Toyota 2010\/Crisis at the World\u2019s Largest Automaker<\/p>\n
Order Description<\/p>\n
Read the Toyota case. Provide answers to the following questions. 1 page maximum (single space), A4 size, 12-point font size, 1-inch margin around.
\n1. What do you think were the main and most important causes of the Toyota crisis
\nDon\u2019t just repeat phrases or paragraphs from the case, but think more deeply about the
\nQuestion. You would need to go more deeply than just listing bullet points.<\/p>\n
2. What should Toyota do to restore its reputation and competitive advantage<\/p>\n
In addition to the attached file, about the Toyota case, you may find this article useful. It is a report from harmstad university or you can use any other supporting document. You don\u2019t have to write it APA, just a question and answer.
\nwww.diva-portal.org\/smash\/get\/diva2:349746\/fulltext02<\/p>\n
yale case 09-040 february 3, 2010
\nToyota 2010
\nCrisis at the World\u2019s Largest Automaker
\nArthur Swersey1
\nAndrea Nagy Smith2
\nCatherine Forman3
\nJaan Elias4
\nIn winter 2010, the Toyota Motor Corporation faced a crisis. Following a number of highly
\npublicized accidents involving Toyota vehicles, the company was forced to recall millions of cars
\nwith potentially deadly defects. Toyota shut down production at several of its North American
\nplants, halted sales of some of its most popular models, and issued a public apology. Customers
\nfled the showrooms, and Toyota sales in the U.S. dropped 16 percent in January 2010.
\nAdditionally, the U.S. government promised to get involved as both the Obama administration
\nand Congress threatened investigations.
\nObservers were astonished. Toyota had built a reputation for the reliability of its automobiles.
\nOver a period of decades, the company had pioneered lean manufacturing and a stringent quality
\ncontrol system that had become the envy of the world. Building on this success, in the late 1990s,
\nToyota\u2019s leadership had set a goal of capturing a 15 percent share of the world auto market. From
\n2000 to 2005, Toyota had steadily expanded its global manufacturing capacity and had also
\nworked to reduce costs by benchmarking to Chinese manufacturers.
\nThe strategy seemed to work. By 2005, Toyota was worth more than the Big Three American car
\ncompanies put together, and The Economist called it \u201cThe Car Company in Front.\u201d5 By 2007,
\nToyota achieved its goal of becoming the largest car manufacturer in the world.
\nHowever, at the end of the decade, significant problems appeared. In the mid-2000s, the number
\nof recalls on Toyota vehicles began to increase. The company\u2019s quality rankings slipped, and in
\n2007 its vehicles were downgraded by Consumer Reports. By 2009, Toyota recalls affected over
\nfour million vehicles in the United States alone. In December of 2009, The Economist, the same
\nmagazine that had lauded the company just five years earlier, now declared on its cover \u201cToyota
\nSlips Up.\u201d6 Other publications followed suit with equally prominent stories about slipping quality
\nat Toyota. The New York Times published a front page story under the headline \u201cToyota\u2019s Slow
\nAwakening to a Deadly Problem,\u201d7 and The Wal Street Journal pronounced, \u201cToyota Is Unable
\nto Hit the Brakes on Crisis.\u201d8 During January 2010, broadcast news outlets featured nearly daily
\nupdates on Toyota\u2019s woes.
\nl
\nAuto industry analysts suggested that the company\u2019s rapid expansion had strained Toyota\u2019s
\nability to control its quality. In winter 2010, the company that had become one of the great
\nsuccess stories of the automobile industry faced a crisis that could cost it billions of dollars and
\nthreaten its survival. Observers wondered what, if anything, the company could do to restore the
\nquality of its products and its reputation for reliability.
\nA Brief History of the Toyota Production System
\nToyota\u2019s unique production system evolved because of the competitive disadvantages that the company
\nfaced after World War II.
\nThe Toyota Motor Corporation was founded in 1937 for the purpose of building trucks for the Japanese
\narmy. After the war, as it made the transition to commercial car production, the company faced a number
\nof challenges. In particular, it needed to produce a wide range of vehicles in small numbers at low cost in a
\nwar-ravaged economy. But the efficiencies that drove the big American carmakers were not suitable for car
\nproduction in Japan, which was a fraction of that in the United States. American methods emphasized
\nlarge batches made on highly specialized machinery, but this system was not cost-effective for low-volume
\ndemand, especially in a country that had little capital for investment following the war.
\nIn the 1950s, Toyota executives, led by executive Taiichi Ohno, visited the United States and toured a
\nFord plant with its assembly line production. The Toyota delegation noticed that Ford produced only a
\nfew automobile models, and they also observed the large amounts of inventory in the factory and the
\nresulting inefficiencies.
\nWhile the Toyota executives were in the United States, they also visited a Piggly Wiggly grocery store,
\nwhere they observed that shelves were stocked with many kinds of food and that goods were restocked
\nonly after they were sold.
\nInspired by the American supermarket, the president of Toyota, Kiichiro Toyoda, put in place the first
\nJust-in-Time system, which also came to be known as the Toyota Production System (TPS). The central
\ngoal of the system was to eliminate waste by delivering materials to the point of production only when
\nthey were needed.
\nThe particular methods of the TPS practiced today are attributed largely to Taiichi Ohno. During the
\n1950s and 60s, Ohno developed a series of production techniques that emphasized flexible resources, with
\nregards to both machinery and employees, and an increase in productivity through the elimination of
\nwaste.
\nOhno embodied the culture of change and improvement that came to distinguish the Toyota Motor
\nCorporation. He personally mentored many of the executive leaders of Toyota, as well as hundreds of
\nproduction managers and supervisors.
\nThe system developed by Ohno made Toyota viable in postwar Japan, enabling the company to produce a
\nvariety of automobile models in low volume at low cost. Eventually Ohno\u2019s system also gave the company
\na way to compete with the high-volume, more mechanized systems of the US automakers. The Toyota
\nProduction System resulted in reduced lead times, lower costs, and higher quality, which over time
\nenabled Toyota to become as profitable as all other car companies in the world combined.
\nAs Toyota gained strength, its production system became the topic (sample nursing essay examples by the best nursing assignment writing service) of hundreds of books and articles on
\nways to increase efficiency in production. Most notably, in 1990 MIT professor James Womack conducted
\nan extensive study of auto manufacturers in which he concluded that the Toyota Production System was
\ndestined to \u201cchange the world.\u201d9 Womack coined the term \u201clean manufacturing\u201d to describe the theory of
\nthe Toyota Production System, and he claimed that Toyota principles could be applied to any production
\nprocess\u2014administrative, retail, or service, as well as manufacturing.
\n2 toyota
\nPillars of the Toyota Production System
\nThe Toyota Production System is a method of organizing mass production that differs in important
\nrespects from the assembly line and the associated scientific management principles developed in the
\n1920s.
\nToyota describes its production system as a \u201cphilosophy\u201d that aims at \u201cthe complete elimination of all
\nwaste.\u201d10 Specifically, Toyota identifies seven types of waste, or \u201cmuda,\u201d that creep in at all stages of the
\nproduction process:
\n1. Over-production ahead of demand;
\n2. Excess motion of people or equipment more than is required for production;
\n3. Unnecessary waiting of people or equipment for the next production step;
\n4. Excess movement of products beyond what is required to perform the processing;
\n5. Over-processing or incorrect processing as a result of poor tool or product design;
\n6. Excess inventory of raw materials, work in progress, and finished products;
\n7. Excess rework required by the manufacture of defective products.
\nThe Toyota system attempts to expose the hidden causes of inventory-keeping and then to create a
\nproduction process that minimizes waste. Every person, machine, and building should be adding value to
\nthe final product, the automobile.
\nTwo methods are recognized by the company as the \u201cpillars\u201d of the Toyota Production System: the Just-
\nIn-Time method of controlling the quantity and timing of production, and the Jidoka method of assuring
\nquality. (See Exhibit 1 for a glossary of Toyota Production System vocabulary.)
\nJust-In-Time Production Control
\nThe “Just-in-Time” manufacturing system means that Toyota makes only \u201cwhat is needed, when it is
\nneeded, and in the amount needed.\u201d11
\nPush versus Pull
\nIn manufacturing systems prior to TPS, production was controlled by work orders back-scheduled from a
\nfinal production schedule. The amount of goods produced was based on the bill of material, the lead time
\nrequired to make the components, and the cost of setting up the machinery or ordering the part. Because
\nsetup costs and scrap rates were high, managers scheduled long production runs to offset these expenses.
\nIn order to accommodate these production runs, work orders were scheduled far in advance of needs.
\nWork was \u201cpushed\u201d onto the shop floor from an overall manufacturing plan.
\nThe layouts of plants were of two types: a final assembly line where the product moved at a steady rate
\ndown a conveyor with carefully timed work at each station, and back shops where the component parts
\nwere made in large batches and stored in cribs for use on the assembly line. In the back shops, parts
\ntraveled back and forth across the plant between operations and often waited in front of each operation.
\nLarge batch sizes meant that a work order took a long time to complete at each operation. Assigning work
\nto machines and employees was handled by a supervisor and directed by production control expediters.
\n3 toyota
\nTaiichi Ohno reasoned that much of the waste in such a system could be addressed by pulling material
\nthrough production instead of pushing it. Production would be initiated by a signal from the following
\noperation, not by a work order generated in advance from a production plan. By producing only what was
\nneeded, the excess work-in-process inventory of parts would be greatly reduced.
\nIn traditional \u201cpush\u201d systems, the manufacturer produces goods and then tries to find buyers, but in the
\nToyota system all production is linked to demand.
\nKanban
\nDuring the 1950s Ohno devised a technique called \u201ckanban\u201d to implement the just-in-time system. In the
\nkanban method, parts for many models are available at each station. When a part is used to build a
\nsubassembly, the preceding station (the station that produced that part) is signaled to make another. Each
\noperation produces only to replenish what is used up by the following operation.
\nThere are many ways to signal the need for replenishment, the most common being kanban cards. In
\nJapanese, \u201ckanban\u201d means \u201csign-board.\u201d These cards are marked with codes indicating the type of part,
\nthe location where it is used, and the supplier that provided it. When a part is used, a card is sent to an
\ninternal or external supplier requesting a re-supply. A withdrawal kanban card is used to get material
\nfrom a storage area, and a production kanban card is then sent to the work station to produce more
\nmaterial. Other methods for signaling the need for replacement are lighted boards or empty shelf space.
\nKanbans enable a steady flow of material through the system, by sending a signal at the precise moment
\nwhen more materials are needed. Kanbans also can signal a change in the mix of parts needed depending
\non final demand. As the model mix on the final assembly line changes, the replenishment kanbans
\nchange. What to produce and in what quantity is signaled by the following operation all the way from
\nfinal assembly through the back shops to suppliers. Production is pulled from final assembly.
\nOne-Piece Flow
\nThe ideal pull-based system would consist of a one-piece flow of materials through the production line,
\nwith no excess inventory. The technique of kanban does not in itself eliminate excess inventory. The
\nquantity on the kanban card tells the station how many to produce, but this quantity may be fairly high.
\nIn addition, there may be several kanban containers of parts at an operation. In order to reduce inventory,
\nthe number of containers and the quantity on a kanban card must be reduced to as close to one as
\npossible.
\nInterconnected Techniques
\nIn order to make the number of kanbans small, Toyota developed a set of interconnected techniques.
\nWhen material is pulled through the production system, and when the batch size is close to one, there is
\nno room for error in quality, quantity, or timing. Supporting operations must be closely synchronized.
\nIt is said that inventory is like water that \u201chides the rocks.\u201d As Ohno reduced the quantity on kanbans and
\nreduced the number of kanbans, \u201crocks,\u201d or other sources of waste in the system, were revealed. As a
\nresult, other methods for reducing waste had to be put into place. These elements are interconnected and
\ncannot be implemented effectively without putting all of them into place.
\nReduced Setup Time
\nIn order to decrease the quantity on a kanban card, which makes small lot production economically
\nfeasible and allows flexibility in manufacturing different variations of the final part, machine setup costs
\nmust be reduced. All machined parts require specific tooling: a drill bit size, a stamping mold, a grinding
\nwheel, and a computer program. Every time a different part is created, the tooling must be changed, and
\n4 toyota
\nthis requires machine changeover time or setup time. The longer this process takes, the more expensive
\nsmall batch sizes become.
\nOne of Ohno\u2019s colleagues, Shigeo Shingo, developed what is called Single-Minute Exchange of Die, or
\nSMED, in which changeovers are targeted to be done in less than ten minutes. In order to reach this goal,
\nthe operator prepares for the changeover while the machine is running; these are known as external setup
\ntasks. Then the worker uses various devices to minimize the time needed to switch tools while the
\nmachine is stopped; these are known as internal tasks. Setups are practiced and analyzed many times to
\nrefine the changeover tasks and improve the process.
\nTakt Time
\nIf material is being pulled to support the final assembly schedule, it must be produced at the same rate as
\nthat schedule. Each station must manufacture the requisite number of parts in the requisite amount of
\ntime. This is accomplished by determining the required cycle time for the final product from final
\ndemand, and then calculating the cycle time for each supporting activity from final assembly cycle time.
\nThis cycle time is called takt time, the German word for beat. It is the beat of the plant.
\nTakt time varies, depending on demand. Every 10 days Toyota dealers provide the factory with details
\nabout orders, and based on that information, the factory makes a production plan. The plan can be
\nadjusted up to three days before the car is manufactured.
\nTakt time for a production facility is calculated by dividing the number of minutes in a day by the
\nproduction requirements for a day at each operation. The beat of the final assembly drives the beat of all
\nsupporting activities. For example, if one car is produced every minute, then four tires, one steering
\nwheel, two front seats, one transmission, four pistons, etc., must be produced every minute. This means
\nthat tires must be produced one every 15 seconds.
\nAdhering to takt time results in an even flow of production. As The Economist described the process,
\n\u201cEverything is minutely synchronized; the work goes at the same steady cadence of one car a minute
\nrolling off the final assembly line. Each operation along the way takes that time. No one rushes\u2026.\u201d12
\nMixed-Model Assembly Schedule
\nIn order to maintain steady production in the stations that support final assembly, the model sequence
\nmust be mixed. If all cars with sunroofs were produced only one day out of the week, the supplier that
\nfabricates sunroofs would either have to produce inventory in advance of the schedule or be idle most of
\nthe week.
\nA mixed-model final assembly schedule smoothes production in the back shops and allows kanban to
\nremain small. This practice of evening out the production flow is known as \u201cheijunka.\u201d A beneficial
\nbyproduct of heijunka is that the manufacturer can quickly respond to changing demand. It is not
\nnecessary to wait for \u201csunroof day\u201d to make a car with a sunroof; instead, the mix of cars can be adjusted
\neach day.
\nMulti-Skilled Employees
\nIn order to produce multiple models with the same resources, machines must be generic and flexible, and
\nemployees must be multi-skilled. Toyota does not use specialized machines or groups of machines that
\ncan make only one kind of part. Instead they use flexible equipment that can produce multiple parts, and
\nthey train employees to operate multiple types of machines. This means that employees are seldom idle: if
\nthere is a decline in demand for one type of task, they turn their attention to another task.
\n5 toyota
\nCells and U-Shaped Layout
\nThe Toyota system attempts to avoid the waste of traditional manufacturing that operates in a process or
\ndepartment layout. In this system, workers perform an operation on a product in large batches, before
\nsending the product on to the next department. The result is large inventories and long throughput times.
\nIn this system, all machines of the same type are grouped together in one department.
\nIn the Toyota system, consecutive operations on a part (both workers and machines) are located as close
\nto each other as possible in a manufacturing cell. As soon as one operation is completed, the product is
\npassed on to the next operation. Toyota found that the best way to do this was to place machines in a U
\nshape so that the cross-trained workers can move from one machine to another to reduce idle time. This
\ncell layout is referred to as a product layout, because a particular cell would produce parts in one product
\nfamily. In contrast to a department layout, a cell would have different types of machines placed side by
\nside.
\nIn a process layout (separate departments) producing in large batches, there is a great deal of indirect
\nlabor that comes from material handling to move parts from one department to the next. A batch of (say)
\n100 parts does not move to the next process until all 100 parts are completed; in other words, all of the
\nparts in the batch wait until the last one is finished. In contrast, with a product layout and small lot
\nproduction, parts move from operation to operation quickly, thus reducing throughput time and work-inprocess
\ninventory. In addition, quality improves because a worker can inspect a part coming from the
\nprevious operation, and there is more of a sense of teamwork.
\nStandard Work
\nIn order to make sure every activity meets takt, work methods must be standardized. Employees list the
\ntasks required to make each part, measure the minimum time required for production, agree on the best
\nmethods, and post standard work sheets that describe and sequence the tasks. When demand changes,
\ntakt changes, and so do the standard work sheets.
\nWorkplace Organization
\nThe workplace must be organized so that everything needed is accessible. This enables the factory to
\nreduce setup time and meet takt time. Toyota developed a system called 5S\u2014sort, straighten, shine,
\nstandardize, sustain\u2013that organizes the workplace and reduces wasted movement.
\nFirst, everything in the area\u2014tools, material, instructions, reports, personal items\u2014is sorted, and only
\nthose items needed for production are stored in the work area. Then items are placed where they can be
\naccessed easily during work, and the locations are labeled. When not in use, items are put back in storage.
\nEverything has a place, and everything is in its place.
\nThe work area is kept clean at all times. As a result, it is easier for employees to notice problems, such as
\noil on the floor by a machine. Usually employees are given time at the end of the day to clean up. Finally,
\nthe rules and procedures are agreed upon by all employees in the area (\u201cstandardize\u201d), and all employees
\nparticipate in finding ways to improve the area (\u201csustain\u201d).
\nTotal Productive Maintenance
\nBecause each stage of the production system is linked together with little inventory between stages,
\nmachines cannot break down during production hours. Operators do preventive maintenance on their
\nmachines at regular intervals during the work week. Tasks are posted and checked off when
\naccomplished. Periodic overhauls by maintenance personnel are done on off shifts according to a lifetime
\nmaintenance plan for the machine. This is called total productive maintenance.
\n6 toyota
\nJidoka
\nThe second pillar of the Toyota Production System is jidoka, which involves the automatic detection of
\ndefects. The concept originated with a loom invented by Sakichi Toyoda. The loom stopped automatically
\nwhenever it detected a broken thread. By employing machines that automatically detect defects and stop
\noperating, jidoka frees operators from watching machines, enabling them to do more productive work.
\nOver the years, Toyota developed a number of techniques for putting this quality system into practice.
\nAndon Boards
\nEmployees are given the power to stop the assembly line in order to call attention to a defect. They pull a
\ncord or touch a switch, and a signal is given to the team leader, usually a light on a board called an
\n\u201candon.\u201d The team leader comes immediately and tries to fix the problem before the end of the
\nworkstation\u2019s takt time. If the problem cannot be fixed in time, the line stops until the problem is
\nresolved.
\nEmployees are expected to call for help if they have not completed the required tasks by the middle of
\ntheir takt time, even if there is no defect. The team leader prevents future incidents by either training the
\nemployee in the proper standard work, or changing the tasks to make it possible to complete them within
\ntakt time.
\nImprovement Cycle
\nWhen a defect is discovered, Toyota employees engage in a process called \u201cthe five whys,\u201d asking why the
\ndefect occurred, and then why the problem that caused the defect occurred, all the way back to the source
\nof the problem. This method of discovering and fixing defects is called the daily improvement cycle.
\nPoka-Yoke
\nPoka-yoke devices are devised to foolproof a process, thereby preventing defects from occurring. Pokayoke
\ndevices prevent employees from incorrectly assembling a part, packing a part, painting a part, etc.
\nOften these inexpensive devices involve a change in the design of the part.
\nFor example, one manufacturing plant found that a car radio circuit board could easily be mounted
\nupside-down, because the circuit board was symmetrical. The solution was to make the circuit board
\nasymmetrical by cutting a notch on one side. After the improvement, the circuit board could not be
\nmounted upside-down, because it would fit into the frame in only one configuration. As a result of this
\nsmall mechanical adjustment, the quality defect was eliminated.
\nKaizen
\nToyota\u2019s system of quality control and production control depends on active employee involvement.
\nIntegral to TPS is the principle of \u201ckaizen,\u201d or continuous improvement, in which workers continually
\nthink of small ways in which to improve the quality and efficiency of their tasks.
\nToyota asks all employees to participate in the \u201cdaily improvements\u201d of poka-yoke, work area quality
\ncircles, and project ( help with nursing paper writing from experts with MSN & DNP degrees) teamwork. Employee suggestions are taken seriously and a high percentage of them
\nare implemented. For example, during the 2009 financial crisis at Toyota, an executive vice president said
\nthat the company received 30,000 cost-saving proposals from employees, suppliers, and other partners. 13
\nToyota has a policy of \u201cstable employment that avoids simple layoffs and terminations,\u201d because it is
\ncommitted to encouraging the development of employee skills and creativity.14 Layoffs disrupt labor-
\n7 toyota
\nmanagement relations and hinder that development. In the company\u2019s current code of conduct,
\nemployees are expressly asked to participate in improving the company in return for stable employment.
\nThis philosophy of employee involvement and continuous improvement began with the first presidents of
\nthe company. In 1935, Toyota executives published the teachings of Toyota founder Sakichi Toyoda as the
\nToyoda Precepts, one of which urged each employee to pursue continuous improvement.
\nSupplier Networks
\nAn essential part of Toyota\u2019s quality control was to integrate its operations with those of its suppliers.
\nToyota found that in order for the just-in-time pull system to function, its suppliers had to follow all of
\nthe requirements of the Toyota Production System. Not only the machines but also the parts had to be
\ndefect-free, because in a just-in-time system, a defective part will stop the flow of production.
\nDuring the time that Toyota was developing the elements of its own production system, it was also
\ndeveloping a new method of relating to its supply base. The company selected the best suppliers and
\ndeveloped close, long-term relations with them. In exchange, it exacted a high standard of quality. The
\nsupplier was required to operate with defect-free quality, mixed-model production, on-time delivery with
\nthe right part in the right quantity, and short lead times. As a visitor to Toyota\u2019s Kyusha plant in Japan
\nexplained,
\nToyota produces only what is ordered. Dealers have to make a unit commitment 30 days in
\nadvance of the production month, then lock in their specific orders five days in advance. At that
\ntime, specific requirements are transmitted to Toyota’s suppliers, and they then have a three-day
\nlead time to sequence the parts required for each vehicle, which are then delivered in hourly
\nincrements straight to the production floor.15
\nToyota\u2019s supply system requires reciprocal obligations: Toyota commits to long-term contracts with a
\nsupplier and provides training and resources for improvement. The supplier is then expected to adopt the
\nToyota Production System, including a commitment to continuous improvement in quality and
\nreductions in cost. Toyota shares production data with the supplier for planning purposes, and in return
\nthe supplier opens its books to Toyota. The automaker collaborates with suppliers in the design of parts
\nand provides resources for them to design improvements in their own parts.
\nIn order to support the just-in-time delivery of product and the mixing of models on a daily basis,
\nsuppliers must be in close proximity to assembly plants. These relationships are not built easily, since the
\nmost important characteristic of a supplier is that it is able to provide consistent on-time delivery and
\ndefect-free quality. This requires training and many times an overhaul of the company\u2019s production
\nsystems. Toyota\u2019s training institute was created as much to train suppliers as Toyota employees.
\nSuccess, Then Growth, Then Crisis
\nOver time, as Toyota implemented its production system, it gained a reputation for producing high
\nquality cars at low cost. As a result, during the 1970s and 1980s, it was able to expand its overseas sales
\nand production. In 1980 Toyota had 11 factories in nine countries, but the bulk of its production was
\ndomestic. By 1990 it had 20 factories in 14 countries. (See Exhibits 2 and 3 for a chart of production
\nfacilities by country.)
\n8 toyota
\nGlobal Vision 2010
\nIn 2000, Toyota reached a ten percent market share in global auto sales, placing it fourth among the
\nworld\u2019s car companies. The company decided to commit to a set of goals, among which was a target of 15
\npercent market share by 2010. Observers noted that by setting this goal, the company was committing
\nitself to a far higher rate of growth than it was accustomed to sustaining. One analyst figured that Toyota
\nneeded to grow at a compound annual growth rate of seven percent per year for 10 years, in contrast to its
\nfour percent CAGR over the previous decade.16
\nFrom 2000 to 2005, Toyota opened 11 new plants in seven countries: the United States, Mexico, the Czech
\nRepublic, Poland, France, Russia, and China. By 2005 Toyota had 46 factories in 26 countries, and more
\nthan half of its production was outside Japan. By 2007 two-thirds of its workers were employed outside
\nJapan.
\nAlong with opening new manufacturing plants, Toyota increased its proportion of outsourcing until in
\nthe mid-2000s it was sourcing between 70 and 80 percent of the cost of the automobile from suppliers.17
\nToyota built networks of suppliers around plants in all 26 of the countries where assembly plants were
\nlocated. As Toyota president Fujio Cho explained in 2008, \u201cAt Toyota, ‘global’ means localizing
\nproduction in principal markets.\u201d18
\nIn addition to increasing sales, Toyota global vision strategy committed the company to a cost-cutting
\ncampaign called \u201cconstruction of cost competitiveness for the 21st century\u201d or CCC21. The company aimed
\nto cut supplier costs by 30 percent and to benchmark those costs to Chinese parts-makers.19 Toyota hoped
\nto realize these savings by working closely with suppliers.
\nBy 2004, auto analysts were reporting that the company appeared to be reaching many of its goals. The
\ncompany\u2019s growth in production capacity led to an equally impressive growth in sales. In April 2007,
\nToyota announced that its first-quarter sales had surpassed those of General Motors, a development that
\nThe New York Times saw as inevitable: \u201cToyota\u2019s ascendancy, which many in the industry have predicted
\nfor some time, is another milestone in America\u2019s long decline from unchallenged industrial
\npreeminence.\u201d20 Indeed, in 2008 Toyota\u2019s yearly sales topped those of GM, and Toyota became the largest
\nautomobile maker in the world. Market share by 2008 was just below the 15 percent goal.
\nQuality Problems
\nHowever, at the same time as it was reaching its Global Vision 2010 goals, the quality of Toyota\u2019s major
\nmodels unexpectedly began to slip.
\nBefore 2006, the three top-selling Toyota models\u2014the Camry, the Corolla, and the Rav4\u2014were regular
\nwinners of overall quality and dependability awards. But from 2006 through 2009, those models, which
\ncomprised over 40 percent of unit sales, did not win any quality awards from J. D. Powers in North
\nAmerica or in Germany. The Lexus division luxury models won multiple awards in those years, but they
\ncomprised only 13 percent of unit sales. Toyota\u2019s recalls began to rise, exceeding those of its competitors
\nHonda and Nissan. (See Exhibit 4 for details.) In October 2007, as a result of the decline of quality on
\nthree models, Consumer Reports stopped its practice of automatically recommending all Toyotas.
\nEven worse, an increasing number of recalls put Toyota quality further in the spotlight. Some of the
\nvehicle problems resulted in driver deaths: most notably, in August 2009, a state trooper and his family
\nwere killed in an accident in San Diego when the accelerator stuck on their Lexus. The National Highway
\nTraffic Safety Administration said that it had received reports of over 100 incidents in which accelerators
\nhad been stuck, and the Los Angeles Times claimed that 1000 complaints about the same problem could
\nbe documented. In 2009 Toyota was forced to recall four million cars with accelerator problems in the
\nUnited States.
\n9 toyota
\nToyota vehicles manifested other safety problems, as well, including tire corrosion, engine stalling,
\nexhaust system defects, and faulty steering rods, all of which caused the recall of several million vehicles in
\nthe United States from 2004 to 2009. In 2007 the company settled one lawsuit from customers
\ncomplaining about oil sludge in car engines, and it was the subject of another lawsuit alleging that it had
\ncovered up defects at its Nummi California plant.
\nOverall in the United States, the number of Toyota vehicles affected by recalls began to skyrocket. In 2000
\nthere were about 8,000 Toyota vehicles recalled; in 2003 there were 200,000 recalled; and in 2005 there
\nwere 2.3 million vehicles recalled. In Japan, as well, the company began to struggle, with its share of
\nrecalls rising from 1.4 percent in 2001 to 34 percent in 2005.21
\nFinancial Difficulties
\nAt the same time as it was struggling with quality problems, the company began to suffer financially. In
\n2008, for the first time since 1939, Toyota reported an operating loss. The worldwide recession was an
\nobvious source of declining sales figures. A related problem was a strong yen, which reduced earnings on
\nexports. Early in 2009, Wharton professor John Paul MacDuffie said,
\n\u201cThe yen is a big headache for the Japanese right now. Added to everything else, it’s a tremendous
\nburden. It’s one thing to deal with a dramatic shift in exchange rates that made products more
\nexpensive for consumers in good times; now it means you have to persuade people to pay more
\nwhen they are still not buying cars. If you take drastic declines in demand and add on the strong
\nyen, which makes their cars much more expensive, it’s a very tough challenge.”22
\nGlobal Vision 2010 Abandoned
\nReluctant to shut down facilities, Toyota instituted other cost cutting measures. In mid-2009, the
\ncompany announced that it would close its joint venture with GM in California. Toyota also said that it
\nwould postpone the opening of a plant in Mississippi, and would shut down other manufacturing lines in
\nNorth America. Most significantly, it announced that it would no longer pursue its goal of 15 percent
\nglobal market share by 2010.
\nQuality and the Workforce
\nThe overarching problem, as many saw it, was that in its drive to expand, Toyota had neglected its
\ncommitment to quality. As one analyst put it, \u201cAt some point, Toyota became a victim of its own success.
\nThe company\u2019s double quick expansion, from perennial underdog to voracious overlord, has
\ncompromised their unique selling point: product quality.\u201d23
\nToyota CEO Fujio Cho had acknowledged in 2005 that such fast growth would bring challenges.
\nAccording to The Economist ,
\nHe sees his greatest challenge as maintaining Toyota\u2019s high standards in such areas as quality
\nwhile it grows so fast across the globe. For Toyota has only recently started to transform the way
\nit is run to make itself a truly global company rather than a big exporter with a string of overseas
\nplants. 24
\nMany believed that the transformation to a \u201ctruly global company\u201d had not come soon enough.
\n10 toyota
\nChallenges in Translating the Toyota Way
\nOne particularly difficult problem that Toyota faced in its global expansion was training managers in the
\nToyota Production System.
\nFrom its inception, Toyota had taught both factory workers and managers its Just-in-Time and Jidoka
\ntechniques through apprenticeship. There was no manual; rather, training took place on the shop floor
\nthrough practical experience in making improvements. Ohno mentored hundreds of Toyota managers,
\nand they in turn mentored others. As Ohno envisaged the system, it was not a set of techniques that could
\nbe enumerated in a book and then applied in any setting. In 1983 he wrote,
\nSince the Toyota production system has been created from actual practices in the factories of
\nToyota, it has a strong feature of emphasizing practical effects, and actual practice and
\nimplementation over theoretical analysis.25
\nWhen Toyota first began to open manufacturing plants outside Japan, skeptics wondered whether the
\ncompany\u2019s unique production system could be taught to foreigners. Some observers suggested that the
\nsystem was so interconnected with Japanese culture that it could not be applied in other settings,
\nespecially in western countries. However, during the 1980s, Toyota had successfully translated its
\nprinciples to far flung plants outside Japan. For example, beginning in 1988 Toyota had opened an
\nassembly plant in Georgetown, Kentucky, and had painstakingly trained American workers, managers,
\nand suppliers in the Toyota system. In the late 1990s, as Toyota was formulating its Global Vision 2010, it
\nseemed as though the company had proved that its principles that could be applied anywhere in the
\nworld.
\nHowever, the rapid expansion of the early 2000s strained the company\u2019s ability to transmit its production
\nmethods through mentoring alone. In 2001, in an attempt to explain its system to new managers, the
\ncompany began to produce documentation and training courses. The company codified its philosophy as
\nthe \u201cToyota Way,\u201d and it established the Toyota Institute to train foreign managers in the essentials. But
\neven with formal courses, the Toyota system did not come naturally to new managers. According to one
\nanalyst,
\nLike a religion, converting to TPS takes time (about two years or more), an organizational
\ncommitment to cultural change, and the acceptance of new values by everyone–especially
\nmanagement. In return the process optimization that TPS makes possible can lead to huge
\npaybacks in inventory reduction, increased product quality, and a relentless elimination of any
\nwaste that hinders efficiency. If not a religion, TPS is at the very least a rigorous philosophical
\napproach to organized activity\u2026.26
\nAs one American manager new to the company put it, the Toyota Way was \u201ca shock to the system.\u201d27
\nWorkforce
\nIn addition to the difficulty of training foreign managers and workers, observers also pointed to a lack of
\nsufficient manpower at all levels of the company.
\nOne source of this problem was the retirement of experienced people. According to an industry analyst,
\nIn a number of facilities, older workers with extensive knowledge of their plants and processes are
\nretiring, leaving their jobs to workers who are not as yet in step with their work. As a result,
\nToyota, which built market share on a reputation for top-quality products, has experienced recalls
\nand quality problems \u2026.28
\n11 toyota
\nAs experienced employees retired, Toyota did not necessarily replace them. Instead, the company had
\nhired temporary and part-time workers and had pushed its existing staff to work ever longer hours.
\nAccording to a 2006 article in the Japanese magazine Weekly Toyo Kezai, Toyota\u2019s productivity in Japan
\nhad increased significantly between 1998 and 2005, from 47.8 cars per employee to 58.7. (See Exhibit 5 for
\ndetails.) The results were not necessarily good, said the authors: \u201cthe consequence is extreme fatigue, with
\nengineers working in the field inevitably having quality problems.\u201d29
\nOthers wondered if quality problems could be traced to a generational shift in the workforce. Observers
\nnoted that in Japan a workforce that had proudly dressed in Toyota uniforms and joyously engaged in
\nperformances of the company song was being replaced by younger workers with individualistic attitudes
\nwho wore t-shirts and baseball caps. One visiting production expert referred to it as the \u201cAmericanization\u201d
\nof the Toyota workplace.
\nSuppliers
\nPutting together supplier networks at the same time the company was trying to force down costs was also
\ncreating problems. Because of a shortage of engineers experienced in CAD (computer-aided design),
\nToyota had outsourced some design and engineering work to its suppliers. However, it was becoming
\nclear that these suppliers were not being given proper oversight:
\nThe shortage of in-house talent has forced Toyota to outsource, relying on its parts suppliers to
\ndesign key components. At the same time, the automaker has increased the amount of parts
\nsharing among different models. The practice has dramatically increased the scope of a “single”
\nfailure, as witnessed by last October’s recall of 1.27m Japanese vehicles. Goldman Sachs estimates
\nthat design faults (e.g. rubber parts not thick enough to withstand engine heat and joints too
\nweak to hold together) account for 68% of Toyota\u2019s 2004 recalls.30
\nSuppliers were also being called on to train shop floor workers in Toyota\u2019s new plants. According to The
\nWall Street Journal,
\nAs it races to add new factories in North America and around the world while trying to maintain
\nquality, Toyota Motor Corp. is bringing in outside help to run its much-studied and much-copied
\n\u201clean manufacturing\u201d system. For as long as Toyota has existed, the company has relied mainly
\non its own highly-trained workers for manufacturing expertise to ensure that all Toyota plants
\nconform to the rigorous Toyota Production System\u2026. But now, the world\u2019s second-biggest
\nproducer of automobiles after General Motors Corp. is scrambling to find enough in-house
\nToyota Production System experts. In a significant shift, Toyota is turning to affiliated assemblyspecialist
\ncompanies to cope with the challenges of its ambitious plan to grab 15 percent of the
\nworld auto market\u2014about as much as GM has today\u2014by 2010. Chief among those challenges: a
\nshortage of quality gurus. There are signs the company\u2019s torrid growth agenda is straining
\nToyota\u2019s human and technical resources and allowing competitors to catch up with it on quality,
\none of Toyota\u2019s most critical strategic selling points.31
\nCost Cutting
\nOne of the largest problems, according to observers, was that Toyota\u2019s ambitions to save money were
\ntaking a toll. According to one analyst, Toyota\u2019s \u201cconstant focus on cost cutting has created devastating
\nproduction glitches\u201d 32
\nAs a result of this change, it appeared that some key principles of the Toyota Production System were
\nbeing ignored. In 2007 Koki Konishi, the head of the Toyota Institute, told The New York Times that he
\nwas concerned that some managers were not allowing workers to stop the assembly line when they
\nspotted a defect.33 The focus was shifting to speed and immediate cost savings.
\n12 toyota
\nThe Crisis Deepens
\nOn October 2, 2009, Toyota president Akio Toyoda made a public apology for Toyota vehicle defects that
\nhad led to a fatal crash in San Diego.34 Besides apologizing, Toyoda outlined a strategy for the company:
\nIn his first press conference since taking the job, Mr. Toyoda painted the company as having
\noverextended itself in an effort to make big cars and big profits in the American market. He
\npromised to take a 30-per-cent pay cut himself, and offered a back-to-basics strategy that would
\nsee the company develop new and separate strategies for each of the regions it is targeting: North
\nAmerica, Europe and Japan, as well as emerging markets like China and India.35
\nHowever, in the succeeding months, the crisis only deepened. The recalls multiplied, involving more and
\nvehicles across an increasing number of models. The U.S. Congress promised an investigation, and the
\nU.S. Transportation Secretary requested a direct meeting with Toyota\u2019s CEO. In early 2010, recalls began
\nto affect cars Japan and Europe, as well. By late 2009 Toyota had suffered greater financial losses than its
\ncompetitors Honda and Nissan, and the worst was yet to come. The Wall Street Journal reported,
\nThe immediate impact of Toyota Motor Corp.’s recalls and sales stoppages is estimated to cost
\nthe company around $1 billion, but the longer-term damage to the auto maker’s hitherto
\nimpeccable brand is set to be much larger\u2026.36
\nToyoda and other executives faced a crisis that the company had not seen since it first entered the
\nconsumer automobile business after World War II. The company had built a production system that was
\nproved superior to American manufacturing methods and was said to have transformed industry
\nthroughout the world. But somehow, in the process of that transformation, the company had forgotten
\nthe basics. As The New York Times reported, Toyota had neglected a key Jidoka technique:
\nIn Toyota lore, the ultimate symbol of the company\u2019s attention to detail is the \u201candon cord,\u201d a
\nrope that workers on the assembly line can pull if something is wrong, immediately shutting
\ndown the entire line. The point is to fix a small problem before it becomes a larger one. But in the
\nbroadest sense, Toyota itself failed to pull the andon cord on this issue\u2026.37
\nAs Toyota\u2019s managers coped with the immediate crisis, others wonder how the company could restore the
\nquality of its products and its reputation for reliability.
\nThe Helpance of Saburo Yoshida with Japanese translations is gratefully acknowledged. This case has been developed from
\npublished sources for pedagogical purposes. The case is not intended to furnish primary data, serve as an endorsement of the
\norganization in question, or illustrate either effective or ineffective management techniques or strategies.
\nCopyright \u00a9 2010 Yale University. All rights reserved. To order copies of this material or to receive permission to reprint any or
\nall of this document, please contact Case Study Research and Development Yale School of Management, 135 Prospect Street, New
\nHaven, CT 06520, or email at case.comments@yale.edu.
\n13 toyota
\nEndnotes
\ni
\n1 Professor of Operations Research, Yale School of Management.
\n2 Project Editor, Case Study Research and Development, Yale School of Management.
\n3 Adjunct Professor of Management, Southern Connecticut State University.
\n4 Director, Case Study Research and Development, Yale School of Management.
\n5 \u201cThe Car Company in Front,\u201d The Economist (Jan. 27, 2005).
\n6 \u201cToyota Slips Up: What the World\u2019s Biggest Car Maker Can Learn from Other Corporate Turnarounds,\u201d The
\nEconomist (Dec. 10, 2009).
\n7 The New York Times, Feb. 1, 2010.
\n8 The Wall Street Journal, Jan. 29, 2010.
\n9 James P. Womack, Daniel T. Jones, and Daniel Roos, The Machine that Changed the World (1990; New York:
\nFree Press, 2007).
\n10 Toyota company website, http:\/\/www2.toyota.co.jp\/en\/vision\/production_system\/origin.html
\n11 Toyota company website, http:\/\/www2.toyota.co.jp\/en\/vision\/production_system\/just.html
\n12 \u201cThe Car Company in Front,\u201d The Economist (Jan. 27, 2005).
\n13 Automotive News, Nov 9, 2009.
\n14 Toyota company website, https:\/\/monkessays.com\/write-my-essay\/toyota.co.jp\/en\/environmental_rep\/03\/jyugyoin.html
\n15 Kevin Meyer , \u201cToyota\u2019s Kyusha \u2013 Manufacturing Ballet,\u201d www.superfactory.com
\n16 Bob Emiliani, \u201cToyota\u2019s Denouement,\u201d Superfactory: Resources for Lean Manufacturing, www.superfactory.com,
\nSeptember 2009.
\n17 J.K. and T.Y. Choi, \u201cBuilding Deep Supplier Relationships,\u201d Harvard Bus ness Review 83 (December 2004), pp.
\n104-113.
\n18 \u201cThe Toyota Sequoia,\u201d Toyoland, https:\/\/monkessays.com\/write-my-essay\/toyoland.com\/trucks\/sequoia.html.
\n19 \u201cA China Price for Toyota,\u201d Business Week (Feb. 21, 2005).
\nhttps:\/\/monkessays.com\/write-my-essay\/businessweek.com\/magazine\/content\/05_08\/b3921062.htm
\n20 Keith Bradsher, \u201cToyota Tops G.M. in Sales for First Time,\u201d The New York Times (April 24, 2007).
\nhttps:\/\/monkessays.com\/write-my-essay\/nytimes.com\/2007\/04\/24\/business\/24cnd-auto.html_r=3
\n21 Jan Miller, \u201cWhen Did Toyota Get to Be a Company Like This\u201d Panta Rei blog, August 2, 2006.
\n22 \u201cBiggest by Default: Toyota May Be Number One, but It Still Faces Challenges,\u201d Knowledge @ Wharton (Feb.
\n24, 2009). http:\/\/knowledge.wharton.upenn.edu\/article.cfmarticleid=2155
\n23 Frank Williams, \u201cToyota: [Falling] Quality Is Job One,\u201d The Truth about Cars (Aug. 18, 2006).
\nhttps:\/\/monkessays.com\/write-my-essay\/thetruthaboutcars.com\/toyota-falling-quality-is-job-one\/
\n24 \u201cThe Car Company in Front,\u201d The Economist (Jan. 27, 2005).
\n25 Taichi Ohno, Foreword to Yasuhiro Monden, Toyota Production System (Georgia: Industrial Engineering and
\nManagement Press, 1983), p. i.
\n26 John Teresko, \u201cToyota\u2019s New Challenge,\u201d Industry Week (Jan. 15, 2001), p. 71.
\n27 Martin Fackler, \u201cThe \u2018Toyota Way\u2019 Is Translated for a New Generation of Foreign Managers,\u201d The New York
\nTimes (Feb. 15, 2007).
\n14 toyota
\n28 \u201cBiggest by Default: Toyota May Be Number One, but It Still Faces Challenges,\u201d Knowledge @ Wharton (Feb.
\n24, 2009). http:\/\/knowledge.wharton.upenn.edu\/article.cfmarticleid=2155
\n29 Takahiro Hasegawa, Akihiro Nomura, and Keiji Umesaki, \u201cToyota,\u201d Weekly Toyo Keizai (July 29, 2006), pp. 28-
\n37. Translation by Saburo Yoshida.
\n30 Frank Williams, \u201cToyota: [Falling] Quality Is Job One,\u201d The Truth about Cars (Aug. 18, 2006).
\nhttps:\/\/monkessays.com\/write-my-essay\/thetruthaboutcars.com\/toyota-falling-quality-is-job-one\/
\n31 Norhiko Shirouzu, \u201cMean but Lean, Toyota Seeks Outside Help — With In-House Quality Gurus in Short
\nSupply, Auto Maker Turns to Its Assembler Affiliates,\u201d The Wall Street Journal (July 14, 2005), p. B4.
\n32 Frank Williams, \u201cToyota: [Falling] Quality Is Job One,\u201d The Truth about Cars (Aug. 18, 2006).
\nhttps:\/\/monkessays.com\/write-my-essay\/thetruthaboutcars.com\/toyota-falling-quality-is-job-one\/
\n33 Martin Fackler, \u201cThe \u2018Toyota Way\u2019 Is Translated for a New Generation of Foreign Managers,\u201d The New York
\nTimes (Feb. 15, 2007).
\n34 Hiroko Tabuchi and Micheline Maynard, \u201cPresident of Toyota Apologizes,\u201d The New York Times (October 3,
\n2009), p. 1.
\n35 Mark MacKinnon, \u201cHow It Became Japan\u2019s Detroit: Nowhere Is Japan\u2019s Manufacturing Slump More visible and
\nVisceral than in Toyota City,\u201d The Globe and Mail (July 18, 2009), p. B1.
\n36 Daisuke Wakabayashi, Mariko Sanchanta, and Yoshio Takahashi, \u201cToyota Faces Fallout over Recall,\u201d The Wall
\nStreet Journal (Feb. 1, 2010). http:\/\/online.wsj.com\/article\/SB10001424052748704107204575038750582835286.html
\n37 Bill Vlasic, \u201cToyota\u2019s Slow Awakening to a Deadly Problem,\u201d The New York Times (Jan. 31, 2010).
\nhttps:\/\/monkessays.com\/write-my-essay\/nytimes.com\/2010\/02\/01\/business\/01toyota.htmlscp=2&sq=toyota&st=cse
\n15 toyota
\n16 toyota
\nExhibit 1: Glossary of Toyota Production System Vocabulary
\nAndon: Toyota\u2019s system for calling attention to a defect at the point of production. Typically the
\nworker pulls an andon cord, which lights up a signal on an andon board.
\n5S: sort, straighten, shine, standardize, sustain; Toyota\u2019s techniques for organizing the workplace
\nand reducing wasted movement.
\nFive whys: the process of asking why a defect has occurred, and then why the problem that
\ncaused the defect occurred, through five iterations, in an attempt to solve the problem at its
\nsource.
\nHeijunka: the process of evening out the production flow so that model variations are spread out
\nrather than clustered together, the result being a mixed-model final assembly schedule.
\nJidoka: Toyota\u2019s system of quality control; the devices and practices that keep defective parts
\nfrom getting to the next operation.
\nKaizen: Japanese word for \u201cimprovement\u201d; incremental ways in which every employee improves
\nthe quality and efficiency of their work.
\nKanban: a system, involving cards, lighted boards, or empty shelf space, for sending a signal at
\nthe precise moment when more materials are needed at a particular point in the production line.
\nMuda: waste that occurs in the manufacturing process, chiefly as the result of excess inventory.
\nPoka-yoke: mechanical devices, such as a checking tool or a holding tool, that prevent defects.
\nTakt: the \u201cbeat\u201d of the plant; the time in which each operation of the production system must
\nhappen in order to maintain an even production flow and meet each day\u2019s production requirements.
\nTakt time is calculated by dividing the number of minutes in a day by the production requirements
\nfor a day at each operation.
\n17 toyota
\nExhibit 2: Toyota Plants outside Japan
\nAs of the end of March 2008, Toyota conducts its business worldwide with 53 overseas manufacturing
\ncompanies in 27 countries and regions. Toyota’s vehicles are sold in more than 170 countries and regions.
\nLocation
\nStart of
\nOperations
\nNumber of
\nEmployees
\nVehicle
\nProduction*
\nNorth America
\nCanada British Columbia Feb. 1985 302 –
\nOntario Nov. 1988 5,091 303
\nCalifornia Nov. 1971 606 –
\nKentucky May 1988 7,632 515
\nMissouri Jan. 1993 1,129 –
\nWest Virginia Nov. 1998 1,389 –
\nIndiana Feb. 1999 4,279 284
\nAlabama Apr. 2003 1,012 –
\nU.S.A.
\nTexas Nov. 2006 2,205 139
\nLatin America
\nArgentina Mar. 1997 2,949 69
\nBrazil May 1959 3,090 63
\nColombia Mar. 1992 1,860 –
\nMexico Sept. 2004 834 34
\nVenezuela Nov. 1981 2,327 17
\nEurope
\nCzech Republic Feb. 2005 3,320 105
\nFrance Jan. 2001 3,959 262
\nPoland Walbrzych Apr. 2002 2,074 –
\nL g Jelcz-Laskowice Mar. 2005 1,069 –
\nPortugal Aug. 1968 690 –
\nTurkey Sept. 1994 3,963 161
\nU.K. Sept. 1992 4,926 278
\nRussia Dec. 2007 600 –
\nAfrica
\nKenya Aug. 1977 311
\nSouth Africa June 1962 9,557 146
\nOceania
\nAustralia Apr. 1963 4,903 149
\nMiddle East
\nBangladesh June 1982 66 –
\n* Vehicle production reported in 1,000s. Only final assembly plants report vehicle production \u2013 other plants manufacture parts.
\n18 toyota
\nLocation
\nStart of
\nOperations
\nNumber of
\nEmployees
\nVehicle
\nProduction*
\nAsia
\nTianjin Oct. 1997 413 –
\nTianjin May 1998 793 –
\nTianjin July 1998 1,821 –
\nTianjin Jan. 1999 233 –
\nTianjin Oct. 2002 12,281 271
\nChangchun Dec. 2004 767 –
\nTianjin Dec. 2004 231 –
\nGuangzhou Jan. 2005 1,241 –
\nChengdu Dec. 2000 2,057 5
\nChina
\nGuangzhou May 2006 4,614 170
\nTaiwan Jan. 1986 2,793 99
\nIndia Bangalore Dec. 1999 3,614 52
\nBangalore July 2002 836 –
\nIndonesia Jakarta May 1970 5,332 66
\nJakarta 2004 – 86
\nMalaysia Shah Alam Feb. 1968 3,270 45
\nSungai Choh 2005 – 22
\nPakistan Mar. 1993 2,079 36
\nPhilippines Makati City Feb. 1989 1,929 19
\nLaguna Sept. 1992 1,045 –
\nSamutPrakan Dec. 1964 12,722 436
\nSamutPrakan May 1979 – –
\nSamutPrakan May 1988 1,100 63
\nThailand
\nBangkok July 1989 2,260 –
\nVietnam Aug. 1996 854 18
\n* Vehicle production reported in 1,000s. Only final assembly plants report vehicle production \u2013 other plants manufacture parts.
\nSource: Toyota company website, http:\/\/www2.toyota.co.jp\/en\/facilities\/manufacturing\/worldwide.html
\n19 toyota
\nExhibit 3: Toyota Plants, Japan
\nLocations of Toyota manufacturing facilities
\n20 toyota
\nToyota Plants
\nName Main products
\nStart of
\noperations
\nNumber of
\nemployees
\nHonsha Plant Forged parts, hybrid system motors, Land Cruiser chassis Nov. 1938 2,506
\nMotomachi Plant Crown, Mark X, Estima Aug. 1959 4,582
\nKamigo Plant Engines Nov. 1965 4,128
\nTakaoka Plant Corolla, Vitz, ist, Ractis, Auris, Scion xD Sept. 1966 4,984
\nMiyoshi Plant Transmission-related parts, cold-forged and sintered parts July 1968 1,745
\nTsutsumi Plant Prius, Camry, Premio, Allion, Wish, Scion tC Dec. 1970 6,340
\nMyochi Plant Suspension cast parts, suspension machine parts June 1973 1,641
\nShimoyama Plant Engines, turbochargers, VVT, catalytic converters Mar. 1975 1,997
\nKinu-ura Plant Transmission-related parts Aug. 1978 4,081
\nTahara Plant LS, GS, IS, GX, RAV4, 4Runner, Land Cruiser, Vanguard, engines Jan. 1979 10,370
\nTeiho Plant Mechanical equipment, moldings for forging and casting and resin-molding dies Feb. 1986 1,872
\nHirose Plant Research and development and production of electronic control devices, ICs Mar. 1989 1,290
\nToyota Motor Kyushu,
\nInc.
\nIS, ES, RX, Harrier, Highlander, engines, hybrid system motors Dec. 1992 4,762
\nToyota Motor Hokkaido,
\nInc.
\nAutomobile parts including automatic transmissions, transfers, aluminum
\nwheels
\nOct. 1992 1,691
\nToyota Motor Tohoku
\nCo., Ltd.
\nProduction of mechanical and electronic parts Oct. 1998 277
\nNotes
\n1: As of March 2007 (automotive operation or products and number of vehicles produced are as of December 2007). Figures for numbers of employees are as of the end of the fiscal
\nyear.
\n2: Production figure for the Honsha Plant indicates Land Cruiser chassis production.
\n3: Toyota Motor Kyushu, Inc., Toyota Motor Hokkaido, Inc. and Toyota Motor Tohoku, Inc. are 100%-owned subsidiaries of Toyota Motor Corporation.
\nSource: Toyota website, http:\/\/www2.toyota.co.jp\/en\/facilities\/manufacturing\/
\n21 toyota
\nExhibit 4: Toyota Recalls Compared to Honda and Nissan, Japan, 2000 to 2005
\nTotal number of cars recalled during the selected years.
\nNote: this chart does not take into account the differences in sales volume.
\nSource: Weekly Toyo Kezai, July 29, 2006
\nNumber of Recalled Cars in Japanese Market
\n(in thousands)
\n0
\n500
\n1000
\n1500
\n2000
\n2500
\n2000 2001 2002 2003 2004 2005
\nHONDA
\nTOYOTA
\nNISSAN
\n22 toyota
\nExhibit 5: Toyota Car Production per Employee, Japan, 1996 to 2005
\nAnnual
\nProduction
\n(in thousands)
\nEmployees
\n1996 3,500 65,224
\n1997 3,421 64,806
\n1998 3,086 64,998
\n1999 8,212 65,290
\n2000 3,422 65,005
\n2001 3,364 66,820
\n2002 3,513 65,551
\n2003 3,558 65,346
\n2004 3,749 64,237
\n2005 3,863 65,798
\nSource: Weekly Toyo Kezai, July 29, 2006
\nToyota Per-Worker Car Production
\nin Japanese Market
\n40
\n50
\n60
\n1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
\n(number of cars)