Toyota Runs Low on Expertise to Power Global Push
KCAUTV.COM
By Norihiko Shirouzu
As it races to add new factories in North America and around the world while trying to maintain quality, Toyota Motor Corp. is bringing in outside help to run its much-studied and much-copied "lean manufacturing" system.
For as long as Toyota has existed, the company has relied mainly on its own highly-trained workers for manufacturing expertise to ensure that all Toyota plants conform to the rigorous Toyota Production System. That system has been at the core of Toyota's ability to build vehicles more efficiently, more profitably and with more-consistent quality than most of its rivals.
But now, the world's second-biggest producer of automobiles after General Motors Corp. is scrambling to find enough in-house Toyota Production System experts. In a significant shift, Toyota is turning to affiliated assembly-specialist companies to cope with the challenges of its ambitious plan to grab 15% of the world auto market -- about as much as GM has today -- by 2010.
Chief among those challenges: a shortage of quality gurus. There are signs the company's torrid growth agenda is straining Toyota's human and technical resources and allowing competitors to catch up with it on quality, one of Toyota's most critical strategic selling points.
Now, from Argentina and Brazil to China and South Africa, manufacturing experts from Toyota-affiliated assemblers such as Kanto Auto Works Ltd. and Toyota Auto Body Co., both of Japan, are working side-by-side with their Toyota counterparts to help open new plants, update manufacturing facilities, cut costs and train local workers.
Toyota's assembler affiliates belong to the Japanese auto titan's sprawling keiretsu, or network, of parts suppliers and other companies that are linked through cross-shareholdings, exchanges of key managers and long-term contract relationships. Previously, their work with Toyota has been largely limited to Japan, producing Toyota-brand cars and light trucks.
Art Niimi, Toyota's former manufacturing chief in North America who was promoted last month to become a senior managing director at Toyota's global headquarters, said one objective is to eventually "outsource" to those affiliates entire or partial management of some manufacturing plants outside Japan, probably including those in North America.
Many quality gurus at those subsidiaries are well-versed in Toyota's methods. But one big risk to the auto maker is their level of expertise as younger and less-experienced engineers are entrusted with managing some day-to-day operations outside Japan.
Toyota is trying to prepare for the day when "if the situation warrants it, we can entrust management of one entire [Toyota] plant to our group company like Kanto Auto Works," Mr. Niimi said.
"From here on, we are committed to operating around the world by using the combined capabilities of the Toyota Group as a whole," he said. "We may be running out of resources as a company, but as a group we still have plenty of resources."
Various aspects of the Toyota Production System, with its central concept of continuous improvement in every process, are widely copied not only by rival auto makers, but also by auto-parts suppliers, supermarkets and other retailers, even hospitals.
Toyota executives hope its affiliates can help it manage growth globally, including in North America. Toyota still tends to outscore its rivals there -- including GM, other Detroit auto makers and those from Europe -- on industry surveys of quality and reliability. But its lead has narrowed and, in some key segments, disappeared.
In addition to Kanto Auto Works and Toyota Auto Body, among Toyota affiliate-assemblers are Central Motor Co., Toyota Industries Corp. and Gifu Auto Body Co.
In another effort to deal with the lack of manufacturing resources in North America, Toyota is likely to locate a future plant close to an existing facility in what the company calls a "concept of satellite plants" to share the experience and expertise of an existing assembly plant.
The company did just that late last month, when it unveiled plans for a Canadian plant just a half-hour drive from its nearly 17-year-old assembly plant in Cambridge, Ontario.
Meanwhile, in an effort to make the Toyota Production System easier for new recruits to learn, Mr. Niimi said he is ready to make broader use of what he describes as one of Toyota's secret weapons in manufacturing: the new in-plant logistics method to deliver parts to the assembly line, internally referred to as "kitting."
Kitting refers to a system in which workers synchronize packages of parts with the order of vehicles heading down the assembly line and place the part kits inside the vehicle under construction. The procedure has allowed Toyota to eliminate almost all the parts shelves that typically flank a plant's assembly line.
