Toyota Exec: Localization Fuels Global Growth
Automaker listens to customer needs, says Toyota Technical Center President Yasuhiko Ichihashi.
ANN ARBOR, Mich.—Yasuhiko Ichihashi, president of the Toyota Technical Center (TTC) in Ann Arbor, gave University of Michigan students and members of the public a glimpse of why his company is flourishing while others are floundering. In a word: localization.
At the November 10 event sponsored by the Tauber Manufacturing Institute, a joint program for students in the Stephen M. Ross School of Business and the College of Engineering, Ichihashi said that by using local suppliers, local designers and local workers, Toyota has focused on manufacturing cars for customers in specific markets. The strategy is being implemented around the world, he said.
"Our goal is to enable our technology to produce the right car at the right time in the right place," said Ichihashi. For 25 years, Toyota has used American designers and engineers to help ensure that its vehicles meet local tastes and standards. Toyota also is saving money by locating engineers near local suppliers.
Through supplier collaboration and research, the company has pinpointed its customers’ expectations and created vehicles that people want to drive, with the quality they expect from Toyota. "For example, we met with farmers and construction workers to discover what they expect. We found that many of them today use their trucks as mobile office sites. So we incorporated laptop and file storage into the design. This is just one new feature that represents our desire to listen to customer needs."
Maintaining Corporate Culture
Training is at the center of the company's success, with employees and suppliers receiving indoctrination into the "Toyota Way," the company's 14 overarching principles.
These principles, some would say, are why Toyota's North American auto division continues to gain market share, increase profits, build new plants, maintain harmonious supplier relations and an enthusiastic workforce with relatively lower labor costs.
"Our biggest challenge is to train people of diverse backgrounds to think and work as one team," Ichihashi said. All new hires go through the Toyota Way training, from factory workers to MBAs, with the latter often being asked to work on the assembly line or sweep floors when necessary. Suppliers are expected to adopt Toyota Way manufacturing principles in their operations as well.
TTC, Toyota’s North American research and development center, is engaged in a broad range of technical activities, including engineering design, evaluation and design of parts and materials, prototype building, engine component design and evaluation, static and dynamic vehicle evaluation, emission certification, regulatory affairs and technical research.
Ichihashi said that in response to Toyota's growth, the company has hired more than 1,400 engineers since TTC's inception in 1991. "In our strong efforts toward localization, we have reached capacity in our Ann Arbor campus and have purchased 690 acres of land 10 miles to the south to create a new campus that will be completed by the summer of 2008," he said. The expansion of the technical center, which is moving to York Township, includes hiring 400 engineers by 2010.
In addition to engineers, he said the company is looking for a variety of professionals who are flexible, teachable and able to see the benefits of taking a hands-on approach.
Toyota's Growth in North America:
- In April, Toyota Motor Manufacturing North America and Toyota Technical Center consolidated to form Toyota Motor Engineering & Manufacturing North America (TEMA). TEMA is responsible for Toyota’s North American engineering design and development, R&D and growing manufacturing activities in the United States, Canada and Mexico.
- Toyota currently operates 13 manufacturing plants in North America, including the recently opened Tundra plant in San Antonio, Texas. Toyota Motor Manufacturing Canada's second plant in Woodstock, Ontario, will open in 2008.
- Production of the Camry at Subaru of Indiana Automotive in Lafayette is set to begin in spring 2007.
- Toyota produced more than 1.55 million vehicles, more than 1.3 million engines and nearly 400,000 automatic transmissions at its North American manufacturing facilities in 2005.
- By 2008, Toyota will have the annual capacity to build nearly 2 million cars and trucks, 1.44 million engines and 600,000 automatic transmissions in North America.
Listen to Yasuhiko Ichihashi discuss growth and localization at Toyota.
Written by Nancy Davis
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