Now That's How You Do It! Toyota To Replace 40% Of Senior Managers For North American Losses

Toyota Motor plans to carry out one of the most drastic management overhauls in its 70-year history next month when Akio Toyoda, grandson of the Japanese car giant's founder, takes over as chief executive.

The company, which has been shaken by an unprecedented Y437bn ($4.6bn) net loss in its most recent financial year, will replace 40 per cent of its senior managers and is said to be preparing a sweeping reorganisation of its key North American business that would unify its now separate sales and manufacturing arms.

Analysts and company insiders say the changes are designed to cement the leadership of Mr Toyoda, 52, and to signal a clear break with the regime of Katsuaki Watanabe, the current chief executive, who will leave day-to-day management to become vice-chairman.

"Some people are calling this a revolution or even a coup d'état ," said Koji Endo, motor industry analyst at Credit Suisse. "The size of the [financial] loss is huge. Somebody has to take responsibility for that."

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budfrogS4 - 5/15/2009 12:24:41 PM

+3 Boost

No need to worry, I'm sure they'll receive nice severance packages...

Agent009 - 5/15/2009 12:56:46 PM

+3 Boost

Most will probably be reassigned to other positions.

Joe_Limon - 5/15/2009 2:01:57 PM

+3 Boost

aka janitorial?

Joe_Limon - 5/15/2009 12:35:41 PM

+4 Boost

I hope they are firing the person who thought it would be a good idea to put a sack bulge on the hood/grill of most of their models.

Agent009 - 5/15/2009 1:06:23 PM

+4 Boost

I have to give them credit, they are doing what is right, unlike many other companies. If you have a loss like this someone is accountable and must pay the price.

It can be easily argued that if they chose to LEAD in product design rather than TARGET product categories and milk them, they would be in much better shape.

Look no further than VW, Audi, Hyundai, Subaru and even Mazda who have fresher lineups and are not suffering as badly.

Once again marketing fails those who do not innovate.

91z4me - 5/15/2009 2:28:01 PM

+4 Boost

It isn't right that many of these people will lose their jobs despite doing everything they could. Lets be honest here: nobody, no matter how good they are is going to be able to keep profits up when sales have fallen in the crapper like they have. And the falling sales are directly related to the fallen economy. It isn't right that people will lose their jobs for a company to save face and make it seem like they are 'punishing those responsible'.

Agent009 - 5/15/2009 2:35:52 PM

+4 Boost

91z4me-

They get paid to be successful. That means looking at the market and building in diversity to your business plan.

Put it this way. If you were an investor and you invested only in tech stocks and banking you probably took a huge blow in the market recently.

However if your portfolio was diversified fully then your losses could have been minimal or even still show a profit.

The investor that took the large loss should be canned, the other deserves to keep his job.

Look at the above mentioned brands and you see they were not a highly leveraged into SUV and pork laden models. They have very balanced portfolios, thus they have lost little compared to those chasing fat profits on dinosaurs.

MrBratwurst - 5/15/2009 4:41:36 PM

+4 Boost

— 91z4me:

| It isn't right that many of these people will
| lose their jobs despite doing everything they
| could. [...] It isn't right that people will lose
| their jobs for a company to save face and make it
| seem like they are 'punishing those responsible'.

They are not getting replaced because of sales decline but MARKET SHARE decline.

Toyota simply lost more than other manufacturers. Numerous reasons account for this and that's the topic for another story.

Same should be done to European Toyota managers too. As far as I can remember TMC lost 50% of sales in the EU, much much than, for instance, Volkswagen.

91z4me - 5/15/2009 11:48:46 PM

+3 Boost

009, If I recall correctly all Toyota decisions about product investment, planning, and approval are done in Japan, not in the US. So shouldn't they be the ones losing their jobs instead of the 'middle management' level in the US, who likely is doing nothing more logistics and marketing?

Type707 - 5/15/2009 3:35:43 PM

+2 Boost

Why cant GM do this?

truckman - 5/16/2009 2:23:15 AM

+4 Boost

Ford never took a bail out, Correct me if I am wrong, but I think management is failing to make good vehicles, there quality has slipped a lot! I would rather hear that management is loosing out than the middle class workers.

anishgt - 5/16/2009 2:34:52 AM

0 Boost

Toyota started to mirror the US Big Three in that they were creating too many products that overlapped and competed with their own products. The sr. managers that made those decisions absolutely should be held accountable as it just wasn't smart from a marketing perspective or from a product-development-cost perspective. Like the Big Three, Toyota was trying to have a separate product for every possible consumer need out there instead of creating one product that meets multiple needs. Benz and BMW are starting down that scary path, in some ways, with unnecessary lines like the X6, the upcoming GT 5 Series (or whatever) the R-class, the somewhat redundant M and GL-classes, etc.

....
thats one of the best answers, creating multiple products and making huge investments for that, rather they should have developed their existing lineup to accomodate multiple applications.Mercedes too made a lot of dumb products like the R,GL,B , GLK etc.

pageman - 5/16/2009 12:02:27 PM

+3 Boost

wrong!

DinamoR - 5/15/2009 9:17:00 PM

+3 Boost

USA needs to learn from Europe and Japan how to do things. For years now the happiest people in the world based on every poll and research done are the people from Denmark, where they pay the highest taxes in the world.

http://www.marketwatch.com/story/the-happiest-places-on-earth-are-heavily-taxed?siteid=rss

Conservatism is a mental disorder. I've always known that, and the Bush years only cemented it. USA needs to move in a new direction, or it will fall behind the rest of the fastly developing world.

Joe_Limon - 5/16/2009 2:58:50 AM

+1 Boost

When you have no money left it's easier to be happy. Look at most of the third world nations of the world and you will find a much much higher happiness level then those of most rich nations.

DinamoR - 5/16/2009 4:37:06 PM

+1 Boost

HAHAHA what??? typical ignorant yankee. people from third world are very unhappy. and scandinavian countries like Denmark have tons of money. They are some of the richest countries on earth, per capita.

Denmarks GDP per capita is almost $70,000. USA? About $45,000. That means the average Dane is more than 50% richer than the average american.

But keep thinking they don't have any money. LMFAO maybe you right wingers should crawl out of your blind ideology cave once a while and look around?

BozzorTheGreat - 5/16/2009 12:21:49 AM

+2 Boost

I briefly worked with Toyota a number of years ago in japan and I can happily attest that there is a culture of performance and of honour at the company - the latter probably much to do with that of Japan - that is sorely lacking at other firms. In so many other companies, there is an art in passing the blame for ones failures, but grabbing the glory for work that at best someone may only have had a hint in.

At Toyota, you are held to account in a brutal manner...but not as brutal as you are expected to hold yourself to.

TheGenius - 5/16/2009 9:23:35 AM

+2 Boost

Live by the sword die by the sword! A few years ago the same Toyota execs were being rewarded for driving growth. The bottom line is that Toyota was pushing very hard to overtake GM, and all the top execs were focused on total domination. The growth strained the company to the point that quality started dropping, but they were willing to sacrifice that (in the short term) to catch GM. Unfortunately, the same execs did not anticipate this market reversal so they have to pay the price (VW and Honda did a better job of matching production to demand). Lexus is faring worse than MB, Audi and BMW and Toyota has suffered more than Honda, and VW so they need to shake things up. Toyota deserves credit because they are serious about fixing the problem. They'll learn from this and be better prepared next time. GM and Chrysler have been in worse shape for years and still could not do this..

pageman - 5/16/2009 12:10:47 PM

+2 Boost

Let's look at this sensibly. Referring to an article in Toyota University, "the future of Toyota is in the hands of the up and coming young execs that are the ages ahead in development than their current management structure".
Out with the old and in with the new. The exec loss in Toyota will be a slash of ones that are close to retirement and ones that have put in 25 years plus. This is the replacement of the OLD Toyota.
These younger execs are more innovative and not so complacent with their product.
Toyota's future in development previously has caused some young talent to leave Toyota because their ideas were not taken to fruition due to old-school management and lack of forward thinking.
This new structure is the key to Toyota's advancement of innovative technologies to come see the light of day.
This could be a real exciting time for Toyota's creativity to shine.

thstone - 5/18/2009 1:02:24 PM

+1 Boost

I have been saying the same thing on here for months!Its the people at the top who make all of the real decisions.

I have said over and over that that GM and Chrysler need to get rid of the Top 20% in their respective companies in order to restructure their companies if they really want to change how they do business. Otherwise, the same old people just keep doing the same old things the same old way.

I'd say my position has been pretty well vindicated by Toyota's actions.