Toyota: On The Way To Number One

Toyota: On the Way to Number One

The Toyota Motor Co. Ltd was first established in 1937 as a spin-off from Toyoda Automatic Loom Works (the name would be changed to Toyota after World War II; both are good transliterations), one of the world's leading manufacturers of weaving machinery. Toyoda's car operations were positioned in the hands of Kiichiro Toyoda, Sakichi Toyoda's son. The first Toyoda car, the Type A1, was 62 horsepower, with a maximum speed of 62 mph. Toyoda Motor Company was split off from the loom works in 1937. Growth was slow from 1936 to 1943, only 1,757 cars were made - 1,404 sedans and 353 phaetons (model AB), but Toyoda found true success building trucks.

Toyota started selling cars in the United States in 1958, but it was not until 1964 that this first Americanized Toyota came out, the Toyota Corona PT20, sold in the US as the Tiara. Sales hit 6,400 in 1965 and reached 71,000 by 1968, nearly doubling each year until 1971 when Toyota was selling over 300,000 vehicles per year.

In 1959, the company opened its first production plant outside Japan in Brazil. From that point forward, Toyota maintained a philosophy of localizing both production and design of its products. This helped to build long-term relationships with local suppliers and local labor. Part of this also means that Toyota does not merely build vehicles overseas, but also designs them there, with a network of both design and R&D facilities in North America and Europe.

Today, Toyota is the world's second largest manufacturer of automobiles in both unit sales and in net sales. In the United States, Toyota has roughly double the sales of Honda. It produces over 5.5 million vehicles per year, equivalent to one every six seconds.

Among the general public, Toyota is mostly known for its reliable cars, but it has also been known in management and leadership circles for its unusual use of people. While most companies tend to make employee policies around the idea that people are lazy and expensive, at Toyota, labor conflict is rare and people are an integral part of the quality process. The company's only strike was in 1950, and resulted in a commitment to mutual trust.

Toyota's success is credited by many to the aspects of the Toyota Production System, established by Taпchi Ohno and Shigeo Shingo from the late 1950s through 1970. It includes aspects of Jidoka, just-in-time production, and kaizen, reducing both inventories and defects.

Toyota's globalization is best summed up by quoting Fujio Cho, President of Toyota Motor Company, in March 2002, "If people started living at the South Pole, we would want to open a dealership there."

Adapting to Change

One thing remains constants in the world and that is change...how a person adapts to that change is a great predictor of how successful he or she will be. This fact also holds true in business, especially in the ever changing environment of the world automotive industry.

The automotive industry has gone through great change from its humble beginnings when German manufacturer Benz put the first car into production: a three-wheeler he built in 1885, to today's multifaceted automotive manufacturers with many types of vehicles as well as diversified business operations. The automotive industry once dominated by "the Big Three" American companies is much more diverse and can be attributed to the ever changing world and how the new industry leaders have adapted. As Dennis Cuneo, senior vice president of Toyota Motor Manufacturing North America Inc. stated at The Business Summit, sponsored by the Tristate Chamber Collaborative in Cincinanti Ohio, "In my humble opinion, embracing diversity is a prerequisite for any business or geographical region that wants to grow." Keeping this idea at the forefront of the Toyota business model, Toyota has positioned itself to become the world's largest car manufacturer over the next 12 months. Toyota values all type of diversity from diversity in its workforce to the types of vehicles it creates: the new handicapped accessible Sienna Rampvan, their hybrid vehicles, and a full line of standard cars and trucks.

Although adapting to change may be a key aspect to business success, it is very important to recognize innovation as a change maker. Toyota has exhibited this time and time again by creating new processes and forcing the world to join them. Being a change maker is one of the big reasons why Toyota has had such exponential growth. Toyota first exhibited its change making ability when it developed the Toyota Production System. The Toyota Production System developed by Taichii Ohno was the evolution of the conveyor system pioneered by Henry Ford. Growing from the theme of creating setup, to manufacture a single product, Toyota worked to create setups that were as efficient as Fords, but customizable to different products. The products were to be developed with short production runs as opposed to the mass mass production models of the American automakers. Developing this process took nearly 30 years, from 1949 to 1975, however once its efficiency began to garner the attention of the larger American automakers. Although many American manufacturers attempted to study the Toyota Production System, their attempts to mimic it failed because they didn't fully understand the idea and didn't fully integrate the practice into their operations, only partially utilizing this approach proved to be the formula for disaster. The failure of the American automakers shows their inability to fully adapt to change during the early 1980's.

One of the largest changes going on in the automotive industry is the production of automobiles with greater fuel economy and less pollution. The hybrid automobile happens to be in the area of a new green market gaining the most attention. This green market is gaining more consumer interest out of necessity; because of the skyrocketing gas prices as well as the effect gas powered vehicles are having on the environment. Dependency on oil is one of the world's great threats. We saw a sign of things to come here in America as gas prices rose above the $3 mark. Increasing the efficiency of cars and trucks can play a significant role in reducing dependency oil.

America is dependent

on foreign oil, but the following measures could significantly alter that dependency:

* If auto manufacturers raise fuel efficiency standards in American cars by one mile per gallon, in one year, our nation would save twice the amount of oil that could be obtained from the Arctic National Wildlife Refuge

* Raising it by 2.7 mpg would