Tuesday, May 01, 2007

Toyota Releases Temp Workers

Toyota Motor Manufacturing, Indiana (TMMI) officially announced last week, April 25, 2007, their plans to eliminate its “variable workforce” by the end the year, citing low demand for the Toyota Sequoia. The news release added “About 350 temp workers will be affected by the decision” which is a more pleasant way of saying that 350 workers will lose their jobs. The TMMI is located in Princetown, Indiana.

This news flash did not make the major headlines like the recent quarter sales announcements that Toyota passes up GM as the Number one (in sales) worldwide automotive manufacturer. I guess the hype of the Toyota race to unseat ex-goliath GM and the potential effect on the future of GM is more news-worthy. In my opinion, this little news headline tells a bigger story about Toyota.

Although I feel saddened for the 350 families affected by the pain of losing of a job, I also feel hopeful. For one, the announcement stated a timeline “by the end of the year” for the elimination. That is a seven month horizon to ease the burden. From my manufacturing experience, temp workers are typically given little notice that their services were no longer needed. This meant same day or next day notice with the “Thanks for your work, here is your last check and don’t come back tomorrow” speech.

Also noted in the news release, Toyota is working with PMI, the company that provides TMMI with variable work force team members, to find them other assignments. This includes transferring workers to the Subaru of Indiana Automotive plant in Lafayette, Indiana where Toyota has recently begun building the Camry. So far, 17 workers have accepted the move.

All are steps to ease the burden of a job loss, while following the “respect for people” principle of lean which extends to even the I-get-no-respect temp workers. I don’t know all the details on how Toyota is actively working to ease the job loss pain yet I get the impression it would be more than most companies.

Other lean lessons point to the workforce strategies of Toyota in a variable demand market. Despite all the news of Toyota’s popularity and sales growth, some Toyota models decline in sales as with the Toyota Sequoia in this case. How does Toyota balance their workforce in a cyclical industry?

One strategy is the variable (temporary) workforce. The role of the variable workforce is a huge strategic difference from typical Western Manufacturers. This is not to say using temporary employees is uncommon in America, just that we use a lower percentage of temporary employees by comparison. This was a surprising fact I learned on my trip to Japan where temporary employees made up 40-50% of the workforce at companies I toured. With the exception of highly seasonal industries, I’ll bet that most American manufacturing companies that have temporary employees have a much lower percentage.

Does this high proportion of temporary employees strategy work? It appears so, but not without creating other issues. Healthcare coverage, employee benefits, pay structure, training, re-staffing to name just a few. A closer investigation into the pros and cons beyond replacing the term “layoff” with “release” would help determine if this is a better approach. Given the added flexibility, a larger variable workforce is more likely a growing strategy for the future beyond even typical cyclical industries.


robert said...

Respect for people is certainly an important principle of the Toyota Way: as is the concept of quasi-lifetime employment.

"Workers become employed right after their graduation from school with a particular company. The employer will not lay off his workers if possible even in the course of depression . The employee in turn will not quit his job at this company but tend to continue working there until he reaches his retirement age ."
Kazutoshi Koshiro is a professor. Faculty of Economics. Yokohama National University . Yokohama. Japan.

* Retirement age is somewhere between 55 and 60.

I think that perhaps these temporary works believed that as things have been going so well for Toyota in recent years they began to feel like full-timers. However, surely Toyota made it clear that the jobs were temporary? At least they can say that they were employed by an organisation with some of the most exacting standards of quality in the world now. That's got to look good on a resume!


Unknown said...

I'd much rather be employed as a temporary (contingent) worker than think I have a job and have it pulled out from under me. Everyone understands the commitment's limits. It's still common practice in IT, where you can tell things are bad because all the contractors are gone. But their companies want to keep them billable, so have a vested interest in placing them somewhere else. We can't be afraid of a flexible workforce, because things change for the worse or the better.

Yes, when you have kids, a dog, a boat and a mortgage, it can be very uncomfortable. That's when respectful help finding another place is important.

Anonymous said...

Just a quick note. I worked for PMI and we were hired on as a variable work force. Infact it was stressed by Toyota management that we were not to be called Temps.

we were told that there was a good chance of being hired in as a Toyota team member.

We were also not just there for 60 days alot of us had more then two years in that role. Some of the pmi workers had more then three years invested with Toyota.

thanks I just wanted to give you a little more insight to your blog.


Unknown said...

Cannot speak as to the training the temp works at TMMI receive, but in at TMMK, temps working for TMMK via Precision Staffing receive extensive training upon being hired, then throughout the next 24 months.Training is extensive, tested, focused on TPS. Passing is required, attendance is required. The training, is more extensive than most of the TMMK employees have received. 90 days after I started I had already completed the Quality Circle Leaders course,was active in a QC and now w/less than a year, lead a QC. The expectation IS that, if attendance and quality are met, and TMMK, through growth/attrition, is in need of new hires, you will be offered a job. There does seem to be a habit of allowing a temp to work out the full 2yrs, then not offered a job due to attendance, quality issues, which causes one to question why they were kept on for so long. Temps meet a higher attendance requirement than TMMK employees, and overall, as a team are better motivated I believe. The view you see on the tram while on tour is nothing like the internal workings w/in the plant. It is not one large happy family. Sadly, the lack of really embracing TPS plant wide. I understand Toyota, and any other corp. using temps, but it IS simply a play on words to say Toyota has not layed off since 1930's. I believe the company, TPS is the ONLY way to succeed in business, it really is a way of life...just not in America, not at TMMK. The expectation is TMMK will always be there, something is owed to the worker, the results in quality dropping reflect this problem. Temps are groomed for the long term, to succeed, to execute TPS...and to have a chance to be hired. So while one can argue 'they' knew at TMMI it was a 'temporary' position, I believe the atmosphere, the trend, the unstated intentions, but the stated actions of Toyota was to one day make these temps employees. Where else can you replace your attrition w/someone w/years of experience, already one the job for you? Right now, a temp at TMMK will go through a min of 24 months as a temp, complete all the training modules regarding TPS, have worked in multiple jobs (in fact will do job rotations that TMMK employees do NOT do because of ergo concerns), THEN, if offered a job and hired go through 6 more months of probation. As a temp, it is not a bad deal. For those seeking long term employment and a future, it is a very slow, walking on eggs process.It can be a win-win for both company and the temp, but the does than their share of investing into Toyota. Toyota is a great company, doing what a company does in a free market to profit, time will tell if we can adjust to it here in America, LONG term, not just a couple of decades, which in Japanese cultural is not even a grain of sand. For Rob, no they cannot say they were employed by Toyota on a resume. Not directly. Still a temp, jumping from job to job. Not sure how many temps left working w/in TMMI, but for those TMMI employees....for every temp not there, someone is a little closer to the door when harder times creep into the auto manufacturing business. We all hope it doesn't continue its down turn.
FYI, we were all called into a meeting when the TMMI layoff was announced, and the opinion here is that the Camery will continue to float TMMK well into the future. Perhaps, but the Suburu plant in IN has scored higher in quality...that should concern all of us at TMMK...but doesn't. Thank you, Miyagi