Best in France project

Julien DALCORSOAude DEBARD

Jean-Christophe LEMOINERadim SEVCIK

Toyota Motor Manufacturing France Case study

Content

1. The Toyota group

2. Why France? Why Valenciennes?

3. The industrial process

4. Human Resources Management

The Toyota group

Toyota Motor Corporation founded in 1937

Manufacturing plants in 25 countries Present in 160 countries

The Toyota group

Employees: 264,000 people worldwide Net revenues (2002): $107.4 billion

(+9%) Net profit (2002): $4.2 billion (-15.7%) 3rd largest car manufacturer in the

world (5.54 million vehicles in 2002)

Toyota France

Setting up in France in 1997 Toyota’s objectives: Become a

WORLDWIDE leader Production of Yaris (180 000 vehicles/year) Two independent structures:

Toyota France: distribution branch Toyota Motor Manufacturing France

(Valenciennes): production branch

Why France?

Need to enter the EURO Zone to avoid currency exchange rate fluctuations

3 possibilities Germany

Largest European market Production costs too high

Spain geographically too distant from its market and from the HQ

France Second European market competition between 3 regions, notably Alsace, Lorraine and

Valenciennes

Why Valenciennes?

Within a radius of 150km Population: 250 M

Paris, Cologne, Brussels (Toyota Europe HQ) 1/3 of European GDP Presence of OEMs and car

manufacturers SAE Detroit, Française de Mécanique PSA-Fiat, Renault, VW, Ford

Why Valenciennes?

Assets Flat industrial land available (0% slope)

Never been used before for industries Well served by public transport

Very low price of land Proximity to Rotterdam harbour Available workforce (20% unemployment

in 1996) PSA territory (25% of the local employment)

French support to Toyota

Recruitment process: helpful collaboration of ANPE screening of 50 000 possible employees

Tax exemptions (local and workforce) Government incentives: < 1 % of the

total investment (4 bn FF)

Some handicaps

Language barrier use of interpreters orders in English

Difference in culture rigour details TV and entertainment

Long French procedures problems dealing with the French “Administration” 14 months for delivery of construction permit

The industrial process

A. The supply chain

Toyota’s activity in Valenciennes: mainly assembling few internal production

Adaptation of the supply chain logistics : from Rotterdam (by barge and trucks) from local suppliers (Valenciennes : an automotive cluster) from Japanese suppliers settled in Valenciennes

A good mix of local and international suppliers

The industrial process

B. The assembly line

Process in line with Toyota’s global procedures: 2 seven-hour production phases a day flexible timetables use of Toyota’s standard productivity indicators

Adaptation of the assembly line to markets trends :

possible doubling of output (300 000 vehicles a year) …through extension of the present assembly line

The result

The world’s most advanced Toyota plant

Quickest production takeoff ever seen A model in terms of technology and production

timing Productivity superior to Toyota’s UK plant Integration of group’s capitalized experience

A successful mix of imported methods…

Just-in-time management: Minimum stocks Daily catch up of production

« Jidoka »: Humanize automatization Encourage initiative Use of « andon»

…and adaptation to the local context

Corporate culture adaptation: 3 new pillars

1. Diversity

2. Developmentability

3. Loyalty

Toyota’s experience of foreign countries: a deep organization.

A performing human resource

2 600 employees (Toyota = 3rd employer in the region)- average age : 28- 2 200 CDI- many temporary employees recruited (until 600)

The match of Toyota’s need and the French labour market: looking for potentials Aptitude tests Capacity to follow guidelines and instructions

A mutual learning

All the key functions are coupled with a Japanese counterpart

27 permanent Japanese expatriates Number twice inferior as usual 3-year rotation In charge of varied functions

Reduced hierarchical organisation

An increasing loyalty to Toyota

At the beginning, strong turnover Loyalty’s instruments that proved to be successful:

Package: salary above the average ( net salary : 945 euros vs 918 euros) incentives: 157 euros/month saving plan (PEE) perks (housing grants, cheap social insurance)

Training: 1.48 million euros in 2002 = 5 to 7 % of the workforce investment shared both by the employees and the employer support of a medical team in to order to help the employees find the

best gestures

The 35-hour work week

Adoption of the 35-hour work week during the settlement negotiations

Toyota’s willingness to obey the new law

Overtime needed when production volume of the day not met => resentment of some employees

Misunderstanding of the law among the youngest employees: 35 hours of presence vs effective work.

Sources

Interviews M. Jean-Louis Roy, CCI Valenciennes M. Nicolas Fayol, Responsable de la Communication de

Toyota Motor Manufacturing France M. Hironaka Chiba, Executive Coordinator de Toyota

France Press articles

«Toyota chouchoute ses jeunes salariés» in Entreprises & Carrières, n° 668/669, 6-19 mai 2003, p. 20-22

« Toyota cherche à exporter son modèle » in Les Echos, 22 avril 2003, p. 37