Toyota is poised to overtake GM, but here's the scariest part: Now it's stepping on t

[dodolaje]

Relentless
Toyota is poised to overtake GM, but here's the scariest part: Now it's stepping on the gas.

TOKYO -- Like a great tanker holding its course through stormy seas, Toyota Motor Corp. is gaining share in the world's most competitive markets and steaming ahead with new technology. Already the world's richest automaker, it is on track to become the largest.

With General Motors Corp. losing ground in its home market, Toyota's path to the top seems unobstructed.

Yet Toyota's top managers aren't satisfied. Instead of pausing to savor their achievements, they are ramping up capacity, stepping up the pace for 265,000 employees worldwide and inducing a level of pressure that companies usually face in times of crisis.

At a briefing last month in Tokyo, Toyota executives appeared uneasy discussing the company's epic transformation from challenger venturing cautiously into new markets to the new champion in everyone's sights.
After outlining the company's strengths and weaknesses, new Chief Executive Katsuaki Watanabe glumly concluded, "There's still room for improvement." Sitting to his right in a hotel suite, Toyota's head of overseas operations, Tokuichi Uranishi, nodded in assent.

Most rivals would happily swap their problems for Toyota's. Its high profitability slightly lags that of Nissan Motor Corp., low-cost Asian rivals are coming on the scene, and recalls are rising along with sales.
But the most daunting challenge may be the consequences of the automaker's success - the arrogance and complacency that can set in at even the finest companies.

When Toyota announced three years ago that it was gunning for 15 percent of the world market, the bold declaration was widely perceived as a shot across GM's bow. The U.S. automaker has a 14.4 percent global market share this year.

But Akio Toyoda, grandson of the founder and a senior company executive, says that objective has been misunderstood. "That's not a target," Toyoda told The Detroit News. "That's a banner to rally people to make greater effort."

To report this series, The Detroit News traveled to Tokyo, San Antonio and Princeton, Ind., and interviewed senior Toyota executives in Japan and North America.

From their headquarters in Toyota City, a drab town in Japan's rural Nagoya region, the automaker has drafted ambitious plans for all major regions. This year and next, Toyota is increasing production capacity by nearly 1 million vehicles to keep pace with growing demand for its solid and reliable cars and trucks.

In Russia, China and elsewhere, it is hiring thousands of workers and erecting plants with a goal of doubling overseas output in coming years. It is now building a full-size pickup plant in Texas.
Toyota is also rethinking each stage of the car-making process, from design to manufacturing, to cut costs and shorten the time it takes to bring new vehicles to market. That's a crucial competitive advantage in the auto industry.

From the time the design is approved to the start of production, "we're shortening the development process to 12 months, or even less," from 20 months, Watanabe said.

Watching Toyota, rivals are perplexed by a curious combination of modesty, wariness and aggressiveness displayed by its executives.
"They'll give you this, 'We're farmers from Nagoya' routine, but they're extremely sophisticated and good at what they do," said Bruce Coventry, president of the Global Engine Manufacturing Alliance, a venture of DaimlerChrysler, Hyundai Motor and Mitsubishi Motors.

Firm risks overheating

Even for a company with good quality control, such rapid growth risks compromising the rigorous methods that lie at the root of Toyota's success and are now industry standards. Recently, Nissan stumbled when it built too many new models, too fast at a new plant in Canton, Miss.
"They're generally fairly cautious" at Toyota, said Tokyo-based auto analyst Andrew Phillips at Nikko Citigroup. "But with the increases in production they're talking about, there's certainly a risk that there could be problems."
Already, Toyota's recalls are on the rise, tracking its sales growth, while rivals have narrowed the gap in vehicle quality and productivity.
Toyota suffered a big embarrassment last month when it recalled its gas-electric Prius hybrid to fix a software defect that was causing some engines to stall. That month, it recalled 1.3 million small cars in five countries, its largest recall ever.

"We're not happy about some of these recalls," said Gary Convis, president of Toyota's Georgetown, Ky., plant. "We're looking hard to make sure that they don't proportionately increase."

As Toyota expands rapidly, it is also grappling with a shortage of skilled managers and engineers. When it decided in June to build its seventh North American assembly plant in Woodstock, Ontario, officials said one reason they chose that site was because the new factory could be overseen by the team running its nearby Cambridge plant.

Last month, the normally acquisition-shy Toyota bought nearly half of GM's 20 percent stake in Fuji Heavy Industries Ltd., in part to bolster its ranks of researchers and engineers.

Now, some Toyota executives in fast-growing regions are coaxing former managers out of retirement. Less than a year after Ed Ohlin retired, the 21-year company veteran and former head of its Mexican sales operations is back on the payroll, helping his former boss Yoshimi Inaba build a sales network in China.

"He was looking for someone who understood the Toyota culture and had brought it to another country. I'd done that," said Ohlin, who now works in Beijing.

Watanabe, a slim, bespectacled manager who previously ran Toyota's vast purchasing operations, seems keenly aware of the risks. "In terms of the time scale, you can say growth might be too rapid," he said.

"But we're still at the stage where we can manage rapid growth," he added, listing safeguards the management is putting in place to ensure that Toyota's expansion doesn't hurt its reputation for quality.

It is adopting new training methods to rapidly teach thousands of new workers and managers the painstaking Toyota Way in more than a dozen languages.

In past years, experts in the Toyota Way had time to nurture new hires. But now they get intensive training at vast centers. Two years ago, Toyota opened a mock assembly plant, the Global Production Center, at the Motomachi factory in Toyota City to train about 2,000 employees a year.
Early this month, experts from Motomachi certified the second such training center, a 99,000-square-foot facility on the site of its Kentucky plant. It will build a third in Europe.

"The idea was to gather best practices from the plants and institutionalize that," said Convis. "Globally, we're doing the same thing, whether you're in a plant in China, Russia or South America."

With so much of Toyota's expansion taking place abroad, "whether we have enough people absorbing the Toyota Way is something we're watching very carefully," said Watanabe.

At the heart of the renowned Toyota Production System are two principles: "kaizen," or continuous improvement, and respect for people. U.S. automakers first saw the system in action after Toyota formed a manufacturing venture in California with GM in 1984. This year, it opened a plant jointly owned with France's PSA Peugeot Citroen in the Czech Republic.
Unusual among automakers, "they don't hide a lot," Coventry said. "It's like going to the Super Bowl and having the opposite side throw their playbook on the table. It's as if they feel they can still beat you on the field."

[dodolaje]

A dark horse

In a reflection of Toyota's team-oriented approach, its executive pay is paltry by U.S. standards. Analyst Ron Tadross at Banc of America Securities estimates the total annual compensation of Toyota's CEO at under $1 million - about as much as a vice president at GM or Ford Motor Co. makes in a good year.

Earlier this year, when former chief executive Fujio Cho prepared to move up to the position of vice chairman, Watanabe wasn't the most prominent candidate to replace him. He lacked overseas experience. But as purchasing director, Watanabe held a key post at Toyota, which has close ties with its suppliers and owns stakes in many.

His appointment signaled that Toyota was intent on tightening cost controls and boosting profits. They have leveled at around $11 billion a year for the past two fiscal years, as the automaker has spent heavily on new factories, vehicles and fuel-saving technologies.

But those investments are paying off. While GM and Ford are losing sales at home and restructuring, Toyota keeps gaining even though it offers smaller discounts.

At U.S. dealerships, domestic vehicles languish three times longer on lots than Toyota models, according to the Power Information Network, a division of J.D. Power and Associates. Customers wait for months to buy the hybrids.
Last month, as Detroit's automakers reeled from the aftermath of their summer employee discount boom, Toyota's market share climbed to 15.1 percent - just a couple of percentage points behind Ford and DaimlerChrysler - even though Toyota's styling is still blander than some of the new designs coming out of Detroit, such as the Chrysler 300C sedan, the new Ford Mustang and the Pontiac Solstice.

"With the Camry, the passion point tends to be quality and reliability," said Art Spinella, president of CNW Marketing Research in Bandon, Ore. "You don't need a dynamic design to get people into the showroom."
In recent years, Toyota's sales have grown even faster in Europe and Asia, boosting its share of the global market to 12 percent last year, from 9.5 percent five years ago.

In sharp contrast to most of its rivals - which rollercoaster through boom and bust cycles - Toyota hasn't recorded an annual loss in more than 50 years. Ever fearful that things could go wrong, it has $28 billion set aside for a rainy day.

And Toyota executives always seem on the lookout for storm clouds. "My experience has been that when a company's doing poorly, it's never as bad as it seems, and when a company's doing well, it's never as good as people write," said Jim Press, president of Toyota Motor Sales USA.

While the company is viewed as Public Enemy No. 1 in much of Detroit, U.S. suppliers are cozying up.

Executives from the big American component manufacturers were on hand July 13 when Toyota's Hino Motors truck-making subsidiary opened a sales office in Farmington Hills. Gov. Jennifer Granholm, who is lobbying for a Toyota plant for the state, donned a short kimono-style jacket and joined Japanese executives for the sake-toasting ritual.

Toyota has not ruled out Michigan as it studies ways to increase output of engines and transmissions in North America, either by expanding a plant or building one. It likes to build at least 60 percent of the vehicles it sells in any region locally. As sales increase, it adds assembly plants and boosts capacity for engine and transmission output.

"It's a constant trajectory upward," said Michael Robinet, vice president of global forecasting at CSM Worldwide. "It looks like they're growing aggressively, but it's very methodical.

"They're ticking the boxes as they go along."

These days, they're ticking off more of them - and faster.

Toyota: By the numbers
$177B
Value of combined shares -- more than 13 times GM's
market value
5
Brands (Toyota, Lexus, Scion,
Daihatsu, Hino)
$10.9B
Profit in fiscal 2005
7.23M
Vehicles produced worldwide in
fiscal 2005
$17B
Fiscal 2006
spending on capital expenditures
and R&D
$28B
Cash, marketable securities on hand
Sources: Toyota, Detroit News research
http://www.detnews.com/apps/pbcs.dll...511270335/1148

[Midi_Amp]

So should I cower in fear or should I buy that snazzy Yaris and sell my Jazz? Not... Good for Toyota, now I can become more proud of having a Honda, the only solely owned Japanese car company which has eluded many pitholes and answer a lot of challenges If Honda got bought by Toyota, then it's time to buy that Yaris

even though Toyota's styling is still blander than some of the new designs coming out of Detroit, such as the Chrysler 300C sedan, the new Ford Mustang and the Pontiac Solstice.

An inch or a mile, bland or spicy, winning... My friend, is winning :byye

[crdcz03]

with all this growth they shouldnt have a problem giving me a raise

[Midi_Amp]

Originally Posted by crdcz03

with all this growth they shouldnt have a problem giving me a raise

So you work for Yota and drive a Lude Consider yourself repped boy!! (by that I mean I send you a rep point)

[02EXSILVER]

Toyota has always been a contender. I'd still like to see them get into the smaller motor market. IE: ATV's and Motorcycles, maby even generators. As is I work for Subaru, they have a tie to GM through Delco and Sabb. They are also working with Toyo/GM on hybrid tech.

[GotBoost98]

IM very happy to hear there working hard to over take GM...... :w00t Toyota an honda

[crdcz03]

Originally Posted by Midi_Amp

So you work for Yota and drive a Lude Consider yourself repped boy!! (by that I mean I send you a rep point)

true story.

and my oma (grandma) is from jakarta

[dodolaje]

Originally Posted by Midi_Amp

So you work for Yota and drive a Lude Consider yourself repped boy!! (by that I mean I send you a rep point)

hahaha dasar loe pasti nga jauh2 lah kalo nga toyota yah honda

[dodolaje]

Originally Posted by crdcz03

true story.

and my oma (grandma) is from jakarta

sweet... do u speak bahasa?

[blackzc]

I dunno this all just seems like the way of the world to me, Gm has been so big for so many years of course they are gonna pay for thier arrogance. It will happen to toyota, look at sony, they are in big trouble

The american car backlash is just about over and people will be going back to american sooner or later, and with toyotas quaility going down and GMs going up
it will be easier to buy american.

When this happens is when i start to worry about honda, they are to conservitive and it may bite them in the ass when FORD and GM start to take market share back.You got FORD GM and Toyota all fighting to the death and honda might not have the cash to compete.

[dodolaje]

Originally Posted by blackzc

I dunno this all just seems like the way of the world to me, Gm has been so big for so many years of course they are gonna pay for thier arrogance. It will happen to toyota, look at sony, they are in big trouble

The american car backlash is just about over and people will be going back to american sooner or later, and with toyotas quaility going down and GMs going up
it will be easier to buy american.

When this happens is when i start to worry about honda, they are to conservitive and it may bite them in the ass when FORD and GM start to take market share back.You got FORD GM and Toyota all fighting to the death and honda might not have the cash to compete.

yeah sony lose sight. they used to be the music benchmark very innovative but now they just become follower. i guess they got so many things to focus they forgot about their bread and butter.. same like honda lost the civic and accord because busy making "trucks" aka minivan small suv big suv weird suv and now weird truck hahaha

[dil2502]

go honda and toyota :w00t

[GOOK-O-MATIK]

wats the capability of toyota of taking over the multinational giant...?? tough question...

[bojacks]

Originally Posted by GOOK-O-MATIK

wats the capability of toyota of taking over the multinational giant...?? tough question...

taking over not anytime soon, just because GM is not doing as well as it could doesn't mean they're down and out. GM still has BILLIONS UPON BILLIONS stashed away. they'll be here for a while.

toyota won't attack gm until gm is on the death spiral, and toyota will buy the shares for pennies instead of dollars.