Toyota Motor Corp. plans to phase in reductions to the group's domestic production capacity of 3.8 million units per year over a three-year period starting in 1999. The company produced 4.21 million units in 1990 when production peaked. Production dropped below four million units in 1992; it fell below 3.5 million in 1997 and then 3.2 million in 1998. Toyota had so far continued to expand its domestic production capacity. However, less ebullient domestic sales and a shift to overseas production make it unlikely that the company will further expand domestic production in the near future.
The company plans to integrate and reduce some production lines, and it will conduct a careful review of models to be produced at domestic plants. It will consider the introduction of several models that can be produced on the same assembly line when it plans new models. The company will shut down plants and cut back on production lines with out-moded or run-down production facilities.
Referring to Toyota's reduced production capacity, President Hiroshi Okuda clearly stated that while aiming for the global standard of management, the company would maintain its current staffing levels. He says that production of 3 million to 3.5 million units per year will enable Toyota to retain its present staff. Okuda criticized Moody's Investors Service, which downgraded securities issued or guaranteed by the Japanese government and cited Toyota 's lifelong employment as one reason for its move. On the other hand, Okuda told Toyota's labor unions that Toyota needed to overhaul its working conditions, including its pay scales, to curb total labor costs. Many observers will be waiting to see if Toyota can come up with a plan to simultaneously achieve high levels of employment maintenance and reduce labor costs in this year's Shunto wage talks.
Commenting on Japan's firm groupings, which had developed out of the interpersonal networks that have emerged from transactions among companies, Okuda said Toyota plans to develop a new system that sees related enterprises drawn together by the force of capitalism.
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