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Learningthewayofcapabilitybuilding fromthecaseofToyotaMotorThailand
Amano,Tomofumi AssociateProfessor GraduateSchoolofEconomics TheUniversityofTokyo
ThecasestudyaimstobeusedinJBICLPEMworkshop.Thecitationisnecessarytobeapprovedbythe author
Contents
Japanesemanufacturingactivitiesabroadanda briefhistoryofToyota ProfilesofToyotaMotorThailand(TMT) Buildingthecapabilitieswhilebeingsmall Overcomingtheeconomiccrisisandfurthergrowth Implications
Japanesemanufacturingactivities abroadandabriefhistoryofToyota
Source:METI
Source:METI
LongtermperformanceofJapaneseautomobilefirms
500 450 400 350 300 250 200 150 100 50 0 1965 1967 1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
DataSource:DevelopmentBankofJapan
1991
Theriseofproductivityattheearlystageofgrowth
1.Earlystruggleoflowproductivitiesandlow qualitieswithhostilelaborrelationshipand financialshortageinthe1950s 2.Toyotalaidofftheiremployeesand announcedJointlabordeclaration in1962to promisethelaborsecurities. 3.TPSwasdevelopedattheearlystageoftheir growthtoovercomesuchshortages
Establishment ofTPS
1959 Motomachi
1974 Shimoyama
SituationsbeforeTPS EijiToyodaandTaiichiOhno
ThephilosophyofTPS(ToyotaProductionSystem)
Missions Upgradingof productivityand quality Therobustproduction systemtothedemand fluctuationanddiversity
Components JustinTime:demand pullproduction Therespectofworking standardandapplication toqualitycontroland Kaizen(Jidoka) Normalizationofprocesses basedonthecycletime (DohkikaandHeijunka)
TheimportanceofNUMMIs caseinthe1980s(USA)
Fullandbestsupports fromToyotamotherfactory
TheNegotiationoflaborissuescomesfirst
NegotiationwithUAW(UnitedAutoWorkersUnion) Rejectingthetraditionaljobbasedwagesystem,takingthe uniformwagesystem toeveryfactoryworkersallowingthemulti jobworkers,becauseoftheintroductionofTPS. HiringUAWworkers
Fullsupportfrommotherfactory
In1984,Takaokaplantaccepted250UAWworkerstotrainthe conceptandskillsofTPS.Workerslearnedthebasicsandmanagers learnedhowtomakethesystem. Californiagovernmentsupportedthetrainingfee(3milliondollars). JapanesemanagersopenedpartieseverySundayduringtheirstays.
ToyotasanothersuccessinTaiwan
T aiwan Au t o m o bil e M ar ke t 70 60 50 40 30 10 20 10 0 5 0 Honda Mazda) 15 (Domestic Production) Imports) 30 Toyota 25 20 Mitsubish Nissan Ford TW Au t o m o bile M ar ke t Sh ar e
10,000units)
20 00 20 01 20 02 20 03 20 04 20 05
19 94
19 94 20 00 20 01 20 02 20 03 20 04 20 05
ProfilesofToyotaMotorThailand
ToyotaMotorThailand(TMT)
Establishment1962 Capital7520millionBaht ShareholdersTMC86.4% Local13.6%(SiamCement10%) Employees13,500 PlantsSamrong,Gateway,BanPho NumberofDealers119 ChairmanPramonS.PresidentSonodaM.
TMTplants
Samrongplant(1964) 220,000unit/year 430,000 4,500emps IMV13Tacttime1.1min. TAW(1988) 55,000unit/year 40,000 1,100emps IMV34Tacttime4.0min.
TMT organizationchartin2008
TMThistory
Phase
Phase
IMVandglobal
Buildingthecapabilitieswhilebeingsmall
Creatingtrustwithlocaldealers
Buildingstrongdealershipsince1956.
Contacting60reliablelocalcommissionpartners Onestrongdealerinoneprefecture(territorysystem)
Onedealerhas510shops
Buildingtheproductioncapabilitiesstepbystep
(1)Motorizationstartedinthe1990sinThailand.Beforethen, the productionlinesaremainlyCKDbasisandlaborintensive. (2)ProductionlinesinSamrong plantweredesignedbyengineersfrom ToyotaMotorSalesCorp. (1)Demandofcommercialvehicleshasincreasedsincethe1990s.In 1996,TMTestablishedGatewayplantwhichmainlyproducing passengercars,basedonMotomachi Factorystechnologicalsupports. (2)InGatewayplant,thenationalcarprojectSOLUNA startedin1996, basedonJapaneseTercel model.
VolumebymodelinGatewayplant
Jointlabordeclarationandrelationshipwithunions
Buildingthestablelaborrelationship
LearningfromJapaneselaborrelationshipandproposingJoint labordeclarationin1993(quality,massproduction,productivity) 70%ofemployeesareunderoneunionandtheunionplaysan importantroleinpromotingcommunicationbetweenthe companyandlabors. TMTcontinuededucatingemployeestounderstandtheToyota waybybothOJTandOffJT
Whenlaunchingnewmodels, Toyotacelebrateditwiththe laborunionleaders.(1993)
EVP/SVP(35)
VP(20)
GM/M(500)
JapanseThai
Advisorysystem(Kurokosystem)
Localmanagershouldstandonthelines.Japanesearestaffs.
Localizationofpromotioncommittee
Evaluationandpromotionofmanagersarealllocalized
TMT organizationchartin2008
LocalizedorganizationatTMT
TMTinthe1990s
Appraisalbasedoncompetencies andperformance
CurrentsalesorganizationinTMT
(Ref)Educationandtrainingtomultiskilledworkers
SkillformationinToyotasfactoriesinJapan
Professional Knowledge LevelS 25 year LevelA 10 year TeamleaderisfromlevelB LevelB 5 year LevelC 1 year Practiceandmaintenanceof 60%processes Practiceof20% process Basics Professional Knowledge Practical Skills Basic Skills
Basicskills
OvercomingtheEconomicCrisisand furthergrowth
IMVprojecttoincreasetheexportof completepickuptrucksandtheirparts
Maintaininglaborrelationshipandsocialtrust Maintainingemployeesthroughdeepcostcutting
TMTshowedstrongcommitmenttounitingwiththewhole workforce,dealersandsupplierstorideoutthecrisis Makingoperationsmoreleanandutilizingtheexcesslabor toimplementimprovementinitiativesandadditional educationofemployeesandsuppliers
RespectstotheKingofThailand
ThekingofThailandaskedTMTtostayinThailand.TMT presentedSOLUNAtohisMajesty.Themotivationof employeesrose.
HismajestyinSOLUNA
IMV(InnovativeInternationalMultipurposeVehicleProjects)
initiatedbyJapaneseheadquarter
DispersionofR&Dcentresto4areas 1) NagoyaTechnicalCentre 2)ToyotaMotorEngineering& Manufacturing,NorthAmerica 3)ToyotaMotorEurope,R&Dand Manufacturing 4)ToyotaMotorAsiaPacific Engineering andManufacturing(Thailand)
IMVprojectwasinitiatedbyJapaneseheadquarterastheirglobal strategiestoemergingcountriesin2002.
IMVprojectinSamrong plantinThailand
IMVprojectroomstartedinSamrong plantin2002. Maximum200Japaneseengineersmovedtothe factoryandinitiatedtheproject MotherplantisHinosHamura plant.Theymoved theproductionlinestoSamrong plantand launchedtheirproductionforexportingtheirturcks 13taskforceteams.Obeyaroommethod,E kanban,qualitygatesandothernewmethodswere introducedwhenlaunchingthelines. Thefirsttruckwasintroducedin2004 Thetacttimeisshortenedfrom1.7secto1.0sec in2006.
Gatewayplant
Establishedin1996,Factoryofpassengercars(Vitz,Corolla,Camry, WishandYaris),Sales(Domestic 110thousandandexport76 thousandcars),Increaseexport. Oneproductionlinetreats5differentmodelwithabout1minute cycletimeandthehighestqualitiesinAsia. TheleaderofproductionlinewithbestpracticesinAsiaPacific ThecontinuousKaizenandtheimprovementofworkers skills
IMVpartsuppliesfromThailandtotheothercountries
OEMpartsof13,200containersperyear areexportedto13countries
HumanresourcedevelopmentatAPGPC
Overcomingthelimitationofmotherplantsystem
ThenumberofJapaneseengineeringstaffsarelimited GPCstartedinToyotaMotomachi plantinNagoyain2003 andsoonexpandedtoAsia,NorthAmericaandEU.
GlobalProductionCenter(GPC) withintheMotomachi Plant
APGPSstartedin2005nearSamrong plant
700workersaretrainedbasicskillsin2months Educatingtrainerstrainer Spreadingtheirbestpracticestoothercountries
Learningthebasicskillswithvisual methods
StrengtheningthetotalvaluecreationinThailand
AutoManufacturingand Sales ToyotaMotorThailand(1962)
Dealers Toyota120Lexus3
LeaseandInsurance ToyotaLeasing1993),AICI
DealernetworkinThailand
Developmentofdealersupportsystem
StandardizationofOperationProcedure(SOP)
Timesofdealervisits,Contentsofcommunication,Whomtotalk, Howto trainthem,Salesachievement,partsupplies,financialsupports andhuman skillsupportsetc. Thesystemsarestandardizedandimprovedbystaffseverymonths.They arealsousedfortheeducationofstaffs.
PartsCentreatBanPho plant
JITsupplyofservicepartstodealers
Trainingcentreforservicemechanicsofdealers
TETC(ToyotaEducation&TrainingCentre)in1996 Afterservicehasbeenrecognizedasanimportantcashsourceeveninthe economicslowdownlikeBahtcrisis.
Localizationofserviceengineersandthecreationoftheirown managementsystem
Areal marketing,DemandSupplymatching,Nationaldemandforecast, CR(customer retention)system,CSsurveyetc.
Communicationthroughthedealerclub
ServicecapabilitiesatTMTdealers
FinancialServicesofToyotaLeasingThailand
Useofcarryingchargeinpurchasingacar:7080%in Thailand ToyotaLeasingThailand
Establishedin1993 Shareholders:BangkokBank10.0%,TABT0.83%,TMT0.26%. JapaneseBanks10%.
Caseofcarryingcharge
RegionaltechnicalandproductioncentreinThailand
TMAP(ToyotaMotorAsiaPacific,Thailand)in2006,supporting productionandpartsuppliesinAsiapacificregion TMAPThailandwillsupporttheregionwithTMAPSingapore andToyotaTechnicalCentreAsiaPacific(TTCAP)inThailand
TheImportanceofsocialcontributionactivitiesinThailand
ToyotaThailandFoundationwasestablishedin1992 Currently400millionbahtfund Supportingpublicactivitiesincludingeducation,lifesupport andhealthcare.
Notonlylocalization,butalsosocialization
CEOEijiToyotavisitedKingseveraltimes
Launchingofnewcarsin1970s
BirthdaypresenttoLoyalfamily
Establishmentofnurseschoolin1995
TheeffectsofautomotiveindustryonSMEsinThailand
Therearelargeclustersofmechanicsandpartsimportersaround Bangkok (Siancon)
ManycarusersrepairgasolineenginestoLNGusableengines
SourcesandPhotosarefromT.RachottandShintaku(2008)
Implicationsfrombusinesshistory
Someimplicationsfromthecasestudy
Theimportanceofforeignfirmsoperationsandtheroleof theirtechnologytransfersandlocalizationpoliciesin nationallevelofeconomicdevelopment Marketattractiveness+exportmanufacturingadvantage Theimportanceofbottomup styleeducationandtraining (Trainingtothemiddleclass)withinandoutsidetheMNEs. Longtermandstablelaborrelationshipforthecommitment totheaccumulationoftechnologicalskills Goodandreliablerelationshipofforeignfirmswithlocal governmentandoverallsociety Creatingqualitativecapabilitiesnotlikeonlyvolume buildingisveryimportanttoJapanesefirms
(Ref)ToyotasnextchallengeinRussia(St.Petersburg)