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Toyota battles to save its reputation for quality
The car in front is a Toyota was a brilliant marketing slogan because it used word play to underline a fundamental truth about the company and its products. Quite simply, no other car manufacturer in the world could compete with Toyota on quality and value for money. Its lean-production methods were copied by manufacturers across the planet. For almost 50 years, the company achieved financial results unmatched in its industry.
Today, after two years of losses and a series of product recalls, Toyota is battling for its hard-won reputation.
The trouble began early last year, when the owners of some 1.3 million Toyotas worldwide were asked to return their cars to the dealer because of seatbelt and exhaust-system problems. Eight months later, more than half a million Toyotas made in China were recalled because of faulty window switches. And by the autumn, snags were beginning to emerge with sticking accelerators on Toyotas in the USA - a problem that eventually affected eight Toyota models, and millions of owners, across north America, Europe and China.
In Volume 35, Issue 11 of Quality World, Johnson advances the view that Toyota's financial slump is because of "rapid and excessive global expansion after the mid-1990s, prompted by top management placing a new and unprecedented focus on reaching bottom-line financial targets".
The company expanded not only its range of models, but also its number of plants and suppliers. As complexity grew, Toyota found it harder to meet customers" orders within a reasonable time. It began to base much of its production on forecasts of demand, rather than actual customer orders. Stocks of unsold vehicles began to mount at the dealers. Defect rates and warranty claims began to rise.
According to Johnson, Toyota's management culture at its zenith was process-driven not results-driven. The firm is today paying for having sacrificed "a concrete world of humans in co-operative relationships" for "a virtual world of finance". The Toyota of tomorrow needs to regain the "living-system" habit of thinking that helped to make it so successful in the past.
As Toyota stumbles, the "Big Three" Detroit car-makers are gaining ground. In Industry Week, Volume 258, Issue 12, Cable reports that Chrysler has succeeded in lowering the number of hours" labour it needs to make each vehicle in the USA to 30.37 - the same as Toyota. Chrysler's Toledo South assembly plant, which makes the Jeep Wrangler, is the most productive in North America, averaging 13.57 hours per vehicle.
General Motors, meanwhile, has improved its productivity in each of the last 15 years, and now boasts three of the 10 most productive plants in north America. And Ford has cut its labour hours per vehicle by 3.7%.
All three companies have been helped by restructuring following the recession. But even before the downturn, the Big Three were rigorously retooling their assembly plants for greater flexibility.
The car in front may still be a Toyota, but GM, Ford and Chrysler are catching up fast. No longer, as Cable puts it, "out-of-shape rivals, gasping for breath just trying to climb the stairs to the factory floor", the Big Three are leaner, fitter and spoiling for a fight.