Toyota expands -- and tends to growing pains
Lindsay Chappell | Automotive News / April 23, 2007 - 1:00 am
TUPELO, Miss. -- Toyota's frenetic growth in North America has a dark side that worries senior executives. The company is wearing out its engineers and manufacturing managers, causing an alarming number of them to quit.
Now Toyota -- which last week broke ground on one plant and cut the ribbon at another -- plans to do something about it. The company says it will decentralize its manufacturing and engineering command and expand its project management staff.
The restructuring is a sign of growing pains as Toyota adds plants in North America at a pace of about one a year. Toyota's Kentucky-based corps of project managers, engineers and supplier support staffers are being run ragged. Midlevel managers crisscross the continent on far-flung assignments - from Ontario to Mexico - and it's taking a toll on the employees and their families, according to an internal company document.
The solution: Toyota will set up regional centers on the West Coast and in Texas by 2010. Personnel in the satellite offices will get more authority to tend to nearby projects.
"It will keep engineers from having to travel so much," says Gary Convis, executive vice president of the North American manufacturing headquarters in Erlanger, Ky. "It will enable them to stay close to home so that we're not putting so much strain on their families."
Losing people
Over the past decade, Toyota has centralized its North American manufacturing headquarters in Erlanger, just outside Cincinnati. But according to the company document obtained by Automotive News, the pace of work at Toyota is proving too much for too many.
"We continue to experience high turnover" reads a PowerPoint presentation given in 2006 by Seiichi
Sudo, COO at Toyota Motor Engineering & Manufacturing North America Inc. in Erlanger.
According to the document, Toyota lost 5 percent of its "experienced members" in 2006 after losing 10 percent in 2005. It is not clear from the document how many employees those percentages represented. Toyota won't comment on the document.
About 1,400 employees are assigned to Toyota Motor Engineering & Manufacturing North America, including clerical staff.
The reasons for the turnover, according to Sudo's presentation: excessive overtime and travel, an imbalance between work and personal life, insufficient authority for managers operating in the field and poor communication within the organization.
Sudo's presentation also said managers suffered from "lack of self development opportunities" and an "unclear future vision."
Toyota will set up a satellite office in Fremont, Calif., to help manage vehicle projects and supplier issues out west. The California office will oversee Toyota's plants in Fremont, Baja Mexico, the Los Angeles area and British Columbia. A third regional center will be established at Toyota's new Tundra plant in San Antonio.
The satellites will report to Erlanger, but personnel stationed in Kentucky will focus on projects in the Midwest, South and the Great Lakes region.
Each center will have project engineers who work with suppliers and Toyota's U.S. vehicle development teams.
More factories
Last week, Toyota officials gathered in Tupelo, Miss., to break ground on a $1.3 billion factory that will produce 150,000 Highlander SUVs a year. Production will start in 2010. And on Friday, April 20, the officials gathered a second time in Lafayette, Ind., to cut the ribbon on an assembly operation that will build 100,000 Camrys a year. The Camrys will be produced at Subaru of Indiana's plant.
The Lafayette plant and a new factory in Woodstock, Ontario, will bring to eight the number of Toyota assembly operations in North America.
Toyota is expected to announce another project soon - production of an all-new crossover at its plant in Georgetown, Ky. The company also is ramping up its Tundra pickup plant in San Antonio and in 2008 will launch RAV4 production at Woodstock.
Convis, who will retire in June, will have responsibility for the satellite office program, serving in a consulting role. He will move his office from Erlanger to Fremont. The company operates New United Motor Manufacturing Inc., a 50-50 joint venture with General Motors, in Fremont.