Best in France project

1. Best in France project Julien DALCORSO Aude DEBARD Jean-Christophe LEMOINE Radim SEVCIK Toyota Motor Manufacturing France Case study

2. Content • The Toyota group • Why France? Why Valenciennes? • The industrial process • Human Resources Management

3. The Toyota group • Toyota Motor Corporation founded in 1937 • Manufacturing plants in 25 countries • Present in 160 countries

4. The Toyota group • Employees: 264,000 people worldwide • Net revenues (2002): $107.4 billion (+9%) • Net profit (2002): $4.2 billion (-15.7%) • 3rd largest car manufacturer in the world (5.54 million vehicles in 2002)

5. Toyota France • Setting up in France in 1997 • Toyota’s objectives: Become a WORLDWIDE leader • Production of Yaris (180 000 vehicles/year) • Two independent structures: • Toyota France: distribution branch • Toyota Motor Manufacturing France (Valenciennes): production branch

6. Why France? • Need to enter the EURO Zone • to avoid currency exchange rate fluctuations • 3 possibilities • Germany • Largest European market • Production costs too high • Spain • geographically too distant from its market and from the HQ • France • Second European market • competition between 3 regions, notably Alsace, Lorraine and Valenciennes

7. Why Valenciennes? • Within a radius of 150km • Population: 250 M • Paris, Cologne, Brussels (Toyota Europe HQ) • 1/3 of European GDP • Presence of OEMs and car manufacturers • SAE Detroit, Française de Mécanique • PSA-Fiat, Renault, VW, Ford

8. Why Valenciennes? • Assets • Flat industrial land available (0% slope) • Never been used before for industries • Well served by public transport • Very low price of land • Proximity to Rotterdam harbour • Available workforce (20% unemployment in 1996) • PSA territory (25% of the local employment)

9. French support to Toyota • Recruitment process: helpful collaboration of ANPE • screening of 50 000 possible employees • Tax exemptions (local and workforce) • Government incentives: < 1 % of the total investment (4 bn FF)

10. Some handicaps • Language barrier • use of interpreters • orders in English • Difference in culture • rigour • details • TV and entertainment • Long French procedures • problems dealing with the French “Administration” • 14 months for delivery of construction permit

11. The industrial process • The supply chain Toyota’s activity in Valenciennes: • mainly assembling • few internal production Adaptation of the supply chain logistics : • from Rotterdam (by barge and trucks) • from local suppliers (Valenciennes : an automotive cluster) • from Japanese suppliers settled in Valenciennes A good mix of local and international suppliers

12. The industrial process • The assembly line Process in line with Toyota’s global procedures: • 2 seven-hour production phases a day • flexible timetables • use of Toyota’s standard productivity indicators Adaptation of the assembly line to markets trends : • possible doubling of output (300 000 vehicles a year) • …through extension of the present assembly line

13. The result The world’s most advanced Toyota plant • Quickest production takeoff ever seen • A model in terms of technology and production timing • Productivity superior to Toyota’s UK plant • Integration of group’s capitalized experience

14. A successful mix of imported methods… • Just-in-time management: • Minimum stocks • Daily catch up of production • « Jidoka »: • Humanize automatization • Encourage initiative • Use of « andon»

15. …and adaptation to the local context • Corporate culture adaptation:3 new pillars • Diversity • Developmentability • Loyalty • Toyota’s experience of foreign countries: a deep organization.

16. A performing human resource • 2 600 employees (Toyota = 3rd employer in the region)- average age : 28- 2 200 CDI- many temporary employees recruited (until 600) • The match of Toyota’s need and the French labour market: looking for potentials • Aptitude tests • Capacity to follow guidelines and instructions

17. A mutual learning • All the key functions are coupled with a Japanese counterpart • 27 permanent Japanese expatriates • Number twice inferior as usual • 3-year rotation • In charge of varied functions • Reduced hierarchical organisation

18. An increasing loyalty to Toyota • At the beginning, strong turnover • Loyalty’s instruments that proved to be successful: • Package: • salary above the average ( net salary : 945 euros vs 918 euros) • incentives: 157 euros/month • saving plan (PEE) • perks (housing grants, cheap social insurance) • Training: • 1.48 million euros in 2002 = 5 to 7 % of the workforce • investment shared both by the employees and the employer • support of a medical team in to order to help the employees find the best gestures

19. The 35-hour work week • Adoption of the 35-hour work week during the settlement negotiations • Toyota’s willingness to obey the new law • Overtime needed when production volume of the day not met => resentment of some employees • Misunderstanding of the law among the youngest employees: 35 hours of presence vs effective work.

20. Sources • Interviews • M. Jean-Louis Roy, CCI Valenciennes • M. Nicolas Fayol, Responsable de la Communication de Toyota Motor Manufacturing France • M. Hironaka Chiba, Executive Coordinator de Toyota France • Press articles • «Toyota chouchoute ses jeunes salariés» in Entreprises & Carrières, n° 668/669, 6-19 mai 2003, p. 20-22 • « Toyota cherche à exporter son modèle » in Les Echos, 22 avril 2003, p. 37