For Toyota, Little To Celebrate At The Top

CBS Evening News: Dismal Sales At World's Top Carmaker; But Workers Forsee Cutbacks, Not Layoffs

(CBS)  Toyota's celebration of being the newly anointed number one carmaker in the world has been short lived.

CBS News has learned that the company's February sales numbers will be as bleak as they were in January, when the Japanese carmaker reported a 34 percent drop in its sales compared to a year ago.

"We see everyone bumping along the bottom for the next few months," Toyota spokesman Mike Michels says.

In 2008, Toyota knocked General Motors off its 77-year perch by selling nearly 9 million cars worldwide, about 600,000 more than GM.

But amidst the global economic recession, plummeting sales and profits are causing Toyota to suffer its first ever operating losses.

"It's been a tough past six months for all of us," says Toyota vice president Cheryl Jones. "We're not immune to what's happened out there."

Jones oversees production control at Toyota's largest factory outside Japan, near Lexington, Kentucky, where production of the Camry, the best-selling sedan in the U.S., has slowed from 2,000 to 1,000 cars a day.

"The sacrifices that we're gonna make in this company are gonna be greater at the top," Jones says. She and other executives anticipate 30 percent salary cuts this year, while middle managers and salaried staff expect 20 percent cuts.

Hourly workers face a trim from 40 to 36 hours a week -- a 10 percent pay cut -- and no overtime, bonuses, or pay raises.

"We've been accustomed to depending on overtime, and now it's no overtime across the board," says longtime Toyota worker Eric Everhart, a father of four.

"The bonuses aren't there anymore, and we don't know if they're going to come back," he says.

Built 21 years ago as Toyota's foothold in North America, the heavily automated Kentucky plant is 7.5 million square feet, or as big as 156 football fields. It takes 20 labor hours there to build a Camry from scratch, about half the time being painted.

Factory workers are not unionized and earn up to $70,000 a year. No one has ever been laid off.

"Morale is good here. I think overall the economy has affected everyone, not just hear at Toyota," says Toyota worker Renee Pike, a mother of three.

"I anticipate maybe a little bit of an adjustment. I feel confident that I will always have a job," Pike says, "Toyota saves for a rainy day, and I'm dependent on that."

Unlike the Big Three American automakers -- GM, Ford, and Chrysler -- Toyota, which supports 14 plants in North America, is not asking any government for a bailout. Toyota plans to keep production down throughout this year, so inventory does not pile up.

Production did stop for three months at the San Antonio plant, where Toyota's Tundra pickup is assembled, and volume there is also half what it used to be.

"We are building Tundra on one shift only In Texas for the foreseeable future," says Toyota spokesman Mike Goss.

While none of Toyota's 1,200 U.S. dealerships have closed, at Rockland Toyota, in the New York City suburbs, owner Neal Cuperman says his business is down 20 percent, forcing him to lay off more than 20 people in the past year.

"You don't know what direction to go in. It's very scary," Cuperman says. "I've been doing this 30 years, and I've never seen it like this."

Cuperman says his biggest problem is getting prospective buyers in the door. During the heady days of $4-a-gallon gas, he had to beg Toyota for more of the fuel efficient Prius hybrids. Now, he has a dozen unsold models sitting on his lot.

"We had people wanting the new car -- the shiny, new car, the new model the exciting car that's out there. They wanted that. Now what's happening is we're finding people need the car -- the car breaks down, they have a big bill in service, their lease is over, they needs to buy that car," Cuperman says. "We got to get these wanna-bes back in."

After 20 years at the Kentucky plant and becoming a team leader in engine assembly, Everhart is learning "to be flexible."

"That's just something that everybody has to accept of part of their part of doing what needs to be done to survive in this economic climate," he says.

[calisteve80]

I am thankful to see there are a few people who realize that all the reports of the Japanese car companies being "Better than American Car Companies" are full of s*$t. I would like to see people pick up on the fact that companies like Toyota/Honda did take money. First of all, they got a Bailout from their own government. Second, they got money from the US government as well. It is not considered Bailout Money, but the US government gave them money for R&D for more fuel effiecient vehicles.

Also, I am sick of the people that still believe that the Japanese companies make better quality/more fuel efficient vehicles than the Big Three. Does nobody know that in 2006, it was revealed that Toyota was for years concealing RECALLS from their customers. The public never heard anything, because Toyota never let people know. A customer would come into the dealer for something like an oil change, and the dealer would fix other problems without leaking a word of it. Way to build a reputation on lies and deception. As for the fuel efficiency, not a lot of people know that by every 2010 model, FORD will be the leader in fuel efficiency for about 90% of their models.

Hopefully some people will find this information helpful...

[riccary]

In reply to enzof1 - you are a real dreamer (maybe WISHING WHAT YOU ARE SAYING IS TRUE).

I could write pages of TRUE examples of GM people that have switched from GM vehicles to Toyota's & Honda's. I am not talking trucks.

Look at vales of vehicles that are over 8 years old or have over 150K miles on them. You can't even give away the gm ones yet the Toyota's & Honda's bring in great resale value.

Last, pick up the latest copy of the car buying issue of Consumer Reports. Next thing you're be saying is it was printed in Japan..

Get real and face it

[riccary]

In reply to omnibus66 and buying American cars. I will continue to buy Toyota's, Honda's and Nissan products OVER GM & Chrysler junk as I have for the last 15 years like many other people. Why ? QUALITY !! One Word.

Thank your over paid UAW and pitiful quality for the fall of GM & Chrysler.

By the way, while you are crying, pick up the latest issue of the car reports from consumer reports. It speaks the truth... reports

[ghalie123]

What is Toyota thinking?

There is no sign of economy picking up, the management should be realistic and expect a further slump in order for the next 12 months as least.

More people are selling their cars out to get real cash than getting a real car. I foresee bus, tram, underground transport will boom.

Unless Toyota takes part in public transport project, I don't see how car industry will survive after such economy bubble burst so badly and most Americans wake up to realize that taking a loan to buy things is not a good idea anymore.

[luke_4u]

I'm not totally surprised that Toyota is having a little "sales" problem. Most people in their right mind, are hanging onto as much of their money, as they can. Now is not exactly the best time to throw your money away on new cars, or anything else you don't really need, for that matter. Big business wants us all to spend spend, and spend again. Be smart, don't do it. If you've got money to burn, then I guess it's a moot point, but most people don't.

[whitemale08]

Soon junkyard dogs like Sean Hannity will be off the radio because GM, his chief sponsor, will no longer be.

Toyota will no longer be in Alabama either until labor in this country is down to the equivalent of .50 cents and hour or the same amount they can get in China.

Funny how Wall Street Republicans like Druggie Limbaugh and Laurah Ingram are so stupid to embrace 'globalization' that eventually they are shut down by British style 'globalization' too.

[edward1975-2009]

With the cost of cars exceeding what most payed for their homes, it's no wonder they are losing money. The poor quality of todays vehicles, have many turning to foreign carmakers. Until they all realize that their is no vehicle worth what they are charging, they will continue to lose money.

[retiredgustav]

If we allow unions to disapear do you really think companies will continue to provide good benefits and wages. Some of you will say let the market determine the wages. The truth is we will have a race to the bottom. Benefits for most will disapeare along with the 40 hour work week.

[hollybb2]

American cars are total CRAP. The big three are getting exactly what they deserve. Years and years of greed are coming back to bite them in the butt,. In 51 years, Toyota has never faced the economy issues we are all facing right now. They will come through this crisis stronger than ever because they care about the product, the customers and their employees.

[cydygitt1]

They are only ASSEMBLED in the USA plants. All of the parts are manufactured in Japan and then shipped to the US assembly plants.

When you buy a Toyota or Honda, you are supporting a few US workers, but many more Japanese workers. We should all learn to buy American whenever possible. And yes, my personal vehicles have ALWAYS been made by Ford, GM, or Chrysler.

Posted by omnibus66
===============

And just where do you think that the Ford, GM and Chrysler parts are being made?

[grabandgo]

The American auto execs need to take a hint!! 30% reduction in pay.
I am sure these guys are flying commercial flights too.

[omnibus66]

Toyota's are on the whole good vehicles, but so are Fords and Chevy's. The problem is that they have propagated the myth that some Toyota's and Honda's are manufactured in the USA. Totally false. They are only ASSEMBLED in the USA plants. All of the parts are manufactured in Japan and then shipped to the US assembly plants.

When you buy a Toyota or Honda, you are supporting a few US workers, but many more Japanese workers. We should all learn to buy American whenever possible. And yes, my personal vehicles have ALWAYS been made by Ford, GM, or Chrysler.

[skyk-2009]

I know people who have worked for Toyota for over25 years without any complaints. Good pay, excellent benefits, and no unions to interfere and take money from the workers. A small pay cut spread among many is shared hardship rather than having dozens of families find themselves without one person or more in the household being jobless. I also know people who won't buy anything other than a Toyota.
Posted by joule18 at 2:11 AM : Mar 1, 2009

You know this how? LOL I'd suppose you went around and talked to all the employees? No? Well could your statement be made simply because you do not like Unions and wish to make that bigotry know without saying it? I think everyone already knows the answer to that. The problem with the big 3 is not the Union which served My father and so many so well for so long. He's dead now but his Pension and Health Benefits are the problem that is being faced here. You see Toyota doesn't have that problem now do they?

[dougblack1]

to you toyato fans,nothing wrong with them. Good cars. but whats wrong with american cars,or are you American. The U.S, needs to feed their children,not the **** kids!!!!!!

[joule18]

I know people who have worked for Toyota for over25 years without any complaints. Good pay, excellent benefits, and no unions to interfere and take money from the workers. A small pay cut spread among many is shared hardship rather than having dozens of families find themselves without one person or more in the household being jobless. I also know people who won't buy anything other than a Toyota.

[sockpuppet4]

I agree. Russ Limpball is an idiot.

If he's going to head up the GOP maybe they ought to get him a girlfriend first. One that aint after his money. (You know how them dames can be)

[sockpuppet4]

They are not selling because they are junk.

When you make a plant out in a cornfield and dont pay proper the farmers building them would rather tip cows than build cars.

Toyota is even racing big V8's in NASCAR now.

Give me a Ford any day.

[enzof1]

I love how Toyota points out that they aren't going to ask for any money from the government, but they fail to mention how they've already gotten billions from the States. Now I'm going to straighten something out for you people. There is this myth going around that Japanese automakers got a foothold in this country because American were sick of those pieces of crap from the American automakers & the Japanese autos were of so much better quality. Well, that a LIE. The reason Japanese Automakers got a foothold in America was because gas prices more than tripled in 1973 & they built small fuel efficient cars & the U.S. automakers didn't. They weren't of better quality than the American cars, they didn't ride better or have better styling or interiors. In fact the cars from GM, Ford, & Chrysler were superior in everyway except fuel economy. But the Japanese automakers, especially Toyota, didn't really start to become successful in the U.S. until they started to copy the U.S. automakers by building midsize cars & large trucks & SUVs. That other myth that Toyota autos get better fuel economy than GM autos, that is also a lie. Chevrolet cars in nearly every category beat Toyota cars in fuel economy. As far as the Prius goes that car is an "Environmental Disaster". I want to know why if the cars Japanese cars are so much better than Americans car then why do I hardly ever see a old Honda or Toyota on the road today (By old I mean from the 1990s)

[cbsblogger]

When you complain about GM getting money, never forget that the Japanese government strategically and financially aided Toyota and Japanese auto companies in the 1970s with the singular goal of usurping the US auto industry.

Our "free" but unfair traders allowed Japanese cars into the USA at will while the Japanese ad a closed market to US cars.

This has persisted throughout Asia until recently. Even Harley Davidson was restricted from selling US Motorcycles in many countries of Asia. You want to know why the USA lost its manufacturing ......ask Ronald Reagan, Bushs, Clintons and Congress. They allowed it to happen.

Google it. http://www.jama.org/about/industry5.htm

[whitemale08]

..and you Toyota Repubicans in Alabama stupidly thought that British style 'globalization' was good for America.

You thought that when our jobs were shipped overseas so Wall Street Republicans can turn profits that it would never end badly for you too.

Druggie Limbaugh is a complete idiot!