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Another Toyota vs. GM bash

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What Toyota knows that GM doesn't

Do you know how many hourly jobs GM has laid off from 2006 to July 2008? Take a guess. How about 34,000? And now, they're talking about another 5,500 layoffs. And now they're asking you and your government for a bailout to end their troubled, outdated, low quality, wasteful production system. But, let's not focus on fixing GM's problems with an infusion of cash. There's something even deeper going on here that's really wrong.

OK, here's a better question. How many hourly jobs has Toyota's American production system laid off in the same time frame? Zero. That's right. ZERO. How? Isn't Toyota experiencing the same slow down in auto sales as GM is? Yes, it is. And yes, Toyota has halted production at its Texas and Indiana plants for the past 3 months. But the 4,500 people who work at those plants have not been laid off. What!?!?! How? Why?

The answer: Toyota has a special culture, deep-rooted values, and respect for their workforce. Toyota's tradition is to NOT lay off employees during hard times. This tradition hasn't really been put to the test until now. And Toyota has stuck to its guns and its values.

"This was the first chance we've really had to live out our values," says Latondra Newton, general manager of Toyota's Team Member Development Center in Erlanger, Ky. "We're not just keeping people on the payroll because we're nice. At the end of all this, our hope is that we'll end up with a more skilled North American workforce."

Interesting. But what does that last line mean? "At the end of all this, our hope is that we'll end up with a more skilled North American workforce." It means that while these employees were not manufacturing automobiles, they were in training. They were doing safety drills, participating in productivity improvement exercises, attending presentations on material handling and workplace hazards, taking diversity and ethics classes, attending maintenance education and taking a stream of online tests to measure and record their skill improvements. Toyota is shifted the Texas and Indiana workers temporarily to Toyota plants whose assembly lines were moving at full speed, such as the Camry assembly plant in Georgetown, Ky. In addition to all of this, the workers also spent some time painting the plants and even helped build Habitat for Humanity homes. And they were getting paid.

Wow! So what is this costing Toyota? The estimate is at least $50 million dollars, plus the loss of revenue of shutting down production. Why is this value and tradition worth so much to Toyota? Why would they be willing to spend $50 million rather than lay people off? It's because Toyota believes that its people, yes, its PEOPLE are its greatest investment and its greatest asset. You hear so many companies say that, but would they really put their money where their mouths are when the rubber hits the road (no pun intended)? In Toyota's case, the answer is yes they would.

So what does Toyota get out of this? When, not if, the plants return to full production, Toyota will have well trained employees on the front line, ready and able to meet the demand for their vehicles. And not only will they be well trained, they'll be happy and motivated to work. Because Toyota is willing to go to the mat for their people, their people will be willing to do the same for Toyota.

The lesson here: Unlike their counterparts GM and Ford, Toyota has always taken a long-term strategic view about their employees. Toyota understands that laying off thousands of employees for slowdowns or plant retooling is counter productive. They wisely utilize the time to redistribute their workforce to understaffed plants, provide additional training for the new products, and leverage their workforce to speed the transition for newer products. Their philosophy has avoided labor disputes and staffing shortages. It has kept the company as a leader in quality and profitability over its shortsighted competitors.

So, the message for you in all of this: Really commit to upholding the value that your people, let me repeat that, your PEOPLE are your greatest asset. Treat them with respect and dignity. Do everything in your power and your imagination to keep them on the payroll during the rough times. If you don't, you may not find those people again on the upside of the downturn. And if you do, you'll have hyper-productive, motivated teams delivering quality because they're committed on a deeper level to your company.

I replied the sender who happened to be the ex-VP of Meryl Lynch India operations. I will post it later.

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GM Can't afford to invest that kind of money into their employees... sheesh. Isn't GM known as "Generous Motors" sometimes for the kind of money they spend on their Employee Healthcare.

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I replied the sender who happened to be the ex-VP of Meryl Lynch India operations. I will post it later.

Ahem....

The elite controlling the masses...

(That's all I'm going to say)

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Ahem....

The elite controlling the masses...

(That's all I'm going to say)

And the masses do love their Toyotas... Toyota ownership seems to be a cult-like thing. Everyone I know that owns one always has good things to say about 'em, glowing about their generic FWD boxes.

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This is what I wrote to him:

Udaymama,

I think I disagree with this article that starts with saying GM has a low quality, wasteful production system. To begin with that is not only an understatement but a statement showing lack of knowledge of what GM has done in terms of production system. First off, 2 out of 5 top plants in North America, in terms of productivity are owned by GM - not Toyota. In terms of average productivity defined as number of man hours per car, GM's Oshawa plant betters most of the world plants and even the likes of Toyota's in their home field. This incorrect underlying assumption of the article itself makes me doubt the viability of the rest of the article. What was out-dated for GM was its pro-Union system and Union's outrageous desire of milking the Capitalists of GM in the past. But things are certainly taking shape for better. When you are at top of the world everything looks trivial, can't we say the same thing about team Australia too? It is human mentality. Even, ubiquitous Toyota is showing cracks in its efficient system since they are now No. 1.

While GM has made mistakes in the past and should deserve the death according to hardcore Adam Smith's capitalism, for the first time I believe it is not GM's problem which has caused them to go for loans, but it is the total American disaster which is pushing it to the brinks. GM as a matter of fact after its turnaround in 2006 had started to make profit in the second quarter of 2007 including the North American operations.

Currently as the scenario holds:

1. Toyota is sitting on 57 Billion dollars of cash, so 50 million is a chump change for it. While, GM has to burn cash through its reserves. If Toyota was in such a position as GM's, I certainly do not think training its employees would have been management's top priority.

2. Toyota's American manufacturing plants (known as transplants here) do not have unions and therefore do not have to worry about a) paying idled workers, b) legacy costs even if they do not sell any vehicles.

3. Most of Toyota plants are young which means, there have been no retiree compensation or insurance benefits as their burden.

4. While it is true that Toyota has not fired workers it has sent part of its workforce on a "leave".

As for the safety comment, do you know that GM has the only plant in the world which has been approved as the Green Plant, meeting all safety and hazardous requirements of the international standards. Not even Toyota with their green image can match that feat.

While sentiments are strong on either sides, one should have balanced approach. I think the article does not follow that princinple.

Regards,

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INDIA....as in OUTSOURCE?

EX? does it mean HE f@#ked up in his job?

No he was out way before the f@#k up. He quit in 2001 after making boat loads in the software bubble. He is one of those who knows markets pretty damn well and somehow made sure he was out of all tech stocks before April 15 crash.

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I'd love to hear this guy's repsone. The only thing you forgot ot mention in your reply is the improved quality of GM's cars and trucks.

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Toyota doesn't lay people off because Toyota uses contractors for a large portion of their workforce. It doesn't count as laying off when you get the call "Don't come in tomorrow" and you're a contractor.

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I'd love to hear this guy's repsone. The only thing you forgot ot mention in your reply is the improved quality of GM's cars and trucks.

Other than that what do you think about my response?

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It's a good reply, but other than venting your spleen (and making yourself feel better), it will fall on deaf ears: there is one man who has already sold his soul to the Devil.

GM and Ford are in a conundrum: the more that the winds of adversity blow against them, the more workers they must lay off, which then plays into the hands of their competitors and makes Detroit increasingly irrelevant. For example, how many talented workers that GM and Ford have been forced to offload have been picked up by their competitors? Eventually, GM and Ford won't employ enough people to matter to Washington and they will simply be allowed to die.

It's sort of like Russia laying off all their nuclear engineers and weapons designers. Where did they end up? Russia lost them and their 'enemies' got them. Lose-lose. Snowball rolling downhill, and all that.

There are too few people that can see (or give a damn) where all this is heading, smallchevy.

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One thing is true about this guy is that I am his most appreciated disciple. I am one of the few who can change his mind. :)

But yeah the graveness of this subject is not realized by the people of this country.

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One thing is true about this guy is that I am his most appreciated disciple. I am one of the few who can change his mind. :)

But yeah the graveness of this subject is not realized by the people of this country.

They just don't care...most people are content in their little Toyota shaped world where nothing bad ever happens and their cars run forever..:)

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Other than that what do you think about my response?

It's good and uses facts to back it up (what a concept!).

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>> An Update

Thanks _______. It is known that the media has its own prejudices. Replies such as yours help in putting things in better perspective. This was a piece sent to me by one of my ex-students. Possibly it must have appeared in some newsmagazine. I am forwarding your reply to all the recipients of the original forward.

Regards,

Uday

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The answer: Toyota has a special culture, deep-rooted values, and respect for their workforce. Toyota's tradition is to NOT lay off employees during hard times. This tradition hasn't really been put to the test until now. And Toyota has stuck to its guns and its values.

Toyota values their employees so much that the employees would rather die while working in the plant than peacefully at home. Such loyalty!

Toyota is about to post its first fiscal-year loss ever.

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Toyota values their employees so much that the employees would rather die while working in the plant than peacefully at home. Such loyalty!

Toyota is about to post its first fiscal-year loss ever.

It's easy not to lay people off when you are expanding your world-wide empire from a safe, protected home base.

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