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

Content 1. The Toyota group 2. Why France? Why Valenciennes? 3. The industrial process 4. Human Resources Management

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

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

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

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

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

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)

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

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

The industrial process A. 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

The industrial process B. 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 ( vehicles a year)  …through extension of the present assembly line

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

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»

…and adaptation to the local context Corporate culture adaptation: 3 new pillars 1. Diversity 2. Developmentability 3. Loyalty Toyota’s experience of foreign countries: a deep organization.

A performing human resource employees (Toyota = 3rd employer in the region) - average age : 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

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

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

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.

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  « Toyota cherche à exporter son modèle » in Les Echos, 22 avril 2003, p. 37