The Canadian who crafted a new Toyota

Last summer, a French Canadian in Ontario was surveying Toyota employees in North America about how to avoid a repeat of the company's recall crisis and prepare for future downturns.

That man, Real "Ray" Tanguay, the soft-spoken, silver-haired chairman of Toyota's Canadian operations, didn't like what they were telling him. Toyota employees, he discovered, felt cut off from the giant Japanese company that had only recently become the world's largest automaker.

Tanguay wondered whether that might have something to do with Toyota's recent spate of problems. And, indeed, the observations led him to draft the giant global plan for Toyota's future that President Akio Toyoda introduced last week.

"People had a hard time understanding how to connect with the company," said Tanguay, who speaks English with a slight French Canadian lilt.

So Tanguay went to Toyoda with a plan for how to fix it. His basic idea: Toyota employees needed a sense of mission and empowerment. And key elements would be more local decision-making and direct access to the top brass in Japan.

Toyoda was impressed enough that in September he lifted the 20-year Toyota veteran from relative obscurity and asked him to design the Toyota Global Vision business plan, which Toyoda unveiled Wednesday, March 9, in Tokyo.

The plan is mostly a collection of big theme goals and mission statements. But an important ingredient is moving more authority away from headquarters and closer to the market.

Tanguay concedes that assigning such a critical strategy to a foreign executive was a risky move for any Japanese company, let alone insular Toyota.

"If I were the president, I would feel that would be a risk to give the Global Vision leadership to somebody outside Japan," said Tanguay, 61, who grew up in remote Mattice in the far north of Ontario.

"I was selected because I made the biggest noise" about Toyota losing its way, he said.

The company's troubles were numerous and deep. It was still trying to recover from its first operating loss in seven decades when the global recall crisis struck.

Toyota had recalled millions of vehicles since fall of 2009 to address unintended acceleration and other problems. And its sales and reputation were getting hammered.

When Tanguay's final proposals for Global Vision reached Toyoda's desk in December, the president was so pleased with the execution that he promoted the Canadian. On April 1, Tanguay will become one of only three senior managing officers worldwide, making him Toyota Motor Corp.'s highest ranking non-Japanese. The position of senior managing officer itself is a newly created job just one rung below the board of directors.

Tanguay's rising star -- he's now one of Toyota's top 25 or so executives -- reflects efforts by Toyoda to internationalize the company and inject fresh, outside perspective into its upper echelons.

The company has had only one higher ranking outsider -- former U.S. sales boss Jim Press, the first non-Japanese board member. Press left the company in 2007, when the board had 30 members. The March 9 overhaul reduces it to 11, from a current count of 27.

Tanguay's idea for Global Vision grew out of the risk-assessment study he oversaw last summer. He said global employees didn't feel connected with senior decision-makers in Japan.

"They also didn't have a clear understanding of what the company represented," he said. "When we asked a question about 'what is the company's vision?' there was not a clear answer."

Toyota needed a more global philosophy, Tanguay argued to Akio Toyoda.

Tanguay has been a stickler for doing things in Toyota's traditional ways of cautious steps and heavy preparation. Urging the company to streamline and speed its regional decision-making is consistent with Tanguay's risk-averse approach to management.

To launch Toyota's RAV4 plant in Woodstock, Ontario, three years ago, Tanguay resisted starting with an inexperienced work force. Instead, he took a large number of trained team members from the Cambridge car plant and invited them to work at Woodstock, 15 miles away.

Before beginning to build Toyota's first Lexus model outside Japan in 2003, Tanguay inspected every Lexus production line in Japan, examined the tools and combed through training procedures.

For the launch of the Lexus RX 300 in Cambridge, Tanguay redesigned the work environment with elegant hardwood floors and built a luxurious entranceway for assembly workers -- all intended to drive home the message that they were no longer just building plebeian Toyota Corollas.

To improve the plant's quality, he issued line managers with then-cutting edge BlackBerry PDAs. Anyone who had a quality question about a Lexus vehicle or part -- in the plant, at a Lexus dealership or even at the port in Long Beach, Calif. -- was instructed to e-mail Tanguay immediately with a photograph of whatever was in question.

Four years ago -- he was by then the senior-ranking North American in Toyota's manufacturing operations -- Tanguay's conservatism applied the brakes to a site-search committee's proposal to build an assembly plant in Tupelo, Miss. He had misgivings about the location, thinking too much employee training and skill development would be required.

But adhering to Toyota's practice of genchi genbutsu -- "go and see" -- Tanguay boarded a plane and paid Tupelo a surprise visit. He drove around, calling on local employers to hear their views of the workers firsthand. He stood on the shop floors of nearby factories and watched employees work, interviewed them about their jobs and their work ethic.

Toyota decided to go ahead with the Tupelo plant. Plans were mothballed during the recession, but the $1.3 billion assembly plant is back on track, and Toyota will begin building Corollas there this year.

Before joining Toyota in 1991, Tanguay was a vice president at Philips Electronics. In his early years with Toyota, he cut his teeth on information technology, environmental matters and administrative duties before joining manufacturing.

When asked last year to implement his vision, Tanguay and his team systematically interviewed some 2,300 Toyota employees worldwide over several months to arrive at the priorities and corporate direction outlined in the document. Toyoda signed off on the final message on Dec. 14.

Tanguay is confident Global Vision will make Toyota stronger. If its principles had been adopted earlier, he said, it could have mitigated some of last year's quality problems.

Many of the problems had been snowballing for years in North America and were never heard at headquarters in Toyota City.

"The local decision-making and having direct access to executives definitely would have been a benefit," Tanguay said of communicating the problems to headquarters. "There were so many filters to go through, by the time it got to the president, it was way too late."