Toyota Knows Brains

When times are tough, what do most manufacturers do?  Why, they lay off or send people home of course!  If you're part of the Detroit Three like GM, Ford, and Chyrsler, then you still have to pay people after they go home.

For years, Detroit's Big Three car makers have paid their workers even when they aren't needed on the assembly line. At GM, Ford and Chrysler, workers effectively are paid for not working when their assembly lines are idle, under terms of union contracts. If a plant is shut temporarily, as some were this summer, workers receive most of their pay but don't have to show up.

This year, as the industry's downturn intensifies, Toyota Motor Corp. finds itself doing the same thing.

Yes, even mighty Toyota is having a tough time, and is slowing down production.  The difference is that Toyota isn't unionized, so it doesn't have to pay people sent home... but still does.  And the more vital difference is that Toyota doesn't send the workers home in the first place.

Instead of sending the workers home, as the Detroit makers often do, Toyota is keeping them at the plants, though. The employees spend their days in training sessions designed to sharpen their job skills and find better ways to assemble vehicles.

At its Princeton plant, Toyota is using the down time to hone its workers' quality-control and productivity skills. The company has pledged never to lay off any of its full-time employees, who are nonunion.

How big is this investment in training?

Toyota is "facing a significant lack of production work for a significant number of workers," said Sean McAlinden, an economist at the Center for Automotive Research. He estimates the wage cost of idling the assembly lines at the two plants at $35 million a month.

How does that compare with your training budget?  So what kinds of projects are the Toyota folks working on?

In Princeton, senior plant manager Norm Bafunno said he can already see the benefits of the training. Mr. Bafunno cites a Teflon ring designed by an assembly worker during the down time that helps prevent paint damage when employees install an electrical switch on the edge of a vehicle's door.

Throughout the factory, workers sit in classrooms, repaint hazard areas bright yellow, lift weights, complete dexterity drills and get steeped in Toyota's corporate philosophy.

Near one idle line, assembly worker Bob Mason sat with four others employees around a table looking at a flip chart with PowerPoint printouts on it. The employees went through a problem-solving module based on a technique in Toyota's production system.

Toyota understand the value of knowledge, and that employees are more than simply a pair of hands.

Jim Lentz, president of Toyota Motor Sales, the company's U.S. sales unit, said the company believes keeping employees on the payroll and using the time to improve their capabilities is the best move in the long run. "It would have been crazy for us to lose people for 90 days and [then] to rehire and retrain people and hope that we have a smooth ramp-up coming back in," Mr. Lentz said.

Mr. Mason, a 40-year-old former firefighter, added: "One of the major things that everyone is grateful for is that they thought enough of us to keep us here.""

Indeed.  Respect for people, pure and simple.

Comments

[Scott Whitlock]

Kevin,

I would say Toyota knows "people." They know loyalty. There are certainly union relationships that are healthy because the people behind them work in healthy ways together. However, most of the time these relationships breed poor performance and antagonism and that is where attendence, quality, and performance goes down for both the associates and the company as a whole. Visteon is a good example - especially in my home town of Connersville, Indiana.

I love that Toyota is investing for the long term. A good strategy for winning hearts and creating loyalty. You know the people that are getting cared for in this way will find ways to improve the product and the process because of what their employer has done for them.

[Dan Markovitz]

Could there be any starker contrast in management philosophies than this? Could there be any more obvious demonstration why Toyota has been able to create one of the greatest machines in history (i.e., the company itself), while the Detroit 3 continue to flounder and seek bailouts? Can you imagine Cerberus doing this with Chrysler?

[Christy Lotz]

I am actually working at Toyota this week facilitating a training for their ESI and Safety teams. Their culture is unlike any I have seen. They value their workforce and seek to understand ways to continuously improve their operations and create a safe and healthy work environment.

The statements in this post regarding Toyota using down time to train and condition employees is a testament to the fact that they will never slow down while they are on top. They recognize that employee involvement with safety, quality, productivity and cost is the best way to excel. The number of trainings that they are putting team members through is staggering. But, I expected nothing less from TPS.

[Aley]

I applaud Toyota for taking this bold step in these harsh economic times. Not only is it a selfless move but certainly one that must be embedded in the company's strategy. Hence, this is no coincident. Companies that have the vision to make such a move can only strenghten their brand and position in the marketplace as a premier workplace. Strenghtening its people can only augur well for the bsuiness in the long run.

[Jay P Patel]

I have always liked what Toyota have done for their people. I was also impressed by reading book on "Toyota Talent". They believe continual improvement in knowledge, skills and quality are vital to quality, productivity and delivering robust products. KNowledge is the greatest power for people and the companies. Managing Knowledge must be in place for any company to survive. I hope domestic companies would learn from what Toyota is doing.

[Richard Steel]

The last time Toyota laid off permanent rmployees was 1950, at which time they vowed for it never to happen again. They have seen off many downturns over the past 60 years and have always come out the other end more efficiency with higher productivity...this is how!

[Victor Johnson]

During the 1980's industrial studies found that in times of economic downturn the organisations that embraced employee training improved their market position in the upturns. They were positioned to advance far ahead of their competitors.

The competitors who had laid off staff had to rebuild the work force during the upturn. The time lag in achieving production was very costly.

[Darrel Keesee]

There are over-expecations that existed in another of Toypota's divisions, finance. An ivyleaque graduate with the equivalent experience of a major portfilio manager was a bit much for a financial arm. Unrealistic hiring expectations also existed for customer representatives. Toyota had to learn itself about the difference in culture, learning curves and progression. Training and coordination was not part of the culture for this division.

This article is an example of what American workers can do when the blend of economic necessity and skilled workforce meet. The main manufacturing unit is an example of industrial investment v government dependence. Not since the great aerospace race in the 1960s has there been many industries investing in themselves.

What is ironic is what we hailing as foreign excellence is the aforementioned departure of quality the started in America. Afterall, William Deming went to a small struggling country because his homeland rejected his quality teachings.