Toyota Struggling in Tough Economy, Seeks to Slash Worker Wages

by Tina Kells | January 8, 2009 at 12:10 pm

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Toyota may be stiff competition for American automakers but it is struggling to stay afloat in these tough economic times all the same. Early this week Toyota announced it would initiate an 11 day work stoppage by shutting down production at plants in Japan as part of cost-cutting measures. Today, Toyota followed up on that plan by asking its workers in Japan to agree to wage cuts.

When the Big 3 Automakers went to Washington seeking bailout funds they attempted to paint the unions as part of their problem pointing to foreign companies like Toyota, who operate non-union plants in the United States, as proof that union wages were killing the American auto industry. Little mention was given to the fact that Toyota is struggling just like the Big 3, maybe even more so.

Toyota seems to have adopted the Big 3's anti-worker sentiment by asking workers in Japan to agree to less compensation during the planned 11 day plant shut downs than they would be entitled to under Japanese law.

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 percent 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.