Mark Young weighs up this week's mixed messages from Japanese car makers...
In the last couple of days we’ve had two very contrasting updates on the UK operations of Japanese car manufacturers. Nissan is taking on 400 more employees at its Sunderland plant, albeit on a temporary basis, but Toyota has announced it is to trim 750 from the headcount at its Burnaston factory in Derby.
The increase at Nissan is due to market-defying sustained demand for its Qashqai model. And you can see why it fits the bill. People are turning to Smart Cars and Kia Prides begrudgingly; I would speculate that regardless of what fuel is consumed, the desire to drop the kids of at school in a Chelsea tractor is yet to be fully diminished. The Qashqai represents a compromise. It’s bigger and bolder in shape than your common or garden mid-range four door and with its 1.5 to 2L engine, it alleviates niggling environmental concerns and (more so, I wager again) the extortionate price of petrol.
“Qashqai continues to buck the trend of a generally depressed market, and we have now identified the need for an additional shift to cover a high volume request in the first half of the 2010 Financial Year,” says Nissan Senior Vice President for Manufacturing, Europe, Trevor Mann. “Doing so will allow us to get cars to our customers more quickly and also provide the significant increase to production needed to fill the delivery pipeline to our European dealer network.”
So the UK has struck lucky, you could say, having been graced with the production of such a successful model. Perhaps though, it is a sign of confidence from Nissan in UK capabilities. This would certainly be consistent with the message the company put out last year when it chose Sunderland to manufacture advanced batteries for electric vehicles, a message it repeated only three weeks ago when Sunderland got another nod of approval, this time to build its new Juke model.
It should be said that last year Toyota announced its own gift for UK automotive and indeed for the low carbon economy that Peter Mandelson is so rightly anxious to see created within UK industry. Toyota announced that Burnaston would be the home of a hybrid version of its Auris model from the back end of this year – the first hybrid that is to be mass produced in Europe by any manufacturer.
However this week’s news is truly in contrast and not just because of the redundancies, disappointing as it is for those employees that face losing their jobs.
The Toyota plant, currently employing 3,800 people, had been operating short production hours – closing the lines every other Friday – for much of last year. Staff either worked less hours and took a pay cut or increased their efforts on continuous improvement exercises during these times. The plant currently utilises two lines – operating two day shifts and one night shift – and makes the Auris and Avensis models. It now plans to close one of those lines from August in what it is calling an efficiency measure. Toyota says production volumes will not go down during this period and only that it will lose its excess capacity. The measures, it says, are part of an attempt to make the business more sustainable long term.
Toyota is widely considered one of the most efficient companies in the world and the lean and continuous improvement methods created within the company are copied at manufacturing plants globally. There is many a lean practitioner who has made a career through teaching the Toyota Production System. This, plus what I saw on my visit to the plant last year, gives me confidence that Toyota is not a company prone to knee-jerk reactions, nor are they fond of taking short term measures. Therefore if the move secures the long term stability of the plant then it must, from that perspective, be begrudgingly applauded. We should have no illusions that the global automotive industry continues to face dire market conditions and that many of the biggest and best established companies face uncertain futures, and I don’t just mean their individual plants.
However, what is worrying is the move is a sad indictment for Toyota’s UK manufacturing plans overall. Toyota is not adjusting its production volumes; it is bringing its capacity down. While it’s no surprise that they are currently not producing as many cars as they could, it is disappointing that they are taking long term measures which will mean that ‘normality’ is not likely to be restored in the foreseeable future. Indeed, the very point that Toyota knows what it is doing when it comes to efficiency means I can’t see it spending a fair chunk of money downsizing only to invest again in increasing capacity when people start buying cars again.
I have requested an update from Toyota on whether this week’s news affects the plans for the hybrid Auris or not and will pass on information when I receive it. I truly hope those plans remain intact. If not, when the car in front is a Toyota once again, it might leave a bitter taste in the mouth of UK manufacturing.
Mark Young
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