Managing crisis, the Toyota Way!

Filed in archive News on October 23, 2008

I read an article about a week ago in Wall Street Journal (You can its full version here) about the crisis in the U.S. and the reaction of the auto makers.

The automotive industry has been with a lot of challenges in the recent years, especially with over-capacity of its personnel in the downturn; now and with shadow of financial crisis affecting many industry industries, I can imagine that this problem has intensified...

In such situation, Toyota has adopted a new strategy: "Instead of sending the workers home, as the Detroit makers often do, Toyota is keeping them at the plants, though. The employees spend their days in training sessions designed to sharpen their job skills and find better ways to assemble vehicles."

At GM, Ford and Chrysler, workers effectively are paid for not working when their assembly lines are idle, under terms of union contracts. If a plant is shut temporarily, as some were this summer, workers receive most of their pay but don't have to show up. A few attend company-paid classes to learn new assembly skills.

The underlying rationale is simple: We are in a bad situation; we have to cut costs but at the same time can't reduce the workforce so let's do another thing: By organizing workshops and courses to improve operations' performance, we can at least develop our workers' capacity and this is certainly better than paying them without doing anything; also empowered personnel equipped with knowledge can find new ways and alternatives for cost reduction in their activities.

Not bad, right?