Phil Biggs covers the automotive industry for NewsTalk 1340 WJRW
May 22, 2013 – 4:30 pm ET
DETROIT, Michigan. – Since the crash of late 2008, Toyota has seen its share of corporate culture-jarring changes that have deeply affected many of their marketing and manufacturing traditions. Looking back at the “triple-witching” natural and financial disasters it has faced over the past few years, Toyota has met and overcome the extreme economic challenges of the global recession, the pain of unprecedented, chronic recalls, and the unexpected wrath of the earthquake and tsunami disaster of March 2011. All these events converged on the global automotive leader to slow down or even stop much of the market dominance it enjoyed last decade.
The recalls shook Toyota to its fundamental core beliefs. Never had Toyota felt the sting of such widespread lapses and breakdown of its highly-touted business methods. There was much to consider after Toyota recalled nearly 17 million cars and trucks worldwide in a series of campaigns, and briefly halted production and sales. Toyota initiated the actions after reports that several vehicles experienced an array of serious to deadly glitches ranging from malfunctioning power window switches to unintended acceleration. These defects caused a severe blow to the deeply-rooted Toyota Production System (TPS). Developed by Toyota’s founding leaders, TPS is an integrated socio-technical manufacturing system that links its management philosophy and business practices. TPS organizes manufacturing and logistics from the OEM through systems integrators such as Denso and other suppliers, to ultimately benefit its end-user customers in the form of superb safety, quality and reliability.
Much to learn from the setbacks it faced… Several of Toyota’s sacred mantras such as “Don’t expect perfection – just the relentless pursuit of perfection” were threatened to the core. The lessons learned were numerous as management was forced to re-examine and re-invent the Toyota Way: respect for people and devotion to teamwork, continuous improvement, Kaizan, and genchi genbutsu (go and see). The need to improve the decision-making process from corporate to field was urgent. As positive and progressive the Toyota Way was, nevertheless many critical decisions were bottle-necked in Japan and it reached a break point over the past several years during and after the downturn and recalls.
Automotive News recently reported that Toyota Motor President Akio Toyoda restructured the company’s management this year to give more authority and autonomy to local regions. “Nowhere was this more evident than in North America, where Jim Lentz, CEO of Toyota Motor Sales U.S.A., was placed in charge of all Toyota sales and manufacturing for the region.” Lentz now reports directly to company headquarters in Nagoya, Japan, rather than through a Japanese executive in California. This has enabled the company to communicate more openly, collaborate more globally, while strengthening risk management in a better, re-vamped regional alignment.
Toyota has rebounded with strong profits and a restored brand image. Toyota continues its traditions of outstanding customer, employee and community service in the U.S. This month Toyota reported that it more than doubled its fourth-quarter earnings, posting net profit of 313.9 billion yen ($3.17 billion), compared with 121 billion yen in the same period last year. Toyota’s Japan-based manufacturing arm also made a profit for the first time in five years.
Add to this that Toyota was named to the Top 100 Most Valuable Global Brands study released by market research company Millward Brown. Toyota’s 2013 brand value rose 12% to nearly $25 billion largely because of its significant inroads in the hybrid market, according to the study. Peter Walshe, Millward Brown global brand director, told Automotive News, “Its hybrids are reinforcing the experience of the brand, and in so doing, Toyota continues to magnify what is special and different about it.” Prius constitutes 50% of all hybrid vehicle sales worldwide, and with more than 3 million Prius vehicles sold globally and over 1 million in North America, this serves to reinforce Toyota’s resurgence.
Mutual trust produces mutual efforts, which lead to mutual benefits – and that’s the capstone of the Toyota Way. With over $500 million of philanthropic support worldwide last year, $23 billion of investment in North America, and 2,000 more jobs added in Mississippi, it speaks to a tremendous global turnaround and re-commitment to the Toyota guiding principle of good corporate citizenship. Making profit from products that are demanded, coupled with social responsibility, is more than resurgence…it’s a worthy business model to which any company should want to subscribe to.
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