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Innovators at work and in the classroom

Turnaround Engineer

A Toyota executive’s lessons on hard-times manufacturing

At Idle plants, the company chose retraining and community service over layoffs, says Wil James. By Mark Matthews

To Wil James, head of Toyota’s largest American factory, the carmaker’s response to three years of bad news underscores Darwin’s maxim: It’s not the strongest or most intelligent of the species that survives, but the most adaptable.

Times were anything but tough for Toyota when James joined the company in 1987, spurning a mechanical engineering job to become a group leader at its new Kentucky plant. For two decades, business was “up, up, up,” he says. But in 2008, a spike in gasoline prices torpedoed big car sales and showed the folly of Toyota’s emphasis on V8-powered pickups and SUVs. While dealers couldn’t get enough hybrid Prius and Corolla models, production lines for Tundras and Sequoias fell idle at the Indiana plant where James was vice president for quality control. The nationwide recession compounded the misery; car sales sank to their lowest levels since the 1980s, pushing Toyota into the red for the first time in a half century.

Then came a series of safety problems that triggered the recall of millions of vehicles, netted tens of millions in federal fines, and damaged Toyota’s reputation for quality. Floor mats trapping an accelerator sent a Lexus hurtling at 120 miles an hour along a San Diego freeway before it slammed into another vehicle and hit an embankment, killing four people. More negative attention focused on sticky accelerator pedals and a steering malfunction. Barely had these headlines faded than a tsunami in Japan and floods in Thailand cut off parts supplies.

This perfect storm didn’t slow James’s rise. By July 2010, he was “back home” in Georgetown, Ky., this time as president overseeing 7,000 employees and a $5.4 billion, 7.5 million-square-foot facility capable of turning out half a million vehicles a year. As in Indiana, where James had introduced the midsize Highlander SUV, Kentucky needed to adapt. His account of the company’s practical, detail-oriented approach hints at his training at Virginia’s Old Dominion University, where he earned a bachelor’s degree in mechanical engineering technology in 1978.

A key rule in both turnarounds was to avoid layoffs, even if assembly lines were down. “While our plants were idle, we got creative,” James told a 2011 IndustryWeek Best Plants conference. As executives took pay cuts, some employees were assigned to other plants. Other “team members” (the nonunion firm doesn’t call them workers) underwent retraining, an impossibility had they been laid off. Community volunteer efforts – cleanup, painting, and general maintenance – offset reduced contributions to local nonprofits. For example, energy and logistics experts devised cost savings for the Scott County, Ky., courthouse and helped city officials streamline trash pickup.

Employee contests generated ways to cut factory costs, including the installation of energy-saving light bulbs throughout the Kentucky plant. Grass-covered lawns were replaced with natural grasses and trees to reduce mowing. Employees also looked for ways to improve their operations. These kaizen (Japanese for “opportunity for improvement”) sessions turned up safer, more efficient ways to put padding on vehicle doors; bumper installations that resulted in fewer scratches; and much less walking to collect parts. Production flexibility “reached a whole new level,” James told the IndustryWeek conference.

Toyota has yet to lick all its problems: An additional 681,500 vehicles were recalled in March. But sales were up 12 percent in February, and profits have rebounded. The company is granting more autonomy to its top North American managers so it can more quickly meet customer needs, James says. And the changing automotive landscape means adaptation must continue. Toyota hopes to introduce hydrogen fuel cells in coming years. Meanwhile, “totally amazing” advances in on-board electronics – bringing directions, stock prices, and sports scores to drivers and passengers – pose an engineering conundrum in planning new vehicles, James says. The challenge: “How do you design today something that will be outdated next year, for a launch in two to three years?”

Mark Matthews is editor of Prism.




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