Toyota CEO touts U.S. success

The Toyota Motor Corporation has outperformed its American competitors by keeping prices low with a lean management structure and a contented workforce, the company's North American president Hideaki Otaka said at a lecture in the Frist Campus Center Monday.

Otaka said that when Toyota took on the Big Three manufacturing giants — Chrysler, General Motors and Ford — in the wake of the 1970s oil embargo, no one could have predicted the Japanese firm would seize a substantial share of the American auto market.

"It was like a high school football team trying to challenge the New England Patriots," said Otaka, who has run Toyota's North American operations since last May.

Though the Big Three American automakers continue to sell more cars than Toyota overall, current trends favor the Japanese firm. Toyota has broken its previous years' sales records in the United States for the past nine years, and their sales in February rose 11.1 percent even as overall auto sales dropped.

Otaka, who joined Toyota in 1965, said the company reduced costs by cutting supervisor positions and granting more flexibility to assembly-line workers.

He visited all Toyota plants in North America when he was appointed to his current position last year.

"Data is important, but the best data cannot substitute for going to see things for yourself," Otaka said.

He said the "Toyota Way" — which he described as a corporate philosophy that empowers employees — gives the automaker an advantage over rivals plagued by labor disputes.

At the same time, Otaka upholds a concern for the consumer's preferences.

"We started with a vision to make cars of the highest quality with the lowest possible cost," Otaka said. "We also carefully examined the needs and desires of the American customers."

After the oil-price spikes of the 1970s, Otaka said, American consumers were looking for more fuel-efficient vehicles. He attributed his company's success in the American market to the superior gas mileage of Toyota cars.

Otaka touted Toyota's 55-mile-per-gallon hybrid, the Prius, as evidence of the company's dedication to environmental responsibility. More than 250,000 of the vehicles have been sold worldwide.

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"It was fascinating to learn about the different corporate structure at Toyota and why that makes them successful when others are lagging behind," said Robert Gould '06, who attended the lecture.

"They seem to be more employee-focused and lot more flexible in their allocation of resources where the U.S. companies have been tied down by unions," he added.

The first U.S. Toyota plant was established in 1984 as a joint venture between General Motors and Toyota. Ten years later in 2004, he company sold 2.1 million vehicles in North America.

"The whole idea about being a good corporate citizen and sacrificing short-term profits for overall quality was interesting," Julian Ulmer '06 said. "I liked his explanation of the 'Toyota Way' and how open-minded they had to be when they were opening the joint plant in the [United States]. Nobody thought it would work, but it did."

Otaka's lecture was sponsored by the Program in East Asian Studies.