One more task for Toyota's quiet giant

FULTON, Miss. — To the American auto industry, he is an unknown man at a little-known company. But Toyota Motor Corp. execs think so highly of Nate Furuta that they don't want him to retire.

Furuta, a longtime Toyota manager, has been in the vortex of the automaker's expansion here and in Europe for 20 years. He has asked for the company's blessing to retire. But instead Furuta has been given one final assignment: Help Toyota establish itself as a leading global manufacturer of vehicle interiors.

Three years ago, Toyota was alarmed by rapid changes and business troubles among U.S. interiors suppliers. The automaker, which likes to use two key suppliers simultaneously, responded by declaring itself an interiors supplier. Toyota merged three of its affiliated parts companies to serve as a counterweight to the few remaining suppliers of interior systems, including Johnson Controls Inc. and Lear Corp.

The result: Toyota Boshoku America Inc., where the 60-year-old Furuta has been posted as chairman and CEO.

Last month, Boshoku opened its U.S. headquarters in Erlanger, Ky., literally across the highway from Toyota's North American manufacturing headquarters. Purchasing department personnel can see Boshoku's flag flying through their windows.

At the same time, Boshoku will open an r&d center in the Detroit suburb of Novi, Mich., to take on more U.S. design work.

On paper, Toyota owns just 39 percent of Boshoku. In reality, Toyota controls the supplier. Boshoku's long-term mission is to operate like another affiliated Toyota supplier, Denso Corp., which is an aggressive global competitor for parts contracts.

Boshoku already supplies seats to the Chevrolet HHR, which General Motors builds in Ramos Arizpe, Mexico.

“Toyota requested that we prepare for more business in North America,” says Furuta, “but also globally.”

Boshoku is still far behind the industry's interiors giants. While Johnson Controls did $19.50 billion in global automaker sales in fiscal 2006 and Lear Corp. reached $17.84 billion in calendar 2006, Boshoku posted an estimated $9.04 billion in fiscal 2006.

But Johnson Controls and Lear each grew by less than 5 percent last year; Boshoku grew 22 percent.

In August, Furuta said Boshoku will spend $80 million on an integrated interiors plant here. That plant will open in 2010 to supply a $1.3 billion Highlander crossover plant Toyota is building in Tupelo. Boshoku is constructing a similar integrated interiors operation to supply Toyota's new RAV4 plant in Woodstock, Ontario.

“In the past, Toyota would have different supplier plants make different parts — seats, trim, headliners, door panels,” Furuta explains. “Now we expect to find better economies of scale by making them in only one factory. That means only one building, only one work force, only one logistics plan.”

The concept is hardly new. Automakers have been buying complete component systems from single supplier locations for a decade. But, ever fearful of a global misstep, Toyota has been hesitant to get on the bandwagon.

That Toyota would begin to embrace the idea by using an in-house affiliate is typically Toyota. The fact that Toyota would give Furuta the task of doing it in North America is typically Furuta.

“I don't know why they keep giving me these difficult jobs,” he says, half-jokingly.

Observes one American colleague from his Toyota days: “In Japanese, there is an expression that the tall nail gets hammered down. Nate is definitely a tall nail.”

For instance, Furuta has resisted assignments that would move him back to the home office in Japan.

“I don't want to go back to Japan,” he confides, putting his forehead into his hands. “I want to retire here in America. I want to play golf with my wife.”

When he wanted to retire from Toyota last year, Furuta had to go plead his case to his former colleague, the automaker's chairman in Tokyo, Fujio Cho.

Cho thought it was a bad idea — again.

Furuta had made the request before and been turned down. This time Cho made a counterproposal: Help Boshoku establish its North American business, then retire in five years.

Or maybe longer, Cho mused.

If Toyota is reluctant to let Furuta fade into the sunset, it is understandable. At a time when the rapidly expanding automaker is publicly bemoaning its global shortage of people, Furuta is rich in institutional knowledge.

He is the only Japanese executive inside the largely nonunion Toyota to negotiate with the UAW. Armed with a law degree from the University of Tokyo, he also weathered the regulatory storm of creating Toyota's first U.S. auto plant in 1984, New United Motor Manufacturing Inc., as a joint venture with General Motors.

In the face of hostile reactions from GM's UAW work force to what the union perceived as Japanese encroachment, the then-37-year-old Furuta concluded that the UAW simply didn't understand Toyota.

To build bridges, he spent most evenings socializing at the San Francisco area local UAW hall. He drank beer, played pool and talked Japanese management theory with the union representatives. Some of them toyed with Furuta by telling him they would put his ideas into “File 13” for consideration. He later learned that “File 13” referred to the trash can.

But in the end, he convinced the union that Toyota's methods — including using only three job classifications instead of three dozen — would succeed in a U.S. plant.

He then moved to Georgetown, Ky., to help start Toyota's first solely owned North American auto plant. At Georgetown, he worked under Cho, who was CEO of the operation.

Furuta devised the staffing plan for the venture, deciding how many skilled personnel were needed and what they needed to do.

In 1996, it was Furuta who proposed the plans to centralize Toyota's sprawling North American manufacturing operations into one headquarters in Erlanger. That proposal ignited two years of arguments within Toyota, where some managers thought the move would create a slow-moving bureaucracy, isolated from the action of the assembly plants.

Once Erlanger was created, Furuta then devised a plan now referred to in Toyota as PMR — or Plant Minimum Requirement. The document has become a handbook for launching Toyota plants around the world — and thus an impressive accomplishment for Furuta in a company obsessed with standardized, written work rules.

Earlier this decade, when Furuta began floating the idea of retirement, Toyota instead dispatched him to the automaker's European operations in Brussels. The business unit was losing money and missing its targets on quality and cost control.

“There were many problems,” Furuta says. “We had expanded rapidly there, and we didn't have adequate systems in place yet.

“I can't say how much money we were losing in Europe, but the amount was significant.”

Furuta helped centralize Toyota's independent operations around Europe, bringing down costs and helping improve retail distribution and sales support. After three years, the reorganization put Toyota Europe into the black, whereupon Toyota tried to recall Furuta to Japan.

He respectfully declined.

Instead, he returned to Toyota's Erlanger offices for two years. There he focused on creating new management training plans. Last year, Furuta persuaded Toyota to separate its U.S. training operations from its human resources department. He reasoned that the move will help speed up skill development among U.S. managers as the automaker opens plants.

After 20 years of duty in the United States, with his two grown sons living here permanently, Furuta declares himself an American. “Although I'm very sorry to say,” he adds, “I don't care for American food.”

He and his wife live near Erlanger, in northern Kentucky just south of Cincinnati, in a golf community. He confesses with some delight that she regularly bests him at the game.

He wants to travel, he adds of his retirement, and maybe do a little consulting. But mostly he will play golf, he says. But that's if Toyota ever lets him go. c