For Toyota, success is bitter-sweet
TOKYO: Rick Wagoner, the chief executive of General Motors, boasts about the number of markets where the U.S. automaker is No. 1. Toyota Motors president, Katsuaki Watanabe, emphasizes where his company trails.
Listening to the leaders of the worlds biggest carmakers, you might think Toyota was the one playing catch-up.
Yet, though GM begs to differ, Toyota has been ahead for the past two years. In 2007, the Japanese group sold about half a million more vehicles than GM, after excluding cars from a Chinese company in which the American firm holds only a minority stake.
The gap may very well widen this year as Toyota seeks growth in emerging markets. So why does Toyotas 65-year-old chief sound so worried?
“Im constantly trying to drive home the message that long-lasting success is elusive,” Watanabe said recently. “Our corporate DNA is about always challenging ourselves to do better. The moment we let down our guard, the fall could come very fast.”
Failure is not normally a word associated with an auto company that is in a league of its own. For years, Toyota has led the industry by nearly every corporate yardstick: profit, market value and cash reserves. Outselling GM, which held the No. 1 spot for the previous 75 years, was largely a symbolic milestone.
But as Toyota began adding roughly half a million cars a year to its output and extended its reach, it has faced new problems. Vehicle recalls have hit record levels in recent years, and Toyota has slipped in quality rankings.
That has not helped the companys share price, which has fallen by around 20 percent in the past six months because of fears of a slowdown in the key U.S. auto market.
The snags have yet to slow Toyotas sales. The company expects to sell almost twice as many cars this year as it did a decade ago.
To keep up with soaring sales, Toyota has doubled its work force to 310,000 over the same period, and that is where Watanabes quality headaches have come from.
A visit to a Toyota plant in Japan shows how difficult it is for Toyota to maintain its high standards as it moves production offshore to booming markets and hires new workers.
At the Tsutsumi factory, the home of Toyotas Prius hybrid car, elderly workers move components around at a speed that encapsulates Japans unique work-centric culture.
The pace of work picks up across the factory floor every time overhead displays are updated with the days vehicle quota, reflecting in real time new orders received at dealerships.
In Japan, death from overwork is not uncommon - Toyota itself was blamed for one in a lawsuit last year - but expecting that level of dedication elsewhere is far from realistic.
“With the population declining and aging in Japan, Toyota has no choice but to expand its work force abroad,” said Tsuyoshi Mochimaru, an auto analyst at Lehman Brothers. “This is a major challenge for management. Its not easy to translate the Toyota Way outside of Japan.”
Instilling a sense of urgency is also tough when new hires have never known a Toyota that was not a cash-generating machine.
Unlike Watanabe. He joined Toyota straight out of university in 1965 and has been with the company through some of its toughest years, including the U.S.-Japan trade disputes of the 1980s and the crippling effects on Japanese exporters as the dollar traded at 79 in the mid-90s.
Even with Toyotas recent quality problems, conveying to the rank and file the dangers of complacency is a tall order.
That is why, from the moment he took the helm in 2005, Watanabe has made it his mission to discourage employees from measuring Toyota against rivals but rather against a lofty goal: developing a dream car that “cleans the air, doesnt cause accidents, makes drivers healthier and can go around the world on one tank of fuel.”
“We have a long way to go,” he said.
It sounds like a corporate fantasy, but the culture of striving is ingrained in Toyotas origin, which can be traced back to the Great Kanto Earthquake of 1923. The quake leveled Tokyo and destroyed trains and streetcars, the citys primary means of transport in a country that was still an industrial backwater.
Sakichi Toyoda, an inventor of textile looms, lamented Japans need to import Ford trucks to bus people around after the quake and instructed his son, Kiichiro, to build automobiles to serve the country.
