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Weekly UpdatesToyota Motor Co.'s announcement of a three-day shutdown of 12 domestic plants in Japan came days before the United States Congress passed a $13.4 billion emergency bailout proposal in December to stop Chrysler and General Motors Corp. from shuttering their own operations. The mixed news affected all workers in the automotive industry in some way. But when Toyota made another announcement of halting production for an additional 11 days during February and March, economists and industry experts like Kenneth Ragsdell met to discuss far-reaching ramifications. As of Feb. 5, all but one assembly line had stopped running.
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"Recognize that Toyota is the most efficient company in the world. Not just the best in the auto industry," said Ragsdell, professor of engineering management and systems engineering at Missouri University of Science and Technology who has worked with car companies globally for 40 years. "The fact that they are slowing down is a strong signal that the worldwide economy is in trouble. Toyota practices lifelong employment and lays off employees very reluctantly."
The idle plants were set to include four vehicle assembly plants and also factories that make transmissions, engines and other parts. According to Japan Economy News, the closure would attempt to bring new vehicle production down to half of last year's level, reducing Toyota's output to 11,000 units per day in 2009, which is the effective borderline for profitability. In December, the company reported a 37 percent drop in U.S. sales and an 18 percent drop in sales throughout dealers in Japan.
"Consumer confidence must return. An economic tsunami has struck the world's economy. People are fearful about their jobs. This is not just an American problem, but America is a key player in the problem creation and the forthcoming solution. ... The banking industry has collapsed, and now loans to buy cars (the most common way) are not available to most potential buyers," said Ragsdell.
"Without the auto industry, there is no U.S. manufacturing industry, period. For every auto worker in North America, four to five workers are in the supplier companies. If the auto industry collapses, then so do those manufacturers."
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