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Toyota’s long, bumpy road to success

TOYOTA CITY, Japan - Toyota Motor Corp., hit by massive recalls worldwide, started as an offshoot of a textile loom company to become one of Japan’s most iconic companies and the world’s number one automaker.

Along the way, the company redefined how cars are made with its “lean production” and “just-in-time” models that have been studied in business schools and adopted by manufacturing industries worldwide.

More recently, as global concern has grown about man-made climate change, Toyota became a pioneer in hybrid petrol-electric car technology and in 1997 launched the Prius, the world’s first mass-market ‘green car.’

Japan’s biggest company by revenue, Toyota overtook General Motors in 2008 as the world’s top automaker while the Detroit giant, now part-owned by the US government, went through a painful restructuring drive.

Today Toyota employs more than 320,000 people worldwide and makes over seven million cars a year in more than 50 plants in 27 countries. The city in central Japan where it was founded has renamed itself from Koromo to Toyota city.

The company started in 1937 as a division of Toyoda Spinning and Weaving Co. at a time when Ford and General Motors dominated car production in the country, making several thousand vehicles a year each.

The founder’s son, engineer Kiichiro Toyoda, had been researching small gasoline engines for years and toured the United States and Europe.

The company changed its name from Toyoda to Toyota because, when written in Japanese katakana characters, it required eight instead of 10 pen strokes — making for a simpler and more auspicious logo, since eight is seen as a lucky number in Japan.

The family company initially reverse-engineered cars from foreign parts and engineers had built a prototype passenger vehicle in 1935 before the company was formally founded, but then focused heavily on truck production for the Japanese military in World War II.

On August 14, 1945, the day before Japan’s surrender, the Toyota plant was bombed, but the company soon ramped up production again, initially on the orders of American occupation forces.

Twenty years after it was founded, in 1957, Toyota shipped the Crown passenger car as its first export to the United States, before opening its first overseas plant in Brazil the following year.

Early versions of Toyota cars were often of poor quality and fared badly on American highways, where big was beautiful and gas-guzzlers ruled — but as their quality improved, they gained a bigger foothold.

By 1969, Toyota’s cumulative exports had hit the one million mark.

In the 1970s, during the global oil crisis, overseas Japanese car sales surged and increasingly threatened Detroit, paving the way for the trade wars between the United States and Japan in the 1980s.

But western competitors were also intrigued by the Toyota Production System (TPS), which has since become a global model of efficient management also known as lean or just-in-time manufacturing.

The system demands that workers be multi-skilled and active team members who constantly look for ways to streamline the production system in what is called the kaizen (improvement) system.

As the trade war raged with the United States due to fast growing Japanese exports, Toyota began joint production with General Motors in 1984 and started its own production plant in Kentucky in 1988.

Although the company has long since become a global behemoth, its top management was kept within the Toyoda family until 1995, when Hiroshi Okuda took over as its eighth president.

Last year Akio Toyoda, the 53-year-old grandson of the Toyota founder, was named as president to steer the Japanese automaker through the global economic downturn, bringing the corporate titan back under family control.