From The Times February 19, 2009
Toyota to seek voluntary redundancies in Britain
Christine Buckley, Industrial Editor
Toyota's British operations are to shed jobs and may implement a pay cut, a reduced working week and a temporary suspension of workers, the company said yesterday after meeting unions.
Toyota said that it would put no target figure on job cuts from a voluntary redundancy programme and that the scheme had been suggested by employee representatives rather than by the company. It said: “Our philosophy is to make every possible effort to secure permanent employment. However, our employee representatives requested that we consider the introduction of a voluntary release programme. We have taken this into consideration and provided this opportunity.”
Toyota said that it had been hit in Europe last year by the wind-down of some models and few launches. The company said that it would not mount heavy discounts to try to win back customers, as some of its competitors have done, especially in the fleet market. It said: “This is not Toyota's strategy, as we want to develop our business in a profitable and sustainable way, with a long-term perspective.”
Now think about it, "develop our business in a profitable and sustainable way, with a long term perspective". Isn't this obvious, does it not make sense? The automotive sector has been one of the hardest hit by the recession. No company can be immune from the effects but let us contrast the prospects for Toyota with its competitors
In 2008 all vehicle manufacturers suffered a significant drop in sales but GM sales fell by nearly three times that of Toyota's. Toyota has said it will make a loss this year, the first time for 70 years! GM, along with Ford and Chrysler has been losing money for so long we can't remember when they last made a profit. They are only held together now by massive government bailouts and they want more! Now ask yourself, in a down turn where would you rather be? The answer is obvious.
That this would happen to the GMs of this world has been obvious for over 20 years, but apparently not to the Directors of GM, nor for that matter at Ford, Chrysler and now many others. Neither was it obvious apparently to their shareholders, investment analysts, bankers (well, what do we now expect of these?), rating agencies (well, what do we now expect of these?), HM Treasury (well, what do we now expect of this?), and, with a few honourable exceptions, financial journalists. All have bamboozled themselves by their specious fixation with sales volumes – “big is good” has been their idiotic mantra. Even now they continue to highlight the main benefit for the Lloyds TSB and HBOS merger as being the massive market share of the combined group in UK retail banking!
And whilst their attention has been so misdirected, the executives of these companies, with the connivance of the banking and financial community have whisked the lack of profitability, the failures in investment, the profligate waste of resources, the poverty of innovation and the cynical manipulation of the communities upon which they leach, back up their sleeves with another slice of complex financial engineering (was there ever such a slur on the word engineering?). And why have they done this? In order to continue to award themselves handsomely for the “brilliant results” that emerge from the financial manipulations that they themselves control.
None of this makes sense. Have they created genuine wealth? Probably not for 20 years or more, in most cases. Not for their shareholders nor their communities. What they have done is build an ever increasing sponge designed to soak up extra debt, more numbers to feed into their “financial engineering” to bamboozle more credulous Financial Industry “experts”. Where does this warped thinking come from when it is so obvious that it doesn't work? Here in the UK, we have to ask just how many of these experts are the result of the Scottish Education establishment – and given the moral intellectual and ethical quality of what we now see, HBOS, RBS, Numbers 10 and 11 Downing Street (both current and previous tenants) – what is wrong with it?
Toyota, where is their place in all this? We know that they have never pursued the goal of being “Number One”. They have concentrated on building the best quality vehicles in the world, straining to match them to each of the market sectors in which they trade, innovating where it makes a difference- new technologies that enable new levels of performance (e.g. the hybrid vehicles) and not for the sake of change. They have pursued excellence in every aspect of their business – operational superiority – elimination of waste – flexible resources. Every major managerial innovation that becomes fashionable – be it TQM, Lean, Green Practice – is something that Toyota will be found to have been doing for some considerable time. When asked why, they will respond “Because it is obvious, it makes sense”.
Toyota's strategy "to develop our business in a profitable and sustainable way, with a long term perspective" is more than a strategy, it is a philosophy. It this philosophy that drives the deep seated managerial values and behaviours throughout the company that have resulted in Toyota's superior Comparative Competitive Strength. Isn't it is obvious? The ability to beat seven bells out of your competition and to withstand setbacks better than anyone else are obvious indicators for long term financial prosperity - all without a single piece of "financial engineering" needed to achieve it.
To achieve the highest level of this brings considerable freedom of strategic choice. The route to this does not always allow for short term unrealistic financial results, it may require tough disciplines on margins, rewards and profit distribution – and that is why so many otherwise potentially strong businesses become undermined by the hysterical betting shop mentality of the Financial Industry. The City of London used to be a byword for financial probity, soberness and integrity – is there anyone left in the square mile that could even spell those words?
We need to get back to the basics of good business and wise investment – seek only excellence in every aspect of our operations, do the right things in the right way, love our customers to death, nurture our people, report our results honestly, borrow only the very minimum that we need, reward ourselves modestly and fairly, protect tomorrow and not just today and so much more. This is still Capitalism but it is also Common Sense. We need to concentrate on Comparative Competitive Strength because our competition is out there in the rest of the world and it will have different economic dynamics which we can outperform rather than seek to imitate. We can outperform the competition, there are examples here in the UK. What may be curious is how many of them are privately owned or led by majority shareholders – not a lot of The City here perhaps?
The Competitive Strength Report will tell you how your business compares with the very best in the world. It will help you decide what you need to do to match that standard and how you will handle your major threats. It does this better, faster and cheaper than any other analytical process in the world – your management team will need 2 hours of homework and up to a day of decision workshop – all can be completed within 4 weeks.
And, a message for all of the Financial Experts. Your credibility is at an all time low. The tools, techniques, values and processes that you have used have been found wanting – all look backwards. To be frank, you appear to have been judging the quality of the ship and its crew by looking at the wake – with no forward radar. The Competitive Strength Report is a forward looking tool - it will tell you whether or not your client, prospective borrower, potential merger partner, acquisition target is going to be a good bet.
What is more, it will enable the understanding of how Capitalism founded on Common Sense will deliver greater financial success and long term value.
If you would like to know more, please have a look at our website here.
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