Toyota: Battling American Backlash

Anthony Fontanelle
February 13, 2007

The Toyota Motor Corp. is bracing for a probable backlash in the American market. Said backlash is said to be the after-effect of the company’s growth in the United States and the automaker is pointing at social and political risks as its significant causes.

Toyota executives are said to have downplayed the significance of predictions that swarmed the industry in the past years. According to analysts, General Motors Corp., the largest automaker around the globe, will be surpassed by Toyota in the near future. Said prediction is in fact expected to happen any time this year. However, analysts added that Toyota could be facing criticism because of the fact that its sales in the United States are escalating while Detroit’s automakers’ sales are plummeting.

According to a presentation given by Seiichi Sudo, the president of Toyota Engineering & Manufacturing in North America, "With recent market-share gains and sales continuing to increase, we are becoming the de facto leader of the industry -- that brings risks and responsibilities. Our competitors are jealous of our success."

Detroit’s automakers’ allies said it is not jealousy. They added that Japanese automakers are exploiting an artificially weak yen to make their products more affordable. U.S. Rep. Sander Levin, D-Royal Oak, said he is considering new legislation aimed at pressuring Japan and other countries to stop manipulating their currencies to boost exports.

“Japanese automakers are importing the more expensive cars to the U.S., and getting the benefit of the yen imbalance," Levin said. He also further added that Japan has "a clear-cut set of policies, and we don't have any."

Under the heading “external challenge,” Sudo’s presentation cited political and social risks as the factors that triggered the backlash. Toyota is expected to come under fire for several reasons. First is the selling of vehicles to American purchasers with high proportions of foreign auto parts. EBC brake pads, radiators, engines and other parts accessories may now be manufactured outside Canada or the United States.

Another reason would be the inclusion of enough minority-owned businesses in its supplier base. Rev. Jesse Jackson, for one, has asked the automaker to enhance its diversity efforts. The automaker is also leaving vacuity in the industry because of the Detroit’s Big Three pandemonium.

"A Democratic Congress, particularly those members with districts hit by Big Three and supplier plant closings, may call for further oversight of the industry and Japanese companies in particular," Sudo’s presentation stated. Toyota’s concerns are far from being impossible. However, with a majority of democrats in Congress, Michigan's Democratic lawmakers have assured to press harder on trade and other issues where Detroit automakers say Japanese companies have an unfair advantage.

“Toyota executives are acutely aware of their position in the United States,” said Matthew May, the author of The Elegant Solution: Toyota's Formula for Mastering Innovation. “Toyota has ambitious goals.” May added, “At the same time, you have to balance that with the mother ship who is saying, 'Beat them but don't drub them. You don't need to spike the ball in the end zone' is really the message."

“Toyota has a culture that stresses both competition and humility,” concluded May, a senior adviser and instructor for the University of Toyota, the company's corporate college which was built to teach the Toyota Way principles. "In the coming years, Toyota will continue to focus on further enhancing productivity, quality and safety, and this was the essence of the planning document," said Daniel Sieger, Toyota spokesman.

Source: Amazines.com