Toyota Motor s Plant Operation in CEE

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1 Toyota Motor s Plant Operation in CEE Hiroshi Kumon Professor at Hosei University Workshop Wissenschaftszentrum Berlin für Sozialforschung (WZB) Nov.,29 th and 30 th, 2007

2 contents 1. Purpose of presentation 2. Japanese auto makers in Europe 3. Toyota Motor s production strategy 4. Toyota Motor s plant operation in CEE 5. Concluding remarks

3 1. Purpose of presentation (1) To show location change of the Japanese auto makers plants in Europe. (2) To explain Toyota Motor s production strategy in Europe: Small car strategy. (3) To investigate transferability of the Toyota Production System in CEE: Successful transfer at an initial stage of plant operation.

4 2. Japanese auto makers in Europe Location change of Japanese auto makers plants in Europe. (1) Phase 1: Iberian Peninsula in 1960s to 1980s. Commercial vehicles. (2) Phase 2: Western Europe in 1980s & 1990s. Passenger cars & engines. (3) Phase 3: Central and Eastern Europe in 1990s & 2000s. Passenger cars and engines. Location of the R&D facilities mainly in WE. Production and export from Japan. Production>Export in 2001.

9 contents 1. Purpose of presentation 2. Japanese auto makers in Europe 3. Toyota Motor s production strategy 4. Toyota Motor s plant operation in CEE 5. Concluding remarks

10 3. Toyota Motor s production strategy in Europe Toyota Motor Corporation (TMC) starts production in Portugal. 1972: TMC enters in capital participation with Salvador Caetano in Portugal, producing commercial vehicles. 1989: TMC starts joint production of pickup tracks with VW AG and terminates in 1996.

11 Toyota starts car production in the UK Passenger cars from export to local production: Toyota started production in the UK with Japanese domestic model. 1989: Toyota Motor Manufacturing (UK) Ltd., (TMUK) established. 1992: TMUK starts production with models of Carina-E ( Corona, segment D) and then Carolla (segment C).

12 Toyota sets small car strategy and produces in France Why Toyota sets small car strategy? (1) to respond to environment regulation and (2) to have entry cars for Toyota models. 1997: TMC picks Velenciennes, France for small car production site. Campact car. 1998: Toyota Motor Manufacturing France S.A.S. (TMMF) established. 2001: TMMF starts production of the model Yaris (segment B).

13 Toyota produces small cars in Czech Republic with PSA 2001: TMC and PSA Peugeot Citroën agree to enter a cooperation on joint development and production of small cars and select Kolin, Czech Republic for the site. 2002: Toyota Peugeot Citroën Automobiles Czech,s.r.o. (TPCA) established. 2005: TPCA begins production of the model Aygo and others (segment A).

14 Two power trains plants in Poland 1999: Toyota Motor Manufacturing Poland Sp.zo.o (TMMP) established in Wałbrzych, Poland. Manual transmissions for theyaris, Collora & Avensis and petrol engines for the Aygo. 2002: Toyota Motor Industries Poland Sp.zo.o. (TMIP) established in Jekz Laskowice, Poland. Diesel engines for the Avensis & Corolla.

15 Plant in Russia Toyota sees Russian market is similar to the US market. 2005: TMC announces construction of new plant in St. Petersburgh, Russia. Toyota Motor manufacturing Russia (TMMR). 2007: TMMR will start production of model Camry for domestic market.

18 contents 1. Purpose of presentation 2. Japanese auto makers in Europe 3. Toyota Motor s production strategy 4. Toyota Motor s plant operation in CEE 5. Concluding remarks

19 4. Toyota Motor s plant operation in CEE TMC has a clear principle of production system: Toyota Production System. How does it apply the system at the plants in CEE, lower-wage region? Toyota transfers the system successfully, even at an initial stage of operation.

20 Toyota Production System Core elements of the system 1. Multi-functional skills. Worker performs regular tasks as well as irregular and abnormal tasks. 2. JIT. 3. Quality assurance with built in process.

21 System transfer at the plants Targeted plants: TPCA and TMMP. Multi-functional Skills: skill formation, wage system, education & training, team system. JIT: production control, part procurement. Quality assurance: quality control. Labor relations: consultation system.

22 Multi-functional skills (1) Skill formation: Both plants stay at an initial stage of skill formation. Few job grades. Implementing job rotation. Cooperation between production workers and skilled workers. Wage system: TPCA sets performance evaluation, while TMMP has a policy to implement it.

23 Multi-functional skills (2) Education & training: Both plants train employees at foreign plants and Japan. On-the-job training. Team system: Both plants have four levels. Supervisor Group Leader Team Leader Team Member.

24 JIT with cross docks Production control: Both plants set a small lot production. TPCA sets the cycle time at 60 seconds, even at first stage of production. Part procurement: TME (Toyota Motor Europe) controls parts procurements for all plants located in Europe. JIT with cross docks.

25 Quality assurance Quality control: Both plants have a policy, Built quality in the manufacturing process. Production workers are responsible for quality assurance. TPCA has 13 quality gates in the process. Line stop: production workers are expected to stop assembly line, when detected deficit.

26 Labor relations Labor union: TPCA has trade union, KOVO. TMMP has no trade union. Labor consultation: Both plants do not have Japanese style labor consultation system.

27 contents 1. Purpose of presentation 2. Japanese auto makers in Europe 3. Toyota Motor s production strategy 4. Toyota Motor s plant operation in CEE 5. Concluding remarks

28 5. Concluding remarks (1) 1. TMC retains an operational advantage in EU with combining adaptive strategy in developing small cars. 2. It sets a production strategy of small car in Europe. After that it increases market share. 3. It transfers the production system successfully even at the initial stage of operation with some revision.

29 Concluding remarks (2) 4. TMC keeps an internal growth approach in EU with adopting a joint venture with PSA. 5. What is a challenge for it? Rapid international expansion raises up some problems. Especially it needs to train top managers who are in charge of overseas plant operation.

30 References Hiroshi Kumon, Toyota Motor s Plant Operation in Czech Republic and Turkey, GERPISA 15 th International Conference, Paris, June 20-22, Hiroshi Kumon, Janese Hybrid Factories in Poland and Slovakia: Case Analyses, in Wada, Masatake & Tetsuo Abo eds., Japanese Managemt and Production System in the Central and Eatern Europe, Bunshindo, 2005, pp , in Japanese. Japanese Automobile Manufacturers Association, Inc. (JAMA), Common Challenges, Common Future, Toyota Motor Corporation Internet Drive.

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