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Toyota’s Way to an Automobile Transnational Corporation: Analytical Essay
Introduction
In today’s world, no matter where you are, you could see the cars which have the emblem of “TOYOTA” on their bodies. In 2018, Toyota has 51 manufacturing bases in 28 countries or regions and it sells automobiles in more than 170 countries (Figure 1). According to “Best Global Brands 2019 Rankings” conducted by Interbrand (2019), Toyota ranked the 7th in the world. Given these situations, to see the significance of transnational corporations in globalization, this paper tries to focus on Toyota (in this paper, it means Toyota Motor Corporation) and examine the process in which Toyota became such a global-scale company. Besides, the paper sees how Toyota has expanded its business into foreign markets under the trade conflicts between Japan and the U.S. In addition, in understanding more about Toyota as a contemporary transnational corporation, the paper tries to cast an eye on its global images and labor issues. To sum up, through the whole paper, I will argue how Toyota has grown into such a huge global company by seeing its historical development, and show some distances between its global discourses and practices, specifically focusing on its labor issues.
The process in which Toyota became “global”
This section sees mainly when and where Toyota broadened its business overseas, and then, focusing on the United States, how Toyota succeeded in becoming a global automobile company under the trade conflict. Toyota’s history as a global company began with Japanese postwar economic growth. After the WW2, as the domestic economy was recovered, Toyota had rapidly grown into the top automobile company within Japan. In fact, in 1955, the amount of selling cars by Toyota was 7,055, which was about 13 times larger than the one in 1950(Toyota, 2012). As the domestic market was highly matured, Toyota began to look at foreign markets by the 1950s. Although its overseas expansion started from China in accordance with national policy, after The Foreign Exchange and Foreign Trade Act was established in Japan to enhance free trade doctrine in 1949, it began to exports to wider areas (Toyota, 2012). In 1955, Toyota started exporting “Land Cruisers” to Brazil or Columbia, where four-wheel-drive cars was demanded for transportation in oil mines or large firms, and subsequently, it began to export to Myanmar, Australia and Thailand (Toyota, 2012). However, around 1960s, third world countries tried to implement import substitutions and produce automobiles domestically rather than importing. Considering those policies and its own sourcing efficiency, Toyota started establishing its own plants overseas. By 1970, Toyota made 17 plants mainly among South East Asian and South American countries, and the amount of offshore production was 75,575 cars (Toyota, 2012). Additionally, at that time, Toyota’s export was conducted through “knock-down kit,” which is defined as “a production method whereby all of the parts of an automobile are delivered as a set and assembled locally” (Toyota, 2012). This system made it possible for foreign governments to admit Toyota’s export to support domestic production. Like these, after domestic market was matured in 1950s, Toyota aimed to expand its business mainly around South America or Asia, and at the same time, tried to do some attempts to overcome barriers of exporting through overseas production or “knock-down kit.”
In the historical analysis of Toyota, it is also important to see Toyota’s expansion in the United States under the trade conflict. The first Toyota export to the United States was in 1957 but at that time, American automobile industry was in its peak prosperity. In 1955, the big three American automakers, GM, Ford and Chrysler, had 95 percent of the domestic market share and 60 percent of world production (Bernstein, 1997). In such situations, Toyota’s effort to export its cars to the United States could be described as “laughable” (Bernstein, 1997). However, in 1980, the total demand of automobiles in the United States decreased by 16 percent but by contrast, the U.S. market share of Japanese automobiles increased 21.3 percent (Bernstein, 1997). The reasons of the dramatic growth of Japanese automobile industry are discussed in various ways, but the one of them could be Japanese cars’ high performance. Although after 1960s, American automakers focused on the design or comfortableness of cars, Japanese companies had to improve its product quality to compete in its developing domestic market (Bernstein, 1997). However, eventually, these successes led to the huge backlash from the United States. For example, United Auto Workers (UAW), one of the largest labor unions in the United States, argued that Japan was “exporting unemployment” (Toyota, 2012). Eventually, from 1981, Japanese government agreed its voluntary export restraint to the United States, which forced Toyota to make the decision of the local production within the United States (Toyota, 2012). As mentioned above, before that time, Toyota had already started offshore manufacturing but most of its plants were in relatively developing countries which have lower labor cost or easy access to raw materials. However, to avoid the trade conflict with the United States, Toyota determined to do its production in one of the biggest developed countries. In 2011, the amount of completed automobile production in North America was the largest and accounted for 31 percent of all offshore production in Toyota (Figure 2). Therefore, it could be said that the trade disputes between Japan and the United States allowed the growing of Toyota’s offshore manufacturing in the United States, a huge developed country.
Toyota’s global image and its labor issues
To see the discourses and real practices in globalization, this section examines Toyota’s global image and its labor issues, that lied behind the image. When you see the website of Toyota, you could find “Toyota Global Vision.” There are numerous mentions about Toyota’s philosophy in global business but in whole, it is emphasized two notions, “future” and “high quality”. The vision says that “Toyota will lead the future mobility society” and aim “sustainable growth” (Toyota, 2019). On the header picture of Toyota’s Facebook account page, there are two cutting-edge automobiles and a robot with the words, “start your impossible” (Figure 3). When you look at the annual report for shareholders, recently, Toyota’s net revenue has remained on the same level, which might make Toyota try to show the possibility of its future growth (Toyota, 2019). Besides, in “Toyota Global Vision”, Toyota puts emphasis on its “commitment to quality” or its spirit of improvement (kaizen in Japanese) (Toyota, 2019). In the press conference about the recall of Toyota’s automobiles in 2010, Akio Toyoda, the president of the company, commented “the quality is the lifeblood” of Toyota (J-CAST, Inc, 2019). In addition to those, as one of the most notable global images, Toyota has historically developed its manufacturing management, which is called Toyota Production System (TPS). For instance, Toyota has employed “just in time” production, which is defined as the way to produce just the only demanded amount only when it is needed (Cusumano, 1985). “Lean manufacturing” is also one of the examples and it aims to save mainly seven wastes; overproduction, inventory, motion, defectiveness, transportation, over-processing and waiting (Chiarini, 2014). Through those three distinctive images: future growth, high quality of products, and its original production system, Toyota is trying to create positive image in the world.
However, when it comes to its labor circumstances, Toyota has several issues. For example, there is an argument that Toyota’s production system to eliminate waste as much as possible led to more major accidents than in other Japanese automobile companies including suicides (Akamatsu, 1982). Try to lower the price of products, Toyota has a huge amount of irregular employment from South East Asia, but according to the National Labor Committee (NLC), they are confiscated their passports and forced to work for 16 hours a day and seven days a week, but they are paid less than half of the legal minimum wage (Abowd, 2008). There is also a criticism to point out the fewer female employees in Toyota because of their childbirth leave (Besser, 1996). Furthermore, in Japan, the death of one of the workers in Toyota, Kenichi Uchino, got a huge attention as karoshi, the death from overworking. According to his wife’s calculation, his working hour was more than 144 hours per month but the company reported it as about 45 hours (Toyokeizai, 2008). As these examples shows, Toyota’s attempt to maintain high quality of product leads to some severe circumstances for labor forces.
Conclusion
From 1960s, to gain a new market, Toyota started to expand its export to South American and Asian countries, and at the same time, Toyota tried to do offshore manufacturing to avoid import substitution. In addition, to overcome the trade conflict, on a large scale, Toyota also started doing offshore production in the United States. Regarding Toyota’s global image, there are three characteristics, “future” growth, “high quality” of products, and Toyota Production System. However, by trying to sustain its high quality, Toyota has some severe circumstances for workers, which could be described as the contrast between discourses and realities of transnational corporations. Given these historical processes and contemporary challenges, it is necessary to keep paying attention to the “future” of Toyota in the changing automobile industry.
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