Toyota's decision to shift its North American operations to Texas by 2017 is all about improving its process. It's the kind of highly focused approach we have learned to expect from a company that has become the world's largest automaker.
By moving employees of Toyota Motor Sales U.S.A. and Toyota Financial Services from Torrance, Calif.; manufacturing and engineering employees from Erlanger, Ky.; and several employees of Toyota Motor North America from New York to a Dallas suburb, Toyota will eliminate pockets of isolated North American disciplines that report back to individual executives in Japan. That's an important step toward Toyota's stated goal of giving its North American operations more autonomy.
After examining the unintended-acceleration recall debacle, Toyota executives concluded that the automaker didn't catch problems early because the lines of communication from America to Japan and back were too long.
After that finding, a sweeping consolidation of North American operations is more logical than surprising.
It isn't easy to leave California, where Toyota launched U.S. operations in 1957. Toyota weighed a host of factors, from employee living costs and relocation to operating costs and closer proximity to Toyota assembly plants in Texas, Mississippi, Kentucky and Indiana. But Toyota rightly considered those factors secondary to fixing its internal communications process.
North America is critical to Toyota's success. The automaker sells more vehicles in the United States, Canada and Mexico than it does in Japan.
The consolidation plan gives Toyota's North American employees the tools they need to run a stand-alone operation. But after long concentrating power in Japan, parent company executives must show they have the will to loosen the reins.