Behind Toyotas North American Reorganization: North American CEO Jim Lentz called this the biggest thing that has happened in NA since he joined Toyota 30 years ago. It has been interpreted in many different ways by the oh so superficial media. I personally have not investigated it with Toyota, but have some thoughts based on what I know about the company and its decision makers. 1. Toyotas public statements unusually reflect reality--whenever I have deeply investigated an issue I find that they believe what they are saying publicly. This includes in this case that Jim Lentz primary job as CEO was to better integrate sales, R&D, manufacturing, logistics, and purchasing. These functions evolved separately in NA and the focus of Global Vision 2000 was a self-reliant Toyota of NA which could not happen until these functions were well integrated. They tried various ways to strengthen communication, like conference calls, but concluded the best way was through co-location demonstrating Toyotas belief in the value of face-to-face communication. It also includes Lentz statement that Akio Toyoda instructed him to think 50 years out, not get hung up on the few years of disruption. The result is moving TEMA (engineering and manufacturing) and sales to Plano, Texas. It includes moving purchasing to Ann Arbor where it is critical to integrate the supply base with product development. And to move production engineering to Toyotas largest plant which is in Kentucky. This all makes sense short of creating one Toyota City as in Japan which is not feasible. 2. I believe Jim Lentz when he said they did not want to pick either the current TEMA headquarters or TMS headquarters in California as it would be unfair to the other group. 3. I further believe that this was planned over a long period of time considering it from every angle in a planning process unimaginable within most companies. 4. And finally I believe that respect for people is a major priority and Toyota will do all it can to make the inevitable disruptions in peoples lives as painless as possible, but it will be painful to some. Now of course once they decided to not pick an existing headquarters they had the rest of the country. In these cases a team does a very thorough evaluation of many factors assigning points and I am confident that factors like tax rate, incentives, quality of life in area, cost of living, wage levels, and access to international airport. They have to try to forecast long-term. They were in California for 30 years. Some wonder why Plano, but it is a suburb of Dallas so the real choice is the Great Dallas area. Texas is a very business friendly state.
Posted on: Wed, 30 Apr 2014 17:27:03 +0000