This Toyota plant, which began production in 2003 and makes big truck engines, did things differently.

“I don’t think anyone anywhere in the auto industry has ever been through anything like this,” said plant president Jim Bolte.

Although the plant shut down for three months to help cut inventory levels, no permanent workers were laid off, though temporary workers were let go and overtime was cut.

Instead, Toyota came up with a three-month training, improvement and cost-cutting plan starting in August 2008 for its 900 employees here in Huntsville.

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“I was very relieved when I heard they were not going to lay us off,” said Kim Jordan, who works in the plant’s tool shop. “There are not many companies that would do that for its employees.”

Joe Hereford, a trainer at the plant, which has a capacity of 400,000 engines a year, said that Toyota was also upfront with employees throughout the process.

“I was scared at first, but Toyota kept us informed about how things were going,” he said. “They told us the good, the bad and the ugly. We all made the same sacrifices and we all stuck together through this.”

The improvement part of the program was focused on having employees look for Kaizen – Japanese for “continuous improvement – or ways in which to make their work more efficient. Kaizen has been adopted by employees here as both noun and verb, as have other terms like muda (waste) and yokoten (borrowing the best practices of others).

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“I came up with a couple of Kaizens for my work,” said Karen Abernathy, who works on the assembly line. “I found that there was a fair amount of motion muda at my work station.”

She suggested to management that the location of her tools and parts be rearranged, shaving 3 seconds off her work per engine.

“Toyota opened up a lot of doors for us and allowing us to participate has been a great experience,” Abernathy said.

Assistant production manager Tim Miles said that the collective improvements from employees on the assembly line that Abernathy works on – a few seconds here, a few there – totaled 416 seconds.

“Individually the small improvements don’t like sound much, but together they really add up,” he said.

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During the three-month down period the plant came up with 3,500 Kaizens. Employees were also encouraged to look for financial waste. Lisa O’Neill, an accounting specialist at the plant, said so far employees had come up with ideas that have cut plant annual expenses by $1.2 million so far.

“If I have 30 managers that means I have 30 auditors looking at expenses,” Bolte said. “But if I have 900 auditors out on the plant floor then I know the results are going to be better.”

In August this year Toyota decided to have four-cylinder engines for its Camry and RAV4 models at the Huntsville plant, which will create an additional 240 jobs.

Bolte said that the way Toyota handled the plant’s down time last year showed employees that they can trust their employer.

“When we made our initial announcement about our non-production time and told our team members that they would not lose their jobs, we could see that many of them maybe didn’t believe us,” he said. “And probably they had heard the same from management at other companies and then were fired two weeks later.”

“Now they know that when we say things we really mean them,” he added.

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Photo by Carlos Barria

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Comments

American business should learn from this. But I think we are too greedy as a culture to have an American company do things the way Toyota did.

 

Finally a feel good story about business in the U.S. But notably from a Japanese company.

 

More than anything this is what happens when you open your mind to possibilities and having the flexibility to adapt to your environment. Time and time again, it’s the companies who are able to adapt to their economic environment that are the ones that will survive, and this is a perfect example. Rigidity is great where it counts, but it’s just one state of flexibility. Cheers to the Alabama workers who capitalize on this and showing that American workers can handle any manufacturing task properly if given the proper leadership and opportunities.

Posted by Mark | Report as abusive
 

I will wait to see if this outcome is the same if for some reason something sours in toyotas future U.S.operations.

 

Good work, in a classic Toyota action. James Lincoln of Lincoln Electric in Cleveland had perhaps the most productive company in the world 70 years ago, by guaranteeing that no one would lose their job through productivity.

Half of the renowned Toyota Productions System is regard for employees. But that half tends not to be so widely copied as the half that finds and cuts waste.

 

TOYOTA do things different. Most foreign companies take their employees as partners. American companies take their employees as “expendable peasants”. The CEO makes $10, while a thousand employees make $1 million together.That is the American way. Greed, and disregard for common good of all. And the result shows in their products.

The CEO of the world largest bank (China) makes less than $300,000/year. In American bank, CEO’s make that amount in 2 weeks or less. And we all wonder why Americans work so much and yet owe so much in personal debt.

GREED will destroy America.

Posted by Theo | Report as abusive
 

well, their policy didn’t stop Toyota from closing the Nummi plant in Fremont California.

Posted by joe | Report as abusive
 

Uhh. Joe… NUMMI in California was half owned by General Motors… Toyota was lucky to get that albatross off its neck.
The big news here is that these are NON-UNION workers doing things to improve the company…. If GM or Ford tried this, they would have the union screaming bloody murder that its not in the workers contract to come up with improvement ideas and be trained on things that “aren’t their job”.

Posted by Bill | Report as abusive
 

Greed has destroyed America already.

It’s pervasive in our politics and laws.

Let’s hope more foreign companies come in here and quietly lobby to change our laws. Either that or we all need to get used to being peasants…. or become Robin Hoods.

Posted by various animal | Report as abusive
 

Japanese salvage their plant to save face, in spite of a global slump earlier. It is not their culture to fire redundancies but if situation so bad, they might as well shut it down to avoid bankruptcy. Filing chapter 11 means they made poor business decisions that Japanese wouldn’t admit lightly.

Posted by MacDonald | Report as abusive
 

Oh Please,

enough of the Toyota fawning. I have a degree in manufacturing and if anyone thinks Toyota is the be all end all, then you are not being intellectually honest! American companys do not treat their employees like cannon fodder! The problem is the liberal-elite who hate american companies but love foreign ones! I for one would like to know why my tax dollars support any foreign companies!

Posted by LTC S. Baker | Report as abusive
 

We have the same problem with unions here in the UK,take our postal service, do not wan’t to moderenize up and live in the real world,years ago our dockers; coal miners, went to the dogs, when will they ever learn !

 

This is the way you do business. Are you paying attention corporate America? No wonder they are one of the most successful car companies in the world. Don’t hold your breadth for the arrogant corporate dimwits in the US to make some changes that produce results. They are not interested in that, they are to busy trying to figure out how to steal from everyone else.

Posted by BB | Report as abusive
 

How many temporary workers has Toyota laid off? Quite a different story (i.e. ALL of them).

Their only strength is in their P.R.

Most traditional American companies (i.e. not run by MBA’s) utilize some sort of “rebalancing” when things slow down, this is not exclusive to Japanese companies. I guess they don’t teach this in “business school”

Posted by Joe Bonasses | Report as abusive
 

Only three words are worth noting:

1) non-union
2) non-union
3) non-union

Until big unions are broken up to stop slopping in the pig trough of production inefficiency, innovation and motivation will be crushed in America. No amount of bailout money will change that fact. Yes – government unions are included.

Posted by Joe Worker | Report as abusive
 

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