Toyota asks Japan workers to take pay cuts

Friday 09th January, 06:20 AM JST

TOKYO —

Toyota Motor Corp said Thursday it is negotiating with its workers in Japan to slash salaries as it stops production to adjust to slumping global demand.

Toyota spokeswoman Ririko Takeuchi said the size of the cut is still undecided. She said talks are under way after the company decided this week to idle production at all 12 of its Japan plants for 11 days over February and March—a stoppage of unprecedented scale for Toyota, Japan’s top automaker.

Under Japanese law, companies must pay at least 60% of the average regular wages during such stoppages, she said.

In a stunning reversal of its previously booming fortunes, Toyota projects that it will sink into its first yearly operating loss in 70 years for the fiscal year ending March 31. And fears are growing about the ripple-effects of the U.S. financial crisis to this nation’s export-reliant auto industry, including parts-makers.

Toyota is shedding 3,000 temporary workers in Japan—about half its domestic temporary work force—by the end of March.

The job cuts have not affected the nearly 70,000 full-time Japanese staff, who like workers at major corporations here are generally protected with lifetime employment. Toyota employs 316,000 people globally.

Toyota officials have said they are trying to ease the transition for its laid-off workers, allowing them to stay in the company dormitory for a month, instead of just a week, as in previous cases.

“Protecting employment is of utmost importance for us,” Toyota President Katsuaki Watanabe told reporters last month. “But tough market conditions are likely to continue, and they could get worse.”

Japanese automakers may be faring better than their U.S. counterparts General Motors Corp and Chrysler LLC, which have been on the brink of collapse until securing a multibillion dollar government bailout.

But the plunge in global demand and the surging yen have hammered their earnings.

Toyota, the maker of the Corolla subcompact and Prius hybrid, saw its U.S. sales in December tumble 37% on year. It expects 50 billion yen in net profit for the fiscal year ending March 31, down from 1.7 trillion yen the previous year.

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10 Comments

Richard_the_First at 11:08 AM JST - 9th January

So use some of the billions of USD in the bank, Mr Toyota. Your employees are your life blood.
wanderlust at 12:32 PM JST - 9th January

None of the big twelve Japanese manufacturers who are busy laying off staff have answered where all those trillions of yen of profits over the last 8 years have gone to... a couple of bad months and they plead poverty. Where is the vaunted long-term Japanese planning and management strategy?
Disillusioned at 04:11 PM JST - 9th January

In a stunning reversal of its previously booming fortunes

So.....Where are all these booming fortunes now? I guess it's easier to take from the poor than to actually expect the rich to support their own employees. Or, possibly they are waiting for a multibillion yen bailout from the Jp Gov. I hope the Jp Gov has some money left after they pay everybody the 12,000yen.
LIBERTAS at 09:20 PM JST - 9th January

Toyota mantra: Take the long term view. Workers will follow as they´ll still have jobs and improved skills when the smoke clears, literally, and they make more efficient green cars. While they also eat the big3´s lunch.
usaexpat at 01:49 AM JST - 10th January

LIBERTAS: don't count the big three out just yet (well maybe Chrysler) In the latest Hybrid sedan review I read Ford's Fusion Hybrid beat the Toyota Camry hybrid in driving dynamics, fuel efficiency and quality of materials. That is a true upset and a welcome one. Toyota has been living off its reputation for far too long and customers are beginning to actually cross shop brands. All of that aside all carmakers will continue to suffer from the perfect storm that was not of their making. I don't see that Toyota has any choice but to seek concessions and layoff workers.
WMD at 10:51 AM JST - 10th January

How much are "bosses" cutting their own salaries, bonuses and the rest of the gravy train I wonder??
rgetty at 11:45 AM JST - 10th January

wanderlust: I totally agree. People have been touting the Japanese business model for so long, few bad months should not do so much damage. Unless like other things we hear about , Maybe they have been inflating their books too, or as some of you really refuse to believe. Maybe the exchange rate Really does play a big part. I know Toyota makes one third of their profits from it and that calculated at a 115 rate.Take away that and the company doesn't look that good.
Scrote at 12:06 PM JST - 10th January

Isn't it strange how when Toyota made record profits they refused to increase wages, yet after only a few months of poor results they are clamouring to slash salaries?

I'm sure the unions will roll-over and take it, as usual.
ptolemy at 07:13 PM JST - 10th January

“Protecting employment is of utmost importance for us,”

As long as they are permanent: ie, Japanese, and robot respond to all orders.
unscrejects at 07:53 PM JST - 10th January

Told you so folks. Told you for three years that Toyota were in a major numbers scam. They'd never give the reigns back to the family unless major wrongdoing had been uncovered.