Staying True to the Toyota Way During the Recession

April 6, 2011
Toyota's Wil James at Best Plants: 'While our plants were idle, we got creative.'

When Wil James joined Toyota in 1987, he received some wise counsel from now-Chairman Fujio Cho that has shaped his management approach.

"Mr. Cho told me, 'Always remember that management should work for team members, instead of team members working for management. We should always show respect for every individual, and we need to make sound decisions locally because no one knows what's best for your team members in your own culture better than you,'" James recalled. "And I've never forgotten that, and I've patterned my management style to demonstrate my belief in that simple truth."

James, addressing a receptive audience at IndustryWeek's Best Plants Conference April 6 in Atlanta, said he also developed a mindset early in his career that "decisions we make should not only benefit our team members in the short term but in the long term" as well.

"So we place a very high priority on long-term employment security for our employees," James said. That philosophy certainly has been put to the test during the recession, which saw U.S. auto sales hit lows not seen since the early 1980s. But James, who runs Toyota's largest North American manufacturing facility, in Georgetown, Ky., beamed that Toyota maintained its employment ranks even during the depths of the recession.

"During the worst economic downturn since the Great Depression, we kept every one of our regular U.S. manufacturing team members employed, even as global auto sales plummeted," James said. "Instead of layoffs, we protected employees by adjusting production."

And during production lulls, Toyota kept employees busy by offering additional training, devoting time to continuous-improvement projects and providing them paid time off to volunteer in the community, James said.

"We also used the downtime for environmental, OSHA and diversity training as well as improving problem-solving skills and standardized work," James said.

At Toyota's manufacturing facility in Princeton, Ind., where James was senior vice president for manufacturing and quality from 2008 to July 2010, Toyota employees formed a kaizen team to study a process on the door line. The team found that the push force needed to install the door padding was high, leading to damaged material and excess physical exertion for workers. As a result of the Kaizen investigation, the plant adjusted the process to lower the push force required by team members from 23 kilograms to 6.8 kilograms, according to James. The change in the process also led to a dramatic reduction in defects, and a $6,000 monthly reduction in scrap/rework costs.

At the Georgetown, Ky., facility, where James became president in July 2010, plant executives agreed to foresake bonuses and take pay cuts, while Toyota Kentucky looked for other ways to cut costs.

The Kentucky plant held contests challenging employees to come up with the best cost-cutting ideas. One winning suggestion, from the facilities department, helped the plant save approximately $1 million a year by installing more energy-efficient light bulbs throughout the plant.

Sweat Equity for Nonprofits

Driven by the dire need to cut costs during the recession, Toyota leaders at some U.S. plants informed local nonprofits that the automaker would have to reduce its contributions to their organizations.

However, Toyota offered resources to those charities "in the form of manpower," James said.

"So we offered those resources to the community, in the form of both people, time and talent," James said. "During some of the time when our production lines were down, we sent some of our team members out into the community to assist organizations with work such as general maintenance, cleanup, painting and various odd jobs that require basic manpower that many nonprofits normally don't have access to."

For example, the Georgetown, Ky., plant's energy team partnered with local government agencies to help them reduce their energy costs. "In Scott County, Ky., we reviewed the courthouse operations and systems and developed a prioritized list of action plans," James explained.

"The results were a reduction of energy of about 65% -- more than $37,000 a year in that case -- and the courthouse was also able to reduce its carbon footprint by 35%."

Also, logistics experts from Toyota's Kentucky plant helped local city officials make their refuse-pickup routes more efficient, James added.

"I think the key point to all of this is we wanted to be upfront with the nonprofits and acknowledge that we had profit issues, but at the same time we demonstrated our willingness to help in other ways that still got them positive results," James said.

"And the representatives of those nonprofits truly appreciated the support."

'Unprecedented Job Security'

James asserted that Toyota offers "unprecedented job security, even in difficult times."

"We take care of the people who make our product, and we provide them with one of the industry's best wage and benefit packages," James said. Toyota demonstrated that philosophy during the recession.

"As you can imagine the results of shutting down a plant is quite costly," James said. "But in the long run we think that the cost of sending everyone home and laying them off is even higher.

"Why? Because we believe when you do that, you actually squander the opportunity to retrain and refocus your workforce. We wanted to take advantage of our team members' capabilities, so we had them making improvements to their processes. We used their ideas to make the lines more efficient. While our plants were idle, we got creative." More Best Plants Coverage:

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