Page 69 - Toyota Under Fire

TOYOT A UNDER FIRE

spent a number of years working in TEMA prior to moving to Europe.
The board felt that it needed an experienced hand to manage what
at the time was primarily a North American production problem.
Just before Agata’s arrival, the decision had been made to cut
back production of trucks and SUVs dramatically in response to
the oil price spike and falling sales by stopping assembly lines for
three months at the Princeton, Indiana and San Antonio, Texas
plants and shifting vehicles between plants for maximum effi-
ciency (a decision that we’ll return to later). Still, Agata says, “My
first message to my staff, from Paris, was that we have to make
our best efforts to keep all our staff.”
While it’s true that Toyota did not lay off any workers, that
doesn’t mean that Agata and his team didn’t think that there was
an urgent need to cut personnel costs. As mentioned, Toyota uses
temporary workers and overtime for hourly employees as mecha-
nisms for increasing production over the historical 80 percent
capacity profitability threshold. During Toyota’s steady growth in
the United States, its North American plants had been running
above 95 percent capacity on average. During those boom years,
hourly team members worked lots of overtime hours. In addition
to overtime, there was an annual bonus based on the company’s
profitability and the performance of the plant that regularly paid
out more than 10 percent of pay for hourly workers.
As volumes fell and production was dramatically cut back,
not only was temporary labor reduced to zero, but team mem-
bers’ overtime and bonuses came to an end. For many workers,
that meant more than a 10 percent drop in take-home pay. Agata
instituted a shared sacrifice model for TEMA. If the hourly work-
ers were going to be taking home 10 percent less, managers and
executives should take larger temporary pay cuts. In addition to
canceling bonuses, he instituted a sliding scale, with vice presi-

38