1.19.2009

Can JIT Slow Job Loss in a Recession?

In a world where bigger is better, the good times are good. When it gets rough though, look out! When the Big Three are closing entire plants for at least one month, we have to ask why not part of their plants, or, why not spread it out over time? I have to wonder if a big factor here is that concept isn't in their lexicon, let along their current capability. But all car makers have been hit by the same bearish economy - so, is the lack of JIT/mixed model and level loading philosophies in the Big Three a reason for “bigger” problems, such as entire plant closures? One has to wonder especially in the light of this news release:

Toyota Tells How and Where it Will Cut production

"This is a tough environment, and it may continue for a while. We are making responsible business decisions now in order to sustain our business over the long term," said Jim Wiseman, vice president of external affairs for Toyota Motor Engineering & Manufacturing North America (TEMA). "In addition to slowing production we are redoubling efforts to cut costs at each of our facilities. Further actions and sacrifices may be necessary, but we will continue to do everything possible to assure the viability of our plants and protect the long term employment security of our team members."

Following this statement, we see in the article that the days to shutdown in each month from January through April are spread across many production lines and many different plants. It seems like Toyota is sticking to the philosophy of JIT in the recession and not abandoning it. A possible big benefit to JIT thinking here is that people are not without a job for at least a month. Thoughts on this? Does anyone know what the Big Three are doing aside from some of the plant closures we have seen in December and January? Is there a difference between the problems the Big Three face and what the Other Three (Toyota, Honda, Nissan) face?

I have to admit, there is a foreboding tone in the statement, "Further actions and sacrifices may be necessary," but my understanding is that Toyota will do everything it can to avoid layoffs, per its 1950-51 pledge. We will see as the events in coming months unfold.

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