Under intense pressure to reduce costs, Toyota Motor Company issued a stern warning to employees of its Kentucky assembly plant: you cost us more than your sister Camry plant in Japan. The move–called “routine” by the company–has ruffled feathers amongst employees.
The message was delivered via video message by Wil James, Toyota’s president of the Kentucky assembly plant. In the video, James delivered a swift punch to employees in a 2.5 minute segment. The video was obtained by Bloomberg.
“If you can make more profit from a Tsutsumi Camry than a Kentucky-built one, which plant would you pick to build it?” James said in the video.
James’ message likely stems from the very top of the Toyota hierarchy. Company President Akio Toyoda has assembled a cost-cutting task force internally. This team has the mission of identifying cost-cutting measures across the company with the intention of cutting current costs for every capital request for increased research and development spending. Toyota has been increasing R&D spending to develop electrification and artificial intelligence.
Part of the company’s cost savings is coming from the implementation of its Toyota New Global Architecture (TNGA), which is a flexible vehicle architecture and production system underpinning nearly every new Toyota product. Toyota’s Tsutsumi plant that builds the Camry in Japan was the first in the Toyota system to get TNGA. Subsequently, Toyota announced a $1.33 billion investment into the Kentucky plant in April to begin implementing TNGA there. The Japanese plant’s leg-up on implementation is likely yielding some of its cost savings versus stateside production.
While implementing TNGA in Kentucky will likely help close the cost gap between the U.S. and Japanese plants, James’ video suggests the company will need to do more. What measures the company has in mind are unclear.
A Toyota spokesperson did say the company plans to be remain at its Georgetown, Kentucky plant for decades to come.