Toyota puts U.S. workers on alert: Made-in-Japan Camrys cheaper

[jpd80]

Toyota puts U.S. workers on alert: Made-in-Japan Camrys cheaper

November 20, 2017 @ 3:19 pm

John Lippert and Kevin Buckland

Bloomberg........http://www.autonews.com/article/20171120/OEM01/311209948/toyota-puts-u-s-workers-on-alert-made-in-japan-camrys-cheaper

 

UPDATED: 11/20/17 6:25 pm ET - adds details

Toyota Motor Corp. issued an unsettling warning to Kentucky workers building its top-selling Camry sedan:

Cut costs now or face an uncertain future.

 

The automaker can build a Camry in Japan, ship it all the way to Kentucky and make more money selling

that car than from one built at Toyota's factory in the state, the plant's president told employees in a 2 1/2

minute-long internal video obtained by Bloomberg News.

 

"I'm not sharing this to scare you, but to heighten your awareness of the current risk we now have,"

Wil James, who has managed the plant for more than seven years, said in the video dated this month.

He said Toyota isn't planning to close the factory and continues to invest in it for the next 30 years.

"But all of this is on the assumption that we can make as much progress in cost reduction and efficiency

as we've made in quality and safety."

 

More at story link....

 

[jpd80]

When Japan starts turning the screws on a plant in a Right to Work State, you now that things aren't good.

[Fgts]

But..but the Camera is "baseball and applepie". This makes my recent Ford purchase more justified, buy American....

[twintornados]

And how much does Toyota receive from the government of Japan in the form of subsidies??

[rperez817]

When Japan starts turning the screws on a plant in a Right to Work State, you now that things aren't good.

 

Toyota Production System famously emphasizes Kaizen. Continuous improvement. The initiative described in the article is an example. Right to work laws have nothing to do it. All of Toyota's U.S. vehicle assembly plants are in states with such laws. As Toyota's new vehicles move to the TNGA platform, all assembly plants worldwide that build them will be expected to demonstrate improvements in manufacturing efficiency.

Edited November 21, 2017 by rperez817

[Kev-Mo]

Subsidies from the State of KY running out?

[rperez817]

Subsidies from the State of KY running out?

 

No sir. Kentucky Economic Development Finance Authority already approved incentives of $43.5 million. This is for the TMMK plant retooling project supporting TNGA based cars like new Camry. However, Toyota has to invest at least $1.7 million and maintain 90% of the jobs target of 7,880 until the year 2020 to qualify for the incentive money. They are on track for that. http://www.kentucky.com/news/business/article143755074.html

Edited November 21, 2017 by rperez817

[bzcat]

Most of the cost advantage of building in Japan is in currency exchange rate savings. The KY plant is already TGNA so the cost efficiency of switching over is already baked in. What Toyoda was saying is basically he thinks the wages and benefits are too high in KY and he can build the same car in Japan and enjoy the weak yen. This is the kind of incendiary comment that will lead to unionization.

[fuzzymoomoo]

Most of the cost advantage of building in Japan is in currency exchange rate savings. The KY plant is already TGNA so the cost efficiency of switching over is already baked in. What Toyoda was saying is basically he thinks the wages and benefits are too high in KY and he can build the same car in Japan and enjoy the weak yen. This is the kind of incendiary comment that will lead to unionization.

With the recent track record of the UAW that's not going to happen

[Kev-Mo]

 

No sir. Kentucky Economic Development Finance Authority already approved incentives of $43.5 million. This is for the TMMK plant retooling project supporting TNGA based cars like new Camry. However, Toyota has to invest at least $1.7 million and maintain 90% of the jobs target of 7,880 until the year 2020 to qualify for the incentive money. They are on track for that. http://www.kentucky.com/news/business/article143755074.html

Here is my advice for the good people of Kentucky:

 

There once was a kindly farmer who found a viper freezing on the ground in the snow. Please help me, the poor creature said, for I am too cold to live. The farmer took the viper and put it inside of his shirt, and the viper began to warm itself and come alive again. But upon coming alive, it bit the farmer most wretchedly, and as the farmer died, he asked the viper, but why? Why when I was so trusting of you? Because I am a viper, the snake replied.

[tbone]

Hey cautionary tale...

[ice-capades]

Whether the factors are currency exchange rates, state incentives, etc. the message has to be... UAW take notice.

 

FYI... I spent 15 years in the entertainment business including 8 years as a Business Agent for the IATSE (International Alliance of Theatrical Stage Employees).

Edited November 22, 2017 by ice-capades

[CKNSLS]

But..but the Camera is "baseball and applepie". This makes my recent Ford purchase more justified, buy American....

 

What vehicles does Ford produce in Mexico?

[rperez817]

Here is my advice for the good people of Kentucky:

 

There once was a kindly farmer who found a viper freezing on the ground in the snow. Please help me, the poor creature said, for I am too cold to live. The farmer took the viper and put it inside of his shirt, and the viper began to warm itself and come alive again. But upon coming alive, it bit the farmer most wretchedly, and as the farmer died, he asked the viper, but why? Why when I was so trusting of you? Because I am a viper, the snake replied.

 

Good post sir. The game between the "farmers" (state and local governments giving out aid) and the "vipers" (people and businesses asking for and receiving aid) is played all the time, in all U.S. states. A former governor of Delaware said the farmers should stop playing. Or at least change how they play so they don't get bitten. https://www.nytimes.com/2017/09/21/opinion/incentives-businesses-corporations-giveaways.html

 

[Bob Rosadini]

Most of the cost advantage of building in Japan is in currency exchange rate savings. The KY plant is already TGNA so the cost efficiency of switching over is already baked in. What Toyoda was saying is basically he thinks the wages and benefits are too high in KY and he can build the same car in Japan and enjoy the weak yen. This is the kind of incendiary comment that will lead to unionization.

IMO to the contrary. Whatever the reason the Japanese built cars are less costly, seems like good business to let your employees know they can't be complacent. Unfortunately the wolf is always at the door. Unionization will save them? Hardly-companies will walk away from a pile of bricks in a heartbeat.

 

I think its human nature-how many guys get into these non-union plants and they are so thrilled at first-decent pay, benefits that they never had in their old jobs and after a couple of years they forget all that. Up to management to keep them aware of what the real conditions are around them so that they are NOT surprised some day.

 

The sad fact is we are in a world economy now and the low cost nations keep changing,

[tbone]

IMO to the contrary. Whatever the reason the Japanese built cars are less costly, seems like good business to let your employees know they can't be complacent. Unfortunately the wolf is always at the door. Unionization will save them? Hardly-companies will walk away from a pile of bricks in a heartbeat.

 

I think its human nature-how many guys get into these non-union plants and they are so thrilled at first-decent pay, benefits that they never had in their old jobs and after a couple of years they forget all that. Up to management to keep them aware of what the real conditions are around them so that they are NOT surprised some day.

 

The sad fact is we are in a world economy now and the low cost nations keep changing,

I agree with you. It is a world economy with cheap labor everywhere, so people need to be cognizant of that. If youre not the cheapest labor pool you must be in a position to add value beyond the standard labor cost to justify your added expense.

 

I would be interested to see the dynamics between management and labor in a non-union plant versus a union plant. From an outsider perspective a unionized plant doesnt seem like it would have the same flexibility as a nonunion plant. Additionally, it seems like the relationship between management and unionized labor is more adversarial.

Edited November 22, 2017 by tbone

[Kev-Mo]

 

Good post sir. The game between the "farmers" (state and local governments giving out aid) and the "vipers" (people and businesses asking for and receiving aid) is played all the time, in all U.S. states. A former governor of Delaware said the farmers should stop playing. Or at least change how they play so they don't get bitten. https://www.nytimes.com/2017/09/21/opinion/incentives-businesses-corporations-giveaways.html

 

 

My intent with the snake story was to caution that from my experience, Asian cultures are far more loyal to themselves and to their customs than to others, even those who they are taking advantage of. And I like your take - the farmer should stop playing. If Toyota locates to your State because you gave them breaks, then what is to make you think they won't move to the next guy who gives them a bigger break? I really don't believe Toyota is here in the USA to be good neighbors, but while they are making tons of profits, they will act like it.

[bzcat]

I agree with you. It is a world economy with cheap labor everywhere, so people need to be cognizant of that. If youre not the cheapest labor pool you must be in a position to add value beyond the standard labor cost to justify your added expense.

 

I would be interested to see the dynamics between management and labor in a non-union plant versus a union plant. From an outsider perspective a unionized plant doesnt seem like it would have the same flexibility as a nonunion plant. Additionally, it seems like the relationship between management and unionized labor is more adversarial.

 

All of Toyota's plants worldwide are unionized, except in the US and Canada. Labor relations is up to the employers not the employees because the relationship is asymmetric. That's why collective bargaining levels of relationship when employers take the labor for granted.

 

Additionally, the US will never be a "cheap labor" place to manufacture because the employers are directly responsible for healthcare cost. Economy requires two inputs - capital and labor. We live in a world where capital movement has no (or very little) restrictions (e.g. Toyota can invest anywhere it wants) but labor movements are artificially restricted (e.g. we have an illegal immigration problem). As long as movement of labor is restricted either by nature (people don't want to move) or artificially (Govt won't let you move), it is not a true free economy. If the US really wants to be a "cheap labor" kind of place, it needs to remove artificial labor movement restriction and let the job goes to the lowest bidder. But does anyone actually want to live in a country like that where people work for subsistence wage and live in slums and shanty towns?

Edited November 22, 2017 by bzcat

[rperez817]

If Toyota locates to your State because you gave them breaks, then what is to make you think they won't move to the next guy who gives them a bigger break? I really don't believe Toyota is here in the USA to be good neighbors, but while they are making tons of profits, they will act like it.

 

It's not just Toyota. Large corporations everywhere are loyal to their shareholders above all else. That's their duty. It's why they chase after incentives from state and local governments when building or expanding facilities. Being a good neighbor in the municipality and state they choose is secondary. Government officials need to be careful with their incentive packages!

 

GM and Ford are infamous as vipers. From 2007 to 2012, GM got $1.77 billion and Ford $1.58 billion in state and local incentive money. They both shut down many facilities and put thousands of people out of work during that time. A particularly sad example involves $200 million in subsidies and tax breaks that GM got from Ypsilanti Township, Michigan. GM took the money, shut down its Willow Run plants in Ypsilanti and walked away.

 

[fuzzymoomoo]

I believe it was The Detroit News that had an article earlier this year about Ford and how they've gotten such a sweetheart of a deal from the city of Wayne for MAP that the city is now teetering on bankruptcy

[tbone]

I believe it was The Detroit News that had an article earlier this year about Ford and how they've gotten such a sweetheart of a deal from the city of Wayne for MAP that the city is now teetering on bankruptcy

You can blame the politicians that negotiated that deal. They are ultimately responsible for the end result.

[jpd80]

 

Toyota Production System famously emphasizes Kaizen. Continuous improvement. The initiative described in the article is an example. Right to work laws have nothing to do it. All of Toyota's U.S. vehicle assembly plants are in states with such laws. As Toyota's new vehicles move to the TNGA platform, all assembly plants worldwide that build them will be expected to demonstrate improvements in manufacturing efficiency.

Toyota has already pulled this play in other parts f the world, it has nothing to do with Kaizen, and everything to do with

telling locals that in order for the plant to stay open, you must match the foreign plant which they now is impossible...

 

This is the first step in a manufacturing pull out for Camry but it could also mean that Toyota wants that production

for another more profitable vehicle.....

[fuzzymoomoo]

You can blame the politicians that negotiated that deal. They are ultimately responsible for the end result.

True, but it takes 2 parties to make deals like that.

 

Why do you think it took so long for the Detroit Red Wings to finally replace the dump that was Joe Louis Arena?

[rperez817]

I believe it was The Detroit News that had an article earlier this year about Ford and how they've gotten such a sweetheart of a deal from the city of Wayne for MAP that the city is now teetering on bankruptcy

 

In addition to subsidies from state of Michigan, Wayne County, and city of Wayne, didn't Ford also get federal loan guarantees for MAP? DOE ATVM program I think. I don't know if Ford has paid off the loan yet.

[fuzzymoomoo]

 

In addition to subsidies from state of Michigan, Wayne County, and city of Wayne, didn't Ford also get federal loan guarantees for MAP? DOE ATVM program I think. I don't know if Ford has paid off the loan yet.

The Department of Energy loans were paid off back in 2015.