Toyota’s 'lifetime employment' takes hit with Australian layoffs

Automotive News | January 30, 2012 - 9:56 am EST

TOKYO -- One of the central myths to Toyota’s way of business -- indeed most Japanese automakers’ public image -- is the idea of lifetime employment.

Once workers are inside the corporate tent, it is hard, if not impossible, to kick them out.

But the concept seems to apply better at home in Japan than it does overseas, if last week’s layoffs at Toyota’s only assembly plant in Australia are any guide.

Japan’s biggest automaker announced the elimination of 350 of 4,600 employees at its Altona plant in Melbourne, or 8 percent of its workforce. The company blamed the cuts on tumbling demand that forced a 36 percent slide in production at the plant over the last four years.

"The reality is that our volumes are down. What we assumed was a temporary circumstance has turned into a permanent situation," Toyota Australia CEO Max Yasuda said in a statement.

Toyota’s Australian plant makes the Camry, Camry Hybrid and Aurion sedans for Australia and export. Output peaked at 149,000 units in 2007; the company expects 95,000 in 2012.

The other reality is that lifetime employment has never been an iron clad proposition in Japan or elsewhere. But Toyota has been better than most automakers in trying to protect it.

After the global financial crisis that struck in 2008, Toyota idled plants or slashed output in the United States and Japan. In some cases, such as the idled Tundra pickup plant in Texas, it kept payrolls intact by retraining workers and conducting maintenance during the down time.

In Japan, it did resort to layoffs -- of a sort. But it left its full-time payroll mostly untouched by slashing contract workers. Huge ranks of such temporary workers allow Japan’s carmakers to fire and hire with greater flexibility by not renewing contracts or hiring for short stints as needed.

Still, the job cuts in Australia should be a troubling sign for Toyota workers worldwide.

It shows that new stresses on the company are forcing a rethink of once sacred cows.

Hans Greimel is Asia editor for Automotive News.Hans Greimel is Asia editor for Automotive News.

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