TOKYO — Consider it Akio Toyoda’s “Japan-First” strategy.
As the COVID-19 pandemic pummels profits and production plans worldwide, the head of Toyota Motor Corp. is reaffirming his commitment to keep Toyota’s Japanese factories turning out at least 3 million vehicles a year.
“I am referring to defending to the very last our system for domestic production of 3 million vehicles a year,” Toyoda said at the company’s financial results announcement this month.
The lofty target represents a 30 percent chunk of Toyota’s global production at a time when its overseas markets and plants are growing. It also comes as Nissan Motor Co., the country’s No. 2 automaker, is crafting a turnaround plan that reportedly may cut as many as 20,000 jobs, though relatively few of those are expected in Japan.
Toyota has been defending its line in the sand since the 2009 global financial crisis — partly to protect jobs in its role as Japan’s biggest automaker and one of the country’s top industrial employers. Toyota’s payroll in Japan has grown to 74,000, from 66,000 in 2001.
When asked if Toyota might consider a similar commitment to protect production levels in big Toyota markets overseas, such as the U.S., where it makes about 1.2 million vehicles, Toyoda demurred. Toyota’s home base for manufacturing is Japan, he said; overseas output will increase in tandem. Toyoda’s outlook is not as jingoistic as it might sound.
The trials of fighting COVID-19 have underscored the importance of safeguarding a domestic stronghold of manufacturing firepower and production knowhow.
In his address, Toyoda bemoaned that Japan had trouble getting medical face masks when the pandemic hit because most were produced overseas. This was the result, Toyoda suggested, of a misguided strategy of offshoring production to make goods at lower costs.
Reducing waste and costs is a core tenet of Japan’s manufacturing philosophy. But it becomes self-defeating when companies start cutting jobs, he suggested. If companies cut too deep, they lose knowledge and innovation along with employees.
“People are not costs,” Toyoda said. “People are the source of continuous improvement and a driving force for the growth and development of monozukuri,” he said, using the Japanese word that conveys the culture of manufacturing.
He pointed out that many Japanese companies, including those of the Toyota Group, were able to rally to fight the pandemic by turning their production resources to face shields, protective gowns and face masks. Why? Because they had protected jobs and the monozukuri culture.
“What we have been defending to the very last has not been ‘3 million vehicles,’ ” Toyoda said. “What we have been continuing to protect have been people who have acquired the techniques and skills that enable them to make what is necessary when the world needs it.”
It is especially important for Japan’s auto industry to pull its weight, he said, because the auto industry employs about 5 million people — approximately 10 percent of the country’s working population.
In his presentation, Toyoda showed a slide outlining Toyota’s domestic output over the years. As overall production by all automakers in Japan shrank from more than 10 million vehicles in 2000 to around 9.68 million in 2019, Toyota’s remained basically unchanged at 3.42 million — except for two blips below 3 million during the 2009 financial crisis and the 2011 earthquake-tsunami.
Finding new markets for Japan-built vehicles helps. Just last week, Toyota unveiled the Venza crossover for the U.S. . It is a rebadged version of the Harrier, sold and made in Japan.
One slide summed up Toyoda’s thinking succinctly. Toyota, it said, would “maintain production of 3 million units and employment, no matter how severe the economic environment becomes.”