This appeared in the Wall Street Journal:
Facing its biggest crisis in decades as its sales drop across the globe, Toyota Motor Corp. turned to the founding family and its core values of efficiency, thrift and quality to find a way out of its slump.
Toyota officially appointed Akio Toyoda, grandson of the company’s founder, as president Tuesday, saying it needed someone with youthful perspective who could carry out bold changes needed to reverse the company’s decline. The Wall Street Journal earlier this month reported Toyota’s senior board decided to hand the job to 52-year-old Mr. Toyoda, replacing Katsuaki Watanabe, who will become a Toyota vice chairman.
The management changes are effective in June, following approval at a shareholders’ meeting.
Just a few years ago, Mr. Toyoda’s appointment for the top job was a long shot because he was considered too young and inexperienced by company elders. Critics have said a major publicly-held company like Toyota must move beyond family control, especially when the Toyoda family collectively own only 2% share of the company.
Mr. Toyoda is expected to make swift changes at the company, including a possible shakeup of Toyota’s management ranks, which he believes have become too conservative and bureaucratic, according to people familiar with the situation.
On Tuesday, Mr. Toyoda offered few details of what he will do. But he said the auto industry faced a once-in-a-century crisis, and promised to lead Toyota’s comeback by putting customers first. “I will go back to the basics of the foundation of the company,” said Mr. Toyoda. “I intend to exercise as much boldness as possible in pushing ahead with the reforms,” he added.
In trading Tuesday in Tokyo, Toyota shares rose 2.3%, or 70 yen, to 3,100 yen. The stock is off 41% in the last 52-weeks.
Mr. Toyoda, son of Toyota honorary chairman Shoichiro Toyoda and grandson of Kiichiro Toyoda, will be the first founding family member to become president in 14 years. He will also be the youngest president at Toyota after his grandfather.
The U.S.-educated executive is known for an aggressive management style and for his criticism of Toyota’s current management, saying it had allowed the car maker to overextend itself in a relentless pursuit of unseating General Motors.
While Toyota is likely to be recognized as the world’s largest auto maker by unit sales when GM announces its 2008 sales figures this month, it’s a victory that has come at an enormous price. Rolling out plants and models across new markets from India and China to the U.S. and Brazil this decade has strained Toyota’s resources. The pace has led to a series of serious missteps from misreading the market, producing faulty products and building underutilized plants.
Toyota faces its first operating loss in 70 years in the fiscal year ending March amid slumping sales in the U.S., Japan and Europe and a sudden slowdown in demand in the once red-hot emerging markets.
To be sure, Toyota’s problems pale before the debilitating condition of Detroit’s auto makers. And if it succeeds in weathering this crisis, it could emerge as an even more powerful force when the economy turns around.
But with sales and profits shrinking in recent months, Toyota has been operating in crisis mode, reduced to penny-pinching measures like turning down the thermostat to save on utility bills, curbing production at its plants world-wide to reduce an oversupply of vehicles, slashing management bonuses and laying off thousands of temporary workers.
In November, Toyota formed an emergency committee tasked with finding ways to make deeper cost cuts and to boost sales. Still, the auto maker said it would continue to focus its resources on expanding the development of its popular hybrid vehicles, like the best-selling Prius.
In one recent example of the company’s new culture of thrift, Takayuki Katsuda, a chief engineer in Toyota’s luxury Lexus cars, said he decided to carpool to Tokyo from the company’s headquarters near Nagoya instead of taking the much quicker bullet train. The five-hour drive saved the company about $30 a person, he estimated
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