No plans to cut wages, Toyota board member says
NAGOYA, Japan — At a time when Detroit’s Big Three are pushing to slash
labor costs, Toyota sees no need to rein in wages and benefits.
Jim Press, who on Friday officially became the first non-Japanese to
join Toyota Motor Corp.’s board, ruled out wage cuts for the company’s
U.S. auto workers, instead stressing the potential for growth in North
The promotion of Press, head of North American operations and a 37-year
veteran at the company, won shareholder approval Friday, furthering
Toyota’s effort to bolster its standing as a multinational corporation.
Press, 60, who also became senior managing director, called the
promotion a victory for Toyota’s nearly 34,700 American workers and a
nod from headquarters regarding the importance of the U.S. market and of
“Everybody got a promotion,” he said. “We all moved up one.”
He rejected recent speculation that Toyota may lower the pay of its
American assembly line workers.
Press called a recently leaked memo about the need to cut labor costs “a
conversation piece,” adding that boosting efficiency is a more effective
way to reduce costs.
“Everybody is concerned about becoming more efficient, and making sure
that the cost of labor doesn’t get out of control,” he told a small
group of reporters at Toyota’s Nagoya office. “We don’t plan to reduce
American automakers, burdened by retiree health care and other so-called
legacy costs, are struggling.
General Motors Corp., Ford Motor Co. and DaimlerChrysler AG’s Chrysler
Group officials say that closing a roughly $25-an-hour labor cost gap
between Detroit and Japanese rivals will be a key issue in talks with
the United Auto Workers this summer.
The three American automakers generally pay about 30 percent more per
hour in wage, pension and health care costs than Japanese automakers.
Ford, according to its annual report, paid $70.51 per hour in wages and
benefits to workers last year. GM’s annual report says its labor costs
average $73.26 per hour, while Chrysler’s costs average $75.86 — all
well above the average $48 hourly cost incurred by Toyota, Honda and Nissan.
Press, in an otherwise subdued interview Friday, forcefully denied a
Wall Street Journal report this week that said Toyota was so worried
about overcapacity, it was considering a halt or slowdown in building
new plants in North America.
“Nobody in our company would ever come to a conclusion like what’s
stated in that article,” Press said.
Press, an avid scuba diver and pilot, left Ford and joined Toyota in 1970.
He now drives a hybrid Camry.
Last year, Press become the first non-Japanese president of Toyota Motor
North America Inc., overseeing sales and engineering divisions as well
as 12 manufacturing plants in the U.S. and Canada.
Press recalled that when he began at Toyota, the automaker was such a
minor player in the U.S. market that the sales listing used to
categorize the nameplate as “other.”
Today, Toyota has snatched U.S. market share away from Detroit
automakers, propelled by the surge in oil prices that have increased
demand for Toyota’s fuel-efficient models, including the Corolla, Camry
and hybrid Prius.
A decade ago, GM controlled about a third of the U.S. market while
Toyota had barely 8 percent. Today, GM’s share has dwindled to 24
percent, while Toyota’s has climbed to more than 15 percent, a market
share comparable to Ford’s.
But Toyota’s success has aroused concern among its executives of a
political backlash in the United States. Lawmakers from manufacturing
states say the Japanese government has kept the yen artificially low,
giving Japanese automakers an advantage.
Press dismissed those accusations, saying foreign exchange markets are
as uncontrollable as the weather. “We don’t control currency,” he said.
“It’s like rain.”
Some U.S. legislators also criticize Toyota for importing nearly half
the vehicles it sells in the United States. Last year, Toyota imported
46 percent of its U.S. sales — a figure the company acknowledges needs
Toyota has steadily expanded production capacity in the U.S., in April
breaking ground in Tupelo, Miss., for its eighth vehicle assembly plant
in North America, the fourth in five years. The factory will begin
production in 2010.
Press expects U.S. demand for Toyota models to grow, partly because of
new auto safety and fuel-efficiency technology. The last five North
American plants have added 600,000 vehicles to production capacity, he said.
“That’s pretty good evidence we’re putting our money where our mouth
is,” he said.
Press’ appointment is part of Toyota’s endeavor to empower regional
management as the company grows increasingly global — “to become a
Japanese company that has roots in America,” said Yasuaki Iwamoto, auto
analyst with Okasan Securities Co. in Tokyo,
But Iwamoto said Press’ ascension to the board was a testament to his
“He has truly become a Toyota man,” Iwamoto said.
Press joins the board of a car company that still dominates quality
surveys from J.D. Power and Associates, and the annual Harbour
Consulting plant productivity report. Rivals like GM, Ford and others,
however, are closing the gap.
That, Press says, is good news for car buyers.
“By our competitors getting better, it pushes us to get better,” he
said. “Customers win.”
Still, Press shrugged off the prospect of surpassing GM as the world’s
biggest automaker. In the first quarter of this year, Toyota eclipsed GM
in worldwide vehicle production and sales for the first time ever.
Bragging rights to No. 1 won’t come until annual production figures are
“That’s not what we are after,” he said, echoing sentiments often
expressed by senior Japanese executives. “We really want to be No. 1
with the customer.”
Toyota is already Japan’s most profitable company, raking in a net
profit of 1.64 trillion yen ($13.7 billion) for the fiscal year through
March, up 20 percent from the previous year.
The outlook for the current fiscal year, however, is cautious — up just
0.4 percent — largely because of a slower U.S. economy.
GM, which lost $2 billion last year, made a $62 million net profit in
the first quarter, but the company still lost an adjusted $85 million
from North American operations.
Ford reduced its loss to $282 million in the first quarter versus $1.4
billion in the first three months of 2006.
Being No. 1 doesn’t necessarily benefit a company, nor is it viewed as
particularly becoming in Japan’s culture, which prizes humility, Press said.
“There’s no satisfaction of beating somebody,” he said. “That’s not
something you’re proud of, is it?”