Route to Recovery

A trip through the epicenters of the recession

Toyota dealer weathering the storm, worrying about commercial lending

Nov 16, 2009 17:06 UTC

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BIRMINGHAM, Alabama – It is not an easy time to be an auto dealer. Apart from worrying about when sales will revive, and at what level, Bruce Limbaugh’s biggest worry is access to loans.

“This is a major challenge for our industry,” said the owner of Limbaugh Toyota. “Even more than credit for consumers, I am concerned about the lack of commercial lending for dealers. Local and regional banks in particular are spurning our dealers.”

Limbaugh’s father bought the Toyota dealership that he now runs back in 1989 and sold it to him in 1995. Like the rest of the U.S. auto industry, Limbaugh Toyota has been hurt by a combination of the recession, the U.S. housing crisis and the credit crunch. So far this year new car sales at the dealership are down 22.6 percent. The industry as a whole has seen U.S. sales fall from a peak of 17 million units in 2005 to an estimated level of just over 10 million units in 2009.

“For us, this truly is a Great Recession,” Limbaugh said. “My net worth has been cut in half over the last year.”

That said, Limbaugh said that last month was the dealership’s second most profitable October in 20 years, and that sales were actually up over October 2008.

“Every month since February our bottom line has improved,” he said.

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Over the past year Limbaugh has cut his staff to 67 from 75. He would “rather not cut that anymore. But the market will dictate that.”

Long term, he believes the auto industry and sales will turn around for what for him is truly a family business. He has three sons and a son-in-law working at his dealership and another son-in-law owns the advertising agency that handles his marketing.

Photo by Carlos Barria

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“Do I think we will recover? Absolutely,” he said. “I’m banking my family’s future on it.”

COMMENT

and this was all before their cars starting speeding up and driving through buildings lol… The crazy part is their always rated number #1.

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Toyota worker shows off her Kaizen

Nov 16, 2009 16:57 UTC

HUNTSVILLE, Alabama – On our way around the Toyota truck engine plant here, we met Shenika Nicholas, who proudly showed off the Kaizen, or continuous improvement, that she came up with during the plant’s three-month shutdown that began in August 2008.

Nicholas, a former schoolteacher who has been here three years, works at a point in the plant where engine blocks are rolled by workers along a short platform on ball bearings. She told us that before the shutdown she was concerned that workers could slip on the ball bearings, but never had time to do anything about it.

She came up with a design whereby workers could walk along rubber pads while pushing the engines along the platform, using waste materials that she found in the plant.

Nicholas said that being able to contribute to safety in the plant meant a great deal to her.

“It’s a wonderful thing,” she said. “I feel so proud to be a part of this.”

Video by Carlos Barria

Toyota plant workers sheltered from the downturn

Nov 16, 2009 16:43 UTC

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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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COMMENT

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.

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