Thursday, 25 February 2010

No sympathy from Toyota’s Japanese suppliers

As Toyota’s president Akio Toyoda faces American lawmakers, his company will be facing something else here in Japan’s auto manufacturing heartland: an unprecedented level of opprobrium.

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Guanyu 道 said...

No sympathy from Toyota’s Japanese suppliers

New York Times
25 February 2010

(KARIYA, Japan) As Toyota’s president Akio Toyoda faces American lawmakers, his company will be facing something else here in Japan’s auto manufacturing heartland: an unprecedented level of opprobrium.

Come what may, Toyota used to be able to count on a reflexive loyalty in this small city, where the rows of smoke stacks and metal-roofed factories rise like something out of Dickens. But after years of feeling the sting of Toyota’s cost-cutting, some of the workers and suppliers that used to be the company’s biggest cheerleaders are instead experiencing a sense of grim pleasure over the company’s woes.

The change is rooted in the changing behaviour of Japanese corporations. Communities like Kariya that once enjoyed a near familial relationship with Toyota, have been feeling forsaken for years as this country’s social contract has changed.

Employment was once for life, but now Toyota keeps employee wages from rising. Over time it has steadily reduced the ranks its short-term contractors and pressured its suppliers to decrease prices.

For decades, thousands of tiny auto parts companies like Sankyo Seiko were Toyota’s loyal legions, and toiled in relative obscurity to supply the behemoth. But the auto giant’s demands in recent years for ever lower prices have driven many of these companies out of business.

After successive price cuts, Toyota now pays them about 30 per cent less for the same part than it did a decade ago, despite the higher cost of raw materials like steel, say many of the companies.

‘Toyota just squeezes us, like it’s trying to wring water from a dry towel,’ said Masayuki Nishioka, 49, whose factory in Kariya makes the rubber seals for Toyota’s car windows.

Last month something snapped for Sankyo’s owner, Teruo Moewaki. He appeared on local television to do the unthinkable: criticise Toyota, announcing that he would no longer accept orders from the automaker or its affiliates.

‘Toyota said we were all one big family. But now they are betraying us,’ said Mr Moewaki.

To hear many here tell it, in good times Toyota failed to increase wages for employees and forced painful price cuts on parts suppliers even as it earned record profits. Since the global downturn, these critics say, Toyota has released thousands of contract workers and squeezed parts makers even further.

While this may seem like normal, even prudent, management, many in Japan see it as an act of betrayal. In fact, Toyota has become a symbol here of how corporate Japan has begun to violate the nation’s unspoken postwar social contract, in which big paternalistic companies share the wealth with employees and business partners in good times and help them weather the bad.

‘Toyota is attacked so much because it has become the face of corporate Japan,’ said Hisao Inoue, the author of two books on Toyota. ‘All Japan’s social problems, economic problems, political problems all seem to pile up on Toyota.’

Even through the early 1990s economic collapse, as big companies squeezed costs or shifted production overseas to compete with lower-price rivals from South Korea and China, this manufacturing belt around the central city of Nagoya, an area known as the Detroit of Japan, seemed immune. Toyota continued to grow even as Japan stumbled in other industries, like consumer electronics.

Now there is a palpable sense of alarm in the air. Cities like Kariya appear to be turning into a new rust belt of abandoned industrial neighbourhoods, with economists estimating that the number of small manufacturers in this part of Japan has dropped by half in the last two decades to about 180,000. -- NYT