Toyota Motor Corporation Reviews Production Plans Amid Mounting Global Disruptions
CEO Akio Toyoda announced that due to global disruptions the current production plan is already ‘at the limit’ so changes must be made.
It is never a good idea to ask, ‘what else can go wrong?’ Because it just seems to invite another problem. But if you are Toyota Motor Corporation you have to seriously consider asking yourself that very question. The global disruptions that have faced the automaker over the course of the last year are hard to believe. How about a global pandemic, supply chain shortages, cyberattacks, and a war? It is impossible to absorb all of that and continue to run your business as you normally would. And it is now being reported by Bloomberg that Toyota will not be able to do business as normal. And word is coming straight from the top.
Chief Executive Officer Akio Toyoda announced that the company is reviewing its production plans in an attempt to boost output in the face of global disruptions. “We need to examine the conditions before us,” Toyoda told union leaders, according to a publication posted to the company’s website Wednesday. “If we do not continue to make sound production plans” along with suppliers, “this will lead to exhaustion.” Toyota is the largest automaker in the world but even they have not been immune to what is happening in the automotive industry.
Output Goal Slashed
Toyota already announced last month that they would be cutting its output goal for the fiscal year ending in March to 8.5 million vehicles from a previous target of 9 million. 8.5 million vehicles is still a substantial number but it is a 5 percent cut from the previous goal. For now, Toyota seems to be sticking to that goal, however, the target for the April to June quarter is in question. Chief Human Resources Officer Masanori Kuwata said that the company will provide specific figures for that period at a later date.
Workers Pushed to Limit
“As the union points out, a production plan that exceeds the capacity of personnel and equipment is abnormal,” Toyoda said earlier in his discussion with union leaders. The situation is “already at the limit,” he said. Toyota vehicles are renowned for their exceptional quality and reliability. That can be difficult to maintain if you have production plans that are stretching resources to the limit. “We learned first hand, during times like major recalls, the importance of prioritizing safety and quality above all else and not neglecting the people supporting us on the ground,” Toyoda said. “Together with suppliers and dealers, we want to work together to overcome the current crisis situation.”
Cyberattack
As if a pandemic and a war were not enough. Last week a cyberattack was carried out on a Toyota supplier. That attack knocked out all of Toyota’s plants in Japan for an entire day. With everything already stretched it was lost time that Toyota could ill afford. Prior to the attack Toyota stated they were aiming to produce 950,000 vehicles in March. That would be a significant increase compared to the 843,393 produced in March 2021. However, with all Japan plants being idle for a day it is likely that goal will be missed.
What Does It All Mean?
If you are currently shopping for a new Toyota or Lexus, you can expect supply to remain tight. Toyota has done an admirable job producing vehicles throughout the course of the supply chain challenges. However, it seems like things may start to be catching up to them. That could result in even longer wait times for new cars. We will learn more soon once the Q2 production targets are announced. But unless there is a major change in current events, don’t expect good news.
Images: Toyota Motor Corporation
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