Toyota's Hopes Rest on Founder's Grandson

The statues of Toyota’s founder and the mayor who brought the automaker to this rural area stand side by side in front of city hall — a clear symbol of this city’s intimate and longtime ties with Japan’s biggest manufacturer.

And so it’s little wonder the residents here are hopeful that Akio Toyoda, the 53-year-old grandson of the company founder, will turn around the automaker and surrounding community. On Tuesday, shareholders are expected to approve his nomination as the new president.

For the first time in 14 years, Toyota Motor Corp. is turning to its founding family roots for leadership as it tackles the worst crisis in its history and desperately needs to stop losing money.

Kohei Suzuki, the mayor of this city of 420,000, believes the mystique of a Toyoda presidency is exactly what this community needs to come together in these hard times.

“I know Toyota will protect our jobs. It is part of the hereditary makeup at the company,” Suzuki said Monday in an interview with The Associated Press at city hall.

“Mr. Toyoda is a frank person, and he is very easy to talk to. He puts the workplace above all else. He listens to his workers,” said Suzuki, who often runs into Toyoda family members at events and uses a Lexus, Toyota’s luxury model, as his official car.

Toyota has cut more than 6,000 contract workers in the last year, but hasn’t resorted to laying off any of its 71,000 regular, salaried workers, in keeping with Japan’s traditional lifetime employment system.

Toyoda is promising a back-to-basics approach at Toyota, valuing rank-and-file and consumer needs. He faces enormous challenges in steering a turnaround after the company lost 437 billion yen, or about $4.6 billion, in the fiscal year through March, its worst loss since it was founded in 1937 by Kiichiro Toyoda, Akio’s grandfather. The company predicts even more red ink this year.

“He represents history,” parking lot attendant Yuji Ito, 24, said of Toyoda’s presidency. “I want him to work hard and do well.”

The founder’s family name is spelled with a “d,” but the company name was changed to Toyota because that was considered a luckier name.

Toyota city’s fate is deeply intwined with the company whose name it shares. Thousands of its residents work in Toyota factories and suppliers. The painful slump has trickled down to parts-makers as well as to hotels, service jobs and shopping districts.

The city’s corporate tax income is expected to plunge 96 percent to 1.6 billion yen ($16.8 million) this fiscal year through March 2010 from 44.2 billion yen the previous year — largely because of Toyota’s woes. That would reduce the city’s tax income by 34 percent, and the city has cut costs in construction, education and other areas.

Over the years, Japan’s “motor city,” which has sister ties with its American counterpart Detroit, has tried to branch out into other fields, such as electronics and biotechnology, but failed miserably.

Its unemployment office is packed these days with job-hunters in unprecedented numbers. No longer is this the place where people flock from around the nation — and even from abroad, like Brazil — to find good work.

The only bright spot in Toyota’s dismal performance lately is the popularity of the new third-generation Prius hybrid, encouraged by government incentives on green vehicles. Even then, analysts say its booming sales are biting into other model sales.

Juichi Nakamura, mayor during the 1930s of the city that later changed its name to Toyota, is still hailed as a visionary for having wooed Toyota here after the local silk business started to lag.

Nakamura — whose statue stands at city hall — worked hard with Toyoda to get the automaker started, back when Japan’s auto industry was still dwarfed by America’s. Last year, Toyota surpassed General Motors Corp. to become the world’s biggest automaker in annual vehicle sales.

Hisao Inoue, author of “Toyota Shock,” a book that chronicles the automaker’s recent troubles, says Toyota sorely needs what he called “a philosophy” or “a spirituality” that a founding family member like Akio Toyoda might offer.

“He has charisma like the imperial family. The same way Japanese people look with respect to the imperial family, Toyota workers respect Mr. Toyoda,” he said.

Toyoda holds a master’s degree in business administration from Babson College in Babson Park, Massachusetts. He has overseen Toyota’s China operations, Japan sales and its Internet business.

Previously, he served as vice president at New United Motor Manufacturing Inc., a Fremont, California-based joint venture between Toyota and GM, giving him key experience in the U.S.

Known as a car-lover, he even enters auto races, although company officials acknowledge their nerves are in tatters worrying for his safety.

Inoue said Toyoda will be able to make long-term management strategies that center around developing good cars, not just making quick profits.

Others are less optimistic.

Masaaki Sato, who has written several books on Toyota, criticizes the move to name a family member as “an anachronism” when the family owns barely 2 percent of the company stock, and believes other executives should have taken the job.

“Name value has nothing to do with how Toyota has grown,” he said. “Why do we have to go back to family succession in this most difficult of times?”

Sato is worried that Toyoda lacks experience, and wondered what his recovery strategy is going to be. His comments on pleasing customers and making good products were too predictable and general, he said.

“He could be a loser card, not the ace card he is trumped up to be,” Sato said.

Still, for the ordinary people of this city, the mood is that of hope.

“You have to give it to Toyota. Toyota has grown so much,” says Kayoko Kobayakawa, a 60-year-old gallery worker. “Times are bad but we hope for a recovery.”

6/22/2009 7:08 AM YURI KAGEYAMA AP Business Writer TOYOTA, Japan