Toyota cutting US execs’ pay, offering buyouts
Published 11:27 am Friday, February 13, 2009
NEW YORK (AP) — Toyota Motor Corp. is reacting to the slump in U.S. auto sales by further cutting North American production, slashing executives’ compensation up to 30 percent and offering buyouts to about 18,000 workers.
“We’ve taken responsible, step-by-step actions to address this issue in recent months, and we hope the new measures will help us adjust while protecting jobs,” said Jim Wiseman, vice president of external affairs for Toyota Motor Engineering & Manufacturing North America in a statement.
The company said Thursday it will cut production days at some U.S. factories in April — from two to eight days according to the amount of inventory at the particular plant.
Toyota is also instituting a shorter work week at some plants. Affected hourly employees would work eight hours less per two-week period, taking a pay cut with the new 72-hour workweek.
Unionized plants in the U.S. and Mexico will not be affected.
The world’s No. 1 automaker said the move will begin in April at its auto assembly plants in Indiana, Kentucky and Texas, as well as auto-parts factories in Alabama, Missouri and West Virginia.
“We have decided to introduce the scheme as the auto market in North America continues to deteriorate, and we also have to protect jobs for our workers,” said Toyota spokesman Yuta Kaga.
The 30 percent pay drop for executives includes a 5 percent salary cut and the eliminated bonus. Bonuses will be eliminated for all salaried and executive employees — a group comprising 10 percent of Toyota’s 30,000 manufacturing jobs in North America — while production team bonuses will be reduced.
The company will also offer buyouts to 18,000 workers, but company spokesman Mike Goss said Toyota does not expect many workers to take them.
The buyouts also will not be offered to workers at a Canadian plant, nor unionized plants in the U.S. or Mexico.
The buyout offer consists of 10 weeks of pay, plus two weeks of pay for every year of service, plus $20,000. It will be the company’s first North America-wide buyout offer.
The company will also eliminate salary increases for the “foreseeable future.”
Toyota, which expects its first annual net loss this year since 1950, had previously frozen North American hiring, eliminated overtime, suspended capital spending and scheduled periodic cuts in production.
The company, which prides itself on avoiding layoffs, is in the process of eliminating 5,300 contract jobs in Japan. Contract workers lack most of the benefits given to regular salaried workers, as well as the tacit guarantee of lifetime employment.
The Detroit automakers, meanwhile, have laid off thousands of salaried and hourly workers as they struggle to survive a massive auto sales slowdown.
Other Japanese automakers are also slashing payrolls. On Monday, Nissan Motor Co., said it would cut 20,000 jobs worldwide, or 8.5 percent of its 235,000-strong global work force, by March 2010.
Toyota is grappling with plunging demand worldwide, especially in the U.S., and a strong yen, which cuts overseas profits of Japanese exporters like Toyota.