Toyota warns of more pain in restructure

Toyota Australia has foreshadowed further restructuring across its manufacturing business, including potential job losses and changes to its parts sourcing process, under a cost-cutting directive from global parent Toyota Motor Corporation.

Toyota Australia has foreshadowed further restructuring across its manufacturing business, including potential job losses and changes to its parts sourcing process, under a cost-cutting directive from global parent Toyota Motor Corporation.

Following Tuesday's announcement of up to 100 voluntary redundancies at its Altona manufacturing plant in Melbourne, Toyota is now on a "transformation journey" to cut the cost of each vehicle it makes in Australia by $3800 before 2018.

As the Coalition awaits an impending Productivity Commission review of the automotive sector, Toyota has also indicated it, too, will make a decision on its future in Australia before the end of 2014. Along with General Motors Holden and Ford, Toyota has only committed to manufacturing cars in Australia until 2016.

Tuesday's round of job cuts - which follows 350 forced redundancies in April last year - stemmed from a drop in export demand in the order of 5000 cars annually, Toyota said.

Toyota Australia executive vice-president and chief operating officer David Buttner said the company would need to make more changes to the way it operates its business.

"We need to continually show our parent company that we're not only achieving our targets now but we're showing the wherewithal to keep those targets in the future right up until 2018," he said.

"So far in this calendar year we're on track to achieving our targets. However, we have to look to the future and, frankly, some gaps are starting to emerge in our plans for the remaining years."

Toyota's biggest ongoing challenge as a manufacturer looms internally, with the Australian operations being pitted directly against the company's other manufacturing affiliates around the world. Toyota exports 70 per cent of its Australian cars. The Toyota Camry, which has been produced in Australia for 26 years, is now manufactured in eight other countries.

Toyota Australia is awaiting parent approval to continue its manufacturing operations in Australia beyond 2017, when the next-generation Camry, Camry Hybrid and Aurion models are due to be released.

Mr Buttner would not buy into speculation that if Holden closed its doors, Toyota Australia would inevitably follow suit.

"We are benchmarking our Kentucky Camry plant, which is seen as the [most efficient] manufacturing plant in the globe," he said.

"We just have to focus on transforming our business, reducing our cost base and ensuring that we have policies and processes that make us globally competitive."

Toyota sources 67 per cent of the parts for its cars from the local supply chain, a figure Mr Buttner admitted was vulnerable given Ford's impending closure in 2016.

The Toyota chief also talked down suggestions the company was after a boost in government assistance. He said: "We were relatively comfortable with the levels of assistance that were being mooted under the previous government and we will continue to work with this government to articulate what we believe are the appropriate levels of assistance to facilitate that globally attractive co-investment."

The anticipated 100 employees affected by voluntary redundancies are due to finish work in late November, allowing Toyota to scale back its daily Altona production from 470 cars to 430 cars.

"We're laying the foundations for our future growth, and when you're laying the foundations, that means you want to build something on top of it," Mr Buttner said.

"We have a very strong desire to continue to build cars in this country."

Related Articles