For Toyota, Little To Celebrate At The Top

Toyota Plant In Georgetown, Ky.
A worker assembles cars at the Toyota plant in Georgetown, Ky. Toyota, the world's number-one carmaker is feeling the effects of the economic downturn, with monthly sales down more than 30 percent from last year. But the company is trimming wages and work hours rather than laying off employees.

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.