Mar. 06, 2013

TMC President Akio Toyoda's Speech for March 6 Press Conference Concerning Organizational and Executive Changes

1. Introduction

First, I would like to apologize for having invited you all on such short notice to come to this press conference despite your busy schedules.

Also, please let me take this opportunity to once again thank you for your constant support.

2. Executive Changes

Now, as in the materials that have been distributed to you, we have made certain internal decisions related to our executive lineup, and we have decided to carry out vast improvements to our organizational structure.

The new structure has been under consideration for some time, as a formula for moving forward in our effort to achieve realization of the Toyota Global Vision announced in March 2011.

Please let me start by explaining our planned executive changes.  I, Akio Toyoda, am to remain in position as president and member of the board.  Chairman of the Board Fujio Cho is to resign from that post and is to be appointed honorary chairman.  Vice Chairman of the Board Takeshi Uchiyamada is to be appointed chairman of the board.

Vice Chairman Uchiyamada, is, as all of you are aware, the father of the "Prius", the world's first mass-production hybrid vehicle, and an engineer that has opened the road to the future of automobiles through advanced hybrid technology.

As vice chairman, his responsibilities have centered on the field of technology.  As a chairman with an engineering background, he will lead overall Toyota management with the following two questions in mind: 1) "What is it that Toyota should do to contribute to global society?" and 2) "What is it that Toyota should do to create innovative technologies that can contribute to society?"

And, in line with his appointment as vice chairman of the Japan Business Federation, also known as Keidanren, his activities will span a wider field.

Chairman Cho was appointed president in 1999.  As vice chairman in 2005 and chairman since 2006, he has supported the global Toyota we know today.

In his younger days, under Taiichi Ohno, who is known as the father of the Toyota Production System, he learned the heart of monozukuri (conscientious manufacturing) and served as the president of Toyota's Kentucky plant, which was Toyota's first independent production plant in the United States.  He is very much a person who has passed on to the Toyota of today the DNA of a company steeped in the ways of monozukuri.

Since becoming chairman, he has supported my predecessor President Katsuaki Watanabe, me and the management in every possible way.  Since I became president, our company has faced many difficulties, including our fall into the red following the global financial crisis, quality issues and the Great East Japan Earthquake.  In every instance, he has provided valuable advice, based on his vast experience and deep passion for Toyota.

Chairman Cho, always thinking about what he can do for the next generation, is a person who has dedicated himself to developing people.  From the perspective of the current working generation, Chairman Cho has been a big presence—a father-figure who has watched unconditionally over the 320,000 people working for Toyota around the world.  As honorary chairman, he will continue to be a pillar of emotional fortitude that supports the management of Toyota.

Next, I would like to talk about our executive vice president board members.

Satoshi Ozawa, Nobuyori Kodaira, Mitsuhisa Kato and Masamoto Maekawa are to continue in their posts, while Yasumori Ihara and Seiichi Sudo are to be newly appointed.  Yukitoshi Funo, Atsushi Niimi and Shinichi Sasaki are to resign from their posts.

Also, as a first for Toyota Motor Corporation, to reflect external opinions in management decision-making, three people—Ikuo Uno, executive advisor of Nippon Life Insurance Company; Haruhiko Kato, president of Japan Securities Depository Center; and Mark Hogan, independent consultant and former group vice president of General Motors Corporation—are to be appointed outside board members.

For other personnel changes, please refer to the material that has been distributed.  The official selection of board members is pending approval of the general meeting of shareholders to be held in June, and the assignment of executive responsibilities for board members and the selection of representative directors is to be carried out at a board of directors meeting following the shareholders meeting.

Now, Vice Chairman Uchiyamada and Chairman Cho would like to address the audience.

(Vice Chairman Uchiyamada's speech to focus on technological innovation, human resources development and the bonds among members of Global Toyota.)

(Chairman Cho's speech in support for the new management team.)

At the center of Toyota management is monozukuri and the cars that are our products.  Although I am not an engineer, I am confident that, at least when it comes to passion for monozukuri and cars, mine is second to none.

Chairman Cho and Vice Chairman Uchiyamada will continue to work with the 320,000 Toyota people around the world, as we all use our minds and strength to continue our efforts to make ever-better cars and to achieve sustainable growth—as an entity that can contribute to global society.  For this, I humbly request your continued support.

3. Organizational Changes

Next, I would like to explain our planned organizational changes.  These changes incorporate two main features.

The first is emphasis on clarifying responsibility for operations and earnings and to accelerate decision-making.  Specifically, we will change our organizational structure by dividing our vehicle operations into four businesses: Lexus International, with responsibility for our Lexus operations; Toyota No. 1, with responsibility for North America, Europe and Japan; Toyota No. 2, with responsibility for China, Asia and Middle East, East Asia and Oceania; Africa; Latin America and the Caribbean; and the Unit Center for integrating our engine, transmission and other operations for what we at Toyota call "units".  An executive vice president responsible for operations and earnings will be assigned to each of these.

Of course, as president, management responsibility ultimately lies with me.  However, as for daily operations, we plan to implement a more agile and autonomous "business unit" type of structure that will enable the executive vice presidents in charge to accelerate decision-making through genchi-genbutsu (or the practice of "going and seeing"), as they are closer to the genba (where the action is happening).

With awareness that innovation is a must to establish the image of Lexus as a global premium brand that hails from Japan, we will put in place a structure in which I will be directly responsible.

Naturally, the business models for the Lexus brand and Toyota brand are different.  Likewise, even for the Toyota brand itself, the business models for mature markets and growing markets are significantly different.

In mature markets such as the ones for which Toyota No. 1 will be responsible, the important factor will be to what degree we can entice owners to replace their cars.  Meanwhile in the growing markets that will be the responsibility of Toyota No. 2, the key factors will be promptly introducing products that match the needs of each market and winning new customers as such markets rapidly expand.

The Unit Center will handle technical development for unit-related components, development of production engineering and also actual production.  It will strive to achieve the development and prompt rollout of the world's most-competitive engines, transmissions and other unit components.

We believe that each of these four business units, applying different business models to steadily grow, will lead to growth for the whole of Toyota.

The second main feature of our organizational changes is the planned establishment of a TNGA Planning Division not positioned within a group, which will allow us to put in place a structure for speedily advancing the Toyota New Global Architecture, or TNGA.  TNGA is the way we will fundamentally reconsider work procedures throughout all of Toyota.  While we project that a new period of even greater sales expansion is on its way, even when such a time comes, we will have in place a company-wide structure that will enable us to continue making cars of excellent quality that are profitable and attractive.

4. Thoughts on Personnel and Organization (Toyota's Future Direction)

Lastly, please let me share with you my thoughts on the planned personnel and organizational changes being announced today.

Since I was appointed president in June of 2009, amid the numerous difficulties that faced us, the company Toyota Motor Corporation—and I—have learned many lessons.  In regard to our fall into the red during the global financial crisis, we acutely realized that, in the automobile industry and its far-reaching supporting and peripheral industries, even if rapid growth is achieved, rapid descent can inconvenience many people.  Sustainable growth is what is most important.  We also learned that increased sales do not equal real growth, as our expansion in vehicle sales also brought expansion in our fixed costs.

The quality issues were cause for all Toyota-related people worldwide to once again sincerely reflect on the importance of "Customer First" and "Quality First", with this setting deeply in our minds.

The Great East Japan Earthquake and the floods in Thailand, among natural disasters taking place in various regions around the world, reminded us of the enormous power of nature.  This led me to think about what Toyota could do for people in the countries that we call home.

As we endeavored to overcome these difficulties, I thought that it was necessary for us to return to Toyota's roots.

Just what is at the root of Toyota?

None other than car-making through "Customer First", "Quality First", and genchi-genbutsu, with all people involved holding the common principle of contributing to society through the manufacture of automobiles.

Throughout Toyota's 75-year history, the company has faced many great crises.  But in the midst of these crises, each individual employee in the organization has, each within their own capacity, contributed their knowledge and experience to find a solution.  In other words, it has been the ability of our employees to take autonomous action that has allowed Toyota to overcome the repeated crises that have come our way.

Today, consolidated Toyota globally has 320,000 employees.  The larger Toyota becomes, the more difficult it becomes to maintain a sentiment in which each employee feels that he or she plays a direct role in supporting Toyota.

The objective of the organizational changes being announced today, as we enter a new phase of growth in vehicles sales, is to build an organization in which its members can take ownership of their work.

If every Toyota person feels grateful to everyone who has supported us and works with an individual desire to make ever-better cars and to contribute to regional development, then the way to sustainable growth for Toyota will open.

Although issues such as executive and organizational changes are primarily internal matters, we feel that the changes being announced today represent an important reform toward the achievement of sustainable growth for Toyota and realization of the Toyota Global Vision, and so we decided to create this opportunity to explain them to you directly.

Thank you.