Toyota Shuts Down All Japanese Production Except for One Line
By Chris Haak
As previously planned, Toyota Motor Corporation has ceased production at every plant in Japan with the exception of leaving a single production line running, as it struggles to keep new vehicle inventory in line with global selling rates. The company plans to implement 10 more Japan-wide production shutdowns over the next two months with the same goal of reducing output so that sales might catch up with inventory levels.
The company commented that “the production suspensions scheduled for Japan in February and March are part of our effort to keep production in line with market demand,” and added, “we are carrying out these suspensions fully aware of the necessity to even out production volumes and maintain employment levels.”
The appropriately-named Toyota City (a city of 400,000 located approximately 150 miles southwest of Tokyo) is the location of Toyota’s global headquarters, and has seen rising unemployment as the global automobile market collapses. Toyota City depends so heavily on Toyota that it expects nearly 90% of its tax revenues will evaporate as Toyota posts losses and has to pay less money as corporate taxes.
It’s a strange parallel world where Toyota is halting production, idling workers, and seeing the economy of their home base suffer – you know, sort of like Michigan has been seeing for the past half decade. And, just like we’re seeing in the US domestic auto industry, reduced production volumes result in financial distress and layoffs in the supplier network (GM’s first quarter production plan is to produce less than half as many vehicles as it did in the first quarter of 2008).
News like this not only emphasizes the global scale of this severe recession, but also shows that the phenomenon of collapsing sales is not happening only to GM, Ford, and Chrysler in the US. The difference is, those three companies were already operating in a weakened condition because of substandard products, poor marketing, and a cost structure that assumed the three companies had 75%+ of the new-vehicle market, when they are now under 50%. The good news is that the companies have finally come to terms with this reality and know they will never have the kind of market share they had before, so are aligning their capacity more closely with their true place in the marketplace. The bad news is that the euphemistic “capacity reduction” means shuttered factories, bankrupt suppliers, and tens of thousands of employees out of work.
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