Toyota Moves Deeper Into U.S. Work Cuts

By Staff Report

Feb. 13, 2009

Still refraining from laying off any North American workers, Toyota Motor Corp. said Thursday night, February 12, that it is freezing wages, reducing hours and adopting a voluntary exit program.

The new measures, which Toyota dubbed a “shared sacrifice” philosophy, come as the automaker faces its first financial losses since 1950 and the unfamiliar specter of idle factory lines.

Toyota has gone out of its way to keep its mostly nonunion U.S. and Canadian production workers on the clock, even as it has shut down assembly lines.

But a statement released by Toyota Motor Engineering & Manufacturing North America Inc., the company’s U.S. manufacturing headquarters, said there is now a “strong possibility” that it will reduce work and pay at some plants.

Toyota is considering a schedule in which some workers would work 72 hours in a typical 80-hour two-week period.

Toyota also said it will:

• Add three to eight additional nonproduction days per factory to its North American schedule through April 30.

• Reduce bonuses for hourly workers.

• Eliminate bonuses for North American executive and salaried workers.

• Offer no wage increases “for the foreseeable future.”

The company will also offer a “voluntary exit program” for workers who want to leave. That plan will provide 10 weeks of pay, two weeks of compensation for every year an employee has worked, and a $20,000 lump payment to any worker who wants to leave.

Spokesman Mike Goss said Toyota has no target to reduce headcount and does not expect many of its employees to leave.

Goss also said that the elimination of executive and salaried bonuses represents about a 30 percent reduction in total compensation of the affected personnel.

“We’re trying our best to keep everyone employed,” Goss said. “We feel that with the reduced workweeks and bonus eliminations, we’re getting into the position we need to be in.”

Filed by Lindsay Chappell of Automotive News, a sister publication of Workforce Management. To comment, e-mail

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