Always Better Cars, Always Better Lives

ALWAYS BETTER CARSALWAYS BETTER LIVES TOYOTA MOTOR PHILIPPINES CORPORATION



ALWAYS BETTER CARSALWAYS BETTER LIVES





TOYOTA MOTOR PHILIPPINES CORPORATIONCopyright 2018All rights reserved. No part of this bookmay be reproduced by any means withoutwritten permission from the publisher.TOYOTA MOTOR PHILIPPINES CORPORATIONToyota Special Economic ZoneSanta Rosa - Tagaytay HighwaySanta Rosa City, Laguna 4026(02) 825-8888 | (049) 541-3020www.toyota.com.phtext RAFAEL A. S. G. ONGPÍNphotography NEAL M. OSHIMAdesign AMAN SANTOSPrinted by The House Printers CorporationPrinted in the Philippines

ALWAYS BETTER CARS ALWAYS BETTER LIVESTOYOTA MOTOR PHILIPPINES CORPORATION



CONTENTSAT THE HELM 12ALWAYS BETTER CARS 22Built-in Quality in Production 36 74Customer Delight 84 88Tamaraw to Innova 90 92The Well-loved Vios 98Rush Launch 102 112Lexus 116 126Developing Local 144Suppliers’ Capability 154CARS ProgramALWAYS BETTER LIVESBest in TownDeveloping Team MembersCorporate SocialResponsibilityEnvironmentalInitiatives

8

ABOUT THIS BOOK This book is divided into two parts. The first, “Always Better Cars”,examines Toyota’s internal culture, which is arguably the main driver of itssuccess. A decade ago, when this team made Toyota Motor Philippines’ 20thanniversary book, it was all about this internal culture, which is indisputablythe key to understanding why and how it has succeeded. Today, Toyota is evolving into a different kind of company worldwide.The second part of the book, “Always Better Lives”, is about Toyota and itsplace in the world. In other words, it is an emerging external orientation.While Toyota has always been customer-oriented, it now prioritizes lookingbeyond its internal processes to further improve its relationship with allstakeholders and members of the communities where it is. For its part,Toyota Motor Philippines now examines its own role in the world at large,and seeks to play the best role it can.

THE NEW LOOK OFTOYOTA MOTOR PHILIPPINES’HEADQUARTERS As Toyota Motor Philippines celebrates its 30th anniversary, it carried on amajor renovation project of its main building at its headquarters in Santa Rosa,Laguna. The new look of the facade makes an impression of modern appearanceand atmosphere, yet still maintaining its corporate identity.  The continuity of the vertical louvers conceals the building inside when viewedfrom a distance. As one gets closer, however, the main building slowly comes intoview as if the louvers are opening up, creating an inviting and welcoming gestureto people coming in.

Perspective Drawing supplied courtesy of PLANTEC ARCHITECTS LTD.



AT THE HELM

MESSAGE FROM THE CHAIRMANDR. GEORGE S.K. T Y As Toyota Motor Philippines Corporation (TMP) celebrates its 30thAnniversary, we look back and reflect on the kind of company we have become. Toyota in the Philippines has been privileged to run a business that does notonly provide quality vehicles, but also able to contribute to the economy of thecountry and the society. We have always believed that the way we should dobusiness should be centered on creating a positive impact to every stakeholderof our value chain and the community we are in. Through the years, we have seen the steadfast support of the Government increating opportunities to further develop the auto manufacturing industry inthe country. Our supply chain has worked hand-in-hand with us in ensuringthat locally-produced vehicles have built-in quality at par with global standards;while, our dealer network has provided customers with service that wouldmake ownership of a Toyota a delightful one. Certainly, the relationshipswe have built and the sense of purpose that has united us have made ourCompany’s existence more meaningful and fulfilling. In the years to come, we see TMP continuing to evolve as a company.Nevertheless, the commitment we have made at the very start of setting up thecompany will remain the same. We shall be ever mindful that our operationsshould contribute to the development of the Toyota Network, the local autoindustry, and the society, for the benefit of the Filipino people.14





INTERVIEW WITHTHE VICE CHAIRMANMR. ALFRED V. T YAlfred V. Ty joined Toyota Motor Philippines in 1992. He is now Vice Chairman.Rafael G. Ongpin (RGO): The company is different today. In 2008, the company wasstill struggling. How do you define success for Toyota?Alfred V. Ty (AVT): Toyota in its 30 years of existence in the country has gonethrough so many ups and downs. A lot of people look at Toyota the way it is today,where it is selling over 180,000 a year. But in the past 30 years, it went through a lotof challenges including the days when we used to sell below 15,000 units and thewhole industry was stuck with only 50,000 units.A lot of the growth then is attributable to a strong economy, very much a reflectionof how the government is running the economy. So, in that sense, I think the 30years of Toyota Motor Philippines, has a lot to do with the stronger ties with itsstakeholders, stronger ties with our suppliers and our dealers. But most especially,we have not wavered, and we have always stuck to our philosophy of Customer First.That has always been the mindset and the driving force of Toyota since Day One –“To provide better Customer Satisfaction”.RGO: I notice that the company in 2008 was very inward looking. There was a lot ofemphasis on internal culture. Yes, customer-focused, but brought by internal culture,such as continuous improvement, the Toyota Way. Today, the company seems moreexternally focused. Is that a conscious thing or has the company just evolved that way?AVT: The inculcation of the Japanese philosophy, we call it the Toyota Way, that’salways been the philosophy spread around all Toyota operations, globally. That takesyears to develop internally, to instill the discipline to the people, and to follow it, stepby step, not jumping from A to C, then C to E. We have to go methodically, one stepat a time. The time has come for the Philippines, the country has started to take offand the discipline instilled in every team member is very important to carry TMPthrough every challenge.Toyota, in its strategic planning, has seen the potential of the Philippines to grow.That’s allowing us to be more outward-looking, and be more able to assess what theneighbors are doing in order for our local operations to grow. It’s all part of what theToyota Global operations brings to the table. 17

RGO: What would you say is the unique advantage of Toyota Motor Philippines, “We have not wavered,specifically? What has kept you guys going all these years and what is going to bring and we have alwaysyou into the future. stuck to our philosophy of Customer First. ThatAVT: You know, I think there is really no one answer to that question. The uniqueness has always been theis really the discipline of the people, and the combination of the Japanese training, mindset and the drivingstrategy, philosophy, but also taking into account the local culture. The respect for the force of Toyota sincelocal culture, and for the local team members, and the way for the 2 cultures to gel Day One – ‘To providetogether - there’s really no magic formula for it…it’s really doing it step-by-step. better Customer Satisfaction’.”RGO: Someone in your organization said, the Philippine market is already on thethreshold of ‘motorization’, a thing that Toyota, globally has seen in many differentcountries. Per capita income reaches a certain level, and people can start to affordcars. It grows rapidly from there. Are you seeing this happen here?AVT: In our analysis, motorization began five years ago and the biggest indicator iswhen we reached US$2,500 per capita income. True enough, the volume of 100,000units came to Toyota Philippines in 2014, much earlier than projected. Last year[2017], we were at 183,000 units that brought us to the Top 10 of all Toyota globaloperations. You’d be surprised. There is so much more potential, I believe. ThePhilippines, has over 100 million population, with an average age of 23 years old, sothe potential is tremendous. Total industry delivered 440,000 units last year. WithThailand’s economy, and population of 68 million people, they generated double thatvolume. That’s only about 70% of our population. Indonesia has 260 million peopleand total market sells over 1 million a year. The penetration levels - there’s so muchmore potential for this country in terms of the automotive industry. Toyota is poisedto take on the challenge of the future and bring us to the next level of motorization.RGO: One of the issues, raised by the government itself, is income distribution.And ultimately, it affects you, because if the economy is growing fast, and the percapita income seems to be rising, but in reality, it’s the rich getting richer and thepoor staying the same, you don’t have new people entering the market. For instance,rural growth is important for you, because the cities are saturated with automobilesalready. Are you seeing that?AVT: That’s very critical to our growth – as the low income earners move up tothe middle market – that would really be the growth driver. It allows them to havepurchasing power. I am sure the difference with a bigger economy, say like Thailandor Singapore, is not that the number of high net worth people, but it’s really thestrength of the middle-income segment. And I believe, with the Philippines’ GDPlevel of continuous growth of above 5% for the past 15 years, employment levels haveincreased tremendously, which spreads the wealth to even more. Rural growth is verycrucial to the continuous development of the country. We definitely see the expansionof consumption in the provincial areas. This will even be more pronounced withinfrastructure development of the government and the private sector.RGO: You started as an assembler of kits. Now components are being manufacturedhere. It’s still not quite a heavy industry, in the sense that much of the raw materialsare still imported, for instance the steel plate for the stampings. Do you foresee, let’ssay in the next decade, that we can bring more parts of the value chain in locally?18

AVT: It’s all volume-related, creating the economies of scale – once the volume is bigenough to make sense for the heavy machinery investments. But Toyota will have tobalance things out, because there are factories existing in Thailand and Indonesia,and other parts of Asia. There is always spare capacity over there, and with the Aseanfree trade, it makes sense to import. Nevertheless, we continue to assemble the VIOSand INNOVA in Santa Rosa because of increased volume. We are continuouslyaiming to bring the cost of production lower through higher plant efficiency andimproved localization. We will not be lacking in technology, because Toyota and itsgroup of suppliers are there to support.RGO: Toyota Motor Philippines has now been around for 30 years. You have certainkey relationships that have grown in this time, with your dealers and with yoursuppliers. Can you talk a little bit about these relationships, and where you are nowafter 30 years?AVT: The past 30 years of our country has been very colorful. Through thehardships, we have also gained knowledge and we have gained partners and friends,helping each other through tough times. Our relationship with our dealers andsuppliers is stronger than ever. We strive to work with them and grow together. All ofthose challenges are key points to the future of Toyota Motor Philippines. Our dealernetwork and our supplier network have been top-notch, and second to none.RGO: Let’s shift gears a little bit, and talk about the future. Technological changeis accelerating so fast. When Über came to the Philippines, people said that’sinteresting, because if that grows, obviously in it’s very early days, an infant industry,it has implications on the personal car ownership. Another factor is, and obviouslyToyota is ahead of the curve here, but in Europe, they are beginning to say that theend of the internal combustion engine is on the horizon. In 20 years, they want carsto have absolutely zero emissions. How are you confronting those things as ToyotaMotor Philippines?AVT: Definitely, there is a higher level of awareness and concern for clean air. Toyotais at the forefront of alternative fuel with its Hybrid engine technology and ElectricVehicle technology. Changing global trend in vehicle ownership is the hottest topicin Toyota headquarters. I get invited from time to time to join these meetings. OurToyota Motor Corporation president, Mr. Akio Toyoda, is very much at the helmof changing the mindset of the whole Toyota organization. The battle cry now isto change Toyota – from a transport company to a mobility company. This refers towhat you just said. In spite of Toyota Motor Corporation having a record financialposition last year, and there is a big sense of urgency inside Toyota, because themarket trend is changing very fast.RGO: How will the company be so flexible, and so nimble, to deal with this change?AVT: (Laughs) ‘Flexible’ and being ‘nimble’ are not among the biggest traits of alarge corporation. It’s a constant challenge for big corporations to react faster. It’sa very big company. That said, we have an active and agile President in TMC whocontinuously challenges the norm and brings out the best potential in any situation. 19



MESSAGE FROM THE PRESIDENTMR. SATORU SUZUKI Toyota Motor Philippines Corporation’s (TMP) three-decade history in thePhilippines has been marked by many memorable milestones with its equal share ofchallenges. Through these ups-and-downs, Team Toyota Philippines has become strongerand more united over the years. Whatever success the company has achieved, we oweit all to our various stakeholders who continue to work with us – our shareholders,Team Members, suppliers, dealers, the Philippine Government and other businesspartners who remain passionate and committed not just in making the automotiveindustry stronger, but more importantly, in providing better opportunities and betterlives for many. We are, likewise, truly indebted to over a million customers in the Philippines whohave put their trust on our brand. We see every sale made as a bond of trust betweenToyota and each customer, which further drives us to be better in all ways possible.As we have seen how the needs and demands of various markets have changed in thelast 30 years, Toyota has also adapted to meet and even exceed customer expectations.It is our ultimate joy to see customers satisfied and truly enjoying their ownershipexperience of a Toyota vehicle. Today, TMP is in the midst of planning and implementing programs that will usherin a new era of not just achieving customer satisfaction, but levelling up the experienceto create customer delight. Changes will happen within the local value chain, with eachstakeholder ably contributing to the achievement of this objective. As much as we have learned and grown from past experiences, we now looktowards the future. We are aware that the business landscape, as well as customerexpectations, will keep on changing. With this in mind, we make it of paramountimportance that each member of the team should not stop looking for ways to bebetter than we currently are…even challenging ourselves to attain aspirations wethink we cannot do yet. I strongly believe that nothing is impossible if we maintainour passion in achieving our goals, especially with the continuous support of ourcustomers and all our stakeholders. Muli, maraming salamat po! Mabuhay ang Team Toyota Philippines! 21



ALWAYS BETTER CARS

A LWAY SBETTER CARS Always Better Cars is deeply anchored on the first pillar of the Toyota Way –“Continuous Improvement” — and is at the very core of the company’s internal logic.It means that no matter how perfect something is, we can and should always strive toimprove it. Always Better Cars is proactive change, not evolutionary. It is change thatcomes from within, not change forced by external circumstances. Always Better Cars is the key to understanding what Toyota is, and how it works.It is a simple three-word phrase, and the fact that its abbreviation in English, “ABC”,corresponds to the beginning of the alphabet, is no accident. ABC is fundamental toToyota, and embodies the spirit of kaizen, or continuous improvement. The product itself is something consumers may take for granted. Indeed, someToyota cars have been called “appliance cars”, because they simply take the user frompoint A to point B without drama or fanfare. They are reliable, easy to maintain,and last a long time. This may not seem so exciting, but underpinning all of theseis a complex corporate culture whose purpose is to make sure the cars work exactlyas designed, and are well made, and thus to deliver the best cars to the customer. Itcould be said that the product of Toyota is not simply cars: it is quality. Toyota Motor Philippines (TMP) has imbibed kaizen from the very first dayof operations in 1988. It could be said that the first twenty years of the companywere spent growing and reinforcing this culture. Today, the culture is even moreimportant, as TMP evolves to deal with its own success. Compared to a decade ago,it is making almost five times the number of cars, as well as importing more unitsthan it used to. It needs to sell these cars, prepare and deliver them faster than ever.These are good problems to have, but they are still problems that must be addressed. Focus on internal culture above all other considerations is not an ordinary orobvious way of doing business. Many businesses give priority to costs, for example,and common business sense sets the objective as producing the best product (orservice) at the lowest cost. Toyota focuses on creating the culture that can deliver thebest product in the best way, rather than just costs and numbers. Of course, it doesnot neglect the numbers, or the costs; it simply puts the culture first, and by culture,it means process.24

Toyota Motor Philippines is producing 23and processing nearly four times more carsper year than it did in its first two decades.This greatly increased volume requiresnew methods of handling, processing, anddelivering the cars. Here, the logistics yardsat the Santa Rosa plant are filled with vehiclesready for processing and delivery. Thechallenge is to maintain a high throughput, sothat the inventory does not spend wasted timehere, and arrives at its destination on time.

At Toyota, everything is process, and process is everything. Even the act ofwalking down the street at the Santa Rosa plant of TMP has its own guidelines.Walk within the defined areas on the sidewalk, of course. Walk on the right side,so oncoming people can pass on your left. Do not walk with your hands in yourpockets, because if you trip, you will not be able to put out your arm in time to breakyour fall. Do not text, or look at your mobile phone while walking, because youmight be distracted and stumble. Toyota constantly reminds its team members to Plan-Do-Check-Act, or simply,PDCA. Everything a team member does in his or her work needs to be part ofPDCA, and demonstrably so. Every action, no matter how small, has to be a result ofa plan, a trial, and a check. In fact, team members spend so much time in meetingsthat one wonders if this affects productivity. Such obsession with detail may seem excessive to outsiders. But it is a way of lifeat Toyota. It is not only the process of making cars that is under constant scrutiny andinnovation, but the process of managing, the process of relating to each other, the processof interacting with the world at large, even the process of developing process itself. One classic process example is car doors. Consciously or not, we judge the qualityof a car by the sounds its doors make— or don’t. If the door is made properly, closingit should convey, through sound and feel, an impression of solidity and precision.This is not an easy objective. Of all the moving parts of a car’s body shell, the doors are among the mostirregular. Instead of a flat plane, they are curved in three dimensions, and the curvesare not necessarily symmetrical. Many contemporary designs have creases or bulgesthat must match precisely with design features on the body. The door itself must beso dimensionally precise that the seams between it and the body (they are called“shut-lines”) must be exactly the same throughout all their length, within microns. The door should fit into the body aperture without touching it at all, leavingprecisely enough space for the rubber seals at its periphery, called ‘weatherstrip’, tocompress to an exact, repeatable shape. In order for this to happen, the points ofcontact, including the door hinges and the striker (the part opposite the hinges thatholds the door shut) must be located with extreme precision in three dimensions. Toyota figured out that the sound was really not a goal, but a symptom. Thereal objective was the fit. Toyota understood that the challenge was to improve theprocess, not only the product. They went back along the line, and modified hundredsof steps of their process, from metallurgy, to raw material delivery, to die-making,stamping, and assembly, in order to make the doors so exact, that when they arrivedon the line, they did not need custom fitting or adjustment. The objective was a doorthat works perfectly the first time, and every time. You can be sure that this effort involved a lot of meetings, planning,discussion— the man-hours involved would have almost certainly exceeded the26

Every action, no matter man-hours actually spent in door production. But the result was indisputablyhow small, has to be superb. Toyota now makes doors that fit exactly, has eliminated the need fora result of a plan, a specific skilled labor, has improved productivity and quality at the same time, andtrial, and a check. In thus brought the cost lower. Toyota car doors make a variety of different sounds,fact, team members depending on the model, but they all fit, and they all sound ‘right’. If you take aspend so much time door from, say, an Innova, and mount it on any other Innova of the same model, itin meetings that one will work without fitting, guaranteed.wonders if this affectsp r o du c ti v i t y. In the spirit of continuous improvement or kaizen, Toyota has never stopped exploring and executing ways to continue to address this issue, which has long since ceased to be a problem. It designs processes to produce parts that are exactly and predictably identical, and easily and precisely joined together. Assuming it used to take 21 minutes to make a door, they would have managed to reduce it to 19 minutes. Then, they would have reduced it to 17 minutes. Now, they would be working on 15 minutes. Just because the process was improved and the problem was ‘fixed’ does not mean the problem is over. Toyota is famously “paranoid”, and keeps checking for recurrence of problems it solved a long time ago. To this day, both random (statistical) and detailed testing pulls parts off the line and determines whether they meet specification. If they do not, and require manual remediation, Toyota does not simply fix them and put them back on the line. In fact, the line will probably be stopped, and all similar parts checked. Management goes back along the line, all the way to the materials, suppliers, logistics and component manufacturing, to determine why the parts were out of specification in the first place. It makes sure to fix the problem. If there are no problems, they look for problems, because there is no such thing as ‘no problem.’ The process is relentless. Apart from kaizen, the other four stated values of the Toyota Way are: the importance of seeing things firsthand (genchi genbutsu), challenge, teamwork, and respect for people and their capabilities. Genchi genbutsu, the importance of seeing things first-hand, is very much alive at Toyota, and also dates back to its origins. Kiichiro Toyoda was most often found on the shop floor. He directly engaged with the machinery and prototypes, and made many things himself. When receiving visitors, he would sometimes apologize for not shaking their hand, as grease and oil was so deeply imbedded in his fingers that a quick hand wash would not clean them enough. Sometimes, his overalls were so oil-stained that he could not sit in his own office chair. Toyoda understood the importance of first-hand. Toyota team members are not allowed to rely on reports or hearsay. They must and see the situation for themselves, and typically, they bring the managers there to show them. When a problem arises, they are expected to be present immediately, to see the problem. If there is no problem, they are still expected to go and see why, and if, there is really no problem. 27



In the spirit of continuousimprovement or kaizen,Toyota has never stoppedexploring and executingways to continue toaddress this issue, whichhas long since ceased tobe a problem.

Challenge is the culture of setting goals very high, so high that they may seem Toyota’s employees,impossible, or even nonsensical, at first. This is very much linked to the long-term whether workers orview that Toyota cultivates. managers, are strictly referred to as “team One of the best examples of internal challenge is the project that developed the members”. AlthoughPrius, the world’s first successful mass-produced hybrid car. No such car existed in “respect for people”the world at that time. The most economical car in mass production in 1993 was means treating them asprobably the tiny Suzuki Cultus (sold in the United States both as the Suzuki Swift individuals, all individualsand the Geo Metro), with a 3-cylinder 1-liter gasoline engine: it could make just over must learn to operate17 kilometers per liter; but it barely sat four people, had no air-conditioning, and effectively as part of aeven deleted hubcaps and a passenger-side mirror to save weight. team, and often, several teams at once. Toyota set a deadline for the Tokyo Motor Show of 1995 to show a viableprototype. Then in 1997, the Prius went on sale in Japan. Its subsequent successmarks a major milestone in automotive history. The hybrid drivetrain systemdeveloped for the Prius has now been installed in over 10 million cars. Teamwork was critical in the success of the Prius project, as it remains to thecompany’s success as a whole. Toyota’s employees, whether workers or managers, arestrictly referred to as “team members”. Although “respect for people” means treatingthem as individuals, all individuals must learn to operate effectively as part of a team,and often, several teams at once. An important advantage of teamwork is that it helps to break down work, orproblems, into small, manageable steps, which can be distributed to the teammembers. In this way, incremental progress is always possible, even when thesituation is difficult, and the challenge is impossible. Respect for people is strictly enforced by Toyota. Although the company ishierarchical, even the lowest worker is not only allowed, but expected to expresstheir frank opinion on work issues. Any worker on a production line can stop theline, when they detect a problem. In fact, if they do not, and the problem is allowedto continue, the consequences are worse, as the worker will be made to explain whythey did not stop the line. Although Toyota itself translates the original Japanese phrase into English as“respect for people”, a more literal translation might be “respect for what it is to behuman.” The deeper meaning is not simply being nice to people, it is recognizingtheir humanity. For instance, Toyota consciously ensures that its workers perform tasks thatare meaningful to the company, and thus to them. The idea is that if work ismeaningless, the worker will soon lose interest in it. In the same vein, Toyotaconstantly challenges its workers to rise above what they have already achieved,sometimes by giving them tasks that seem impossible. Toyota tries to minimizeturnover. Instead of constantly disposing of workers who do not perform, it givesthem the tools to perform.30

Humility is an important component of respect for people. Toyota insists that allteam members be aware of their own limitations, weaknesses and problem areas, andas such, should be open to listen to what others have to say. This somewhat lengthy discussion of Toyota’s culture was necessary in order tounderstand how Toyota Motor Philippines met its challenges thirty years ago, andbuilt today’s success. In 1988, the initial TMP plant established in Bicutan, Parañaque was alreadyobsolete, by some metrics. A lot of the machinery had been employed in andimported from other Toyota plants around the world. It was by no means inferiorequipment; in fact, it had been state-of-the-art, when it was new, in the 1970’s andearly ‘80’s. But by 1988, other automobile plants around the world were much moreautomated. For instance, in 1988, body shell welding robots already existed that couldexecute all necessary welds almost simultaneously and automatically, with no humanintervention. The body parts, set in a jig, were sent to a single welding station, wherea clamshell device containing dozens of welding robots would close upon it, and in adramatic explosion of sparks and flashes, execute hundreds of spot and seam weldsflawlessly, and complete the entire body assembly operation in less than a minute. At the then Bicutan plant, and even now at the Santa Rosa plant, body shellwelding was performed by human operators using ordinary manual electric arc-welding equipment. Because many workers could not all safely fit within the samearea to perform welds simultaneously, the operations had to be divided into differentstations. The welding itself was intensely laborious and required great skill, and thus,training. It took hours, not seconds, to complete the hundreds of welds necessary toassemble a body shell. Because the Philippines was so underdeveloped industrially, practically everycomponent had to be imported either complete or in unfinished form. For instance,there was no capability to make any sort of advanced plastics. The Santa Rosa plant didhave sheet metal stamping capability from the outset, but the capacity was limited. It was a struggle for Toyota to meet the local content requirements set bythe Philippine government’s economic planners, first in the Progressive CarManufacturing Program (PCMP) dating back to 1970, and the revised CarDevelopment Program (CDP) that replaced it in 1987. The CDP required 32.26%local content in 1988, and 40% by 1990. Some local content was already available, such as tires, batteries, radiators,upholstery, carpeting, interior trim, and rubber parts like hoses, belts and seals.There were plants making transmissions, air-conditioning compressors, condensersand evaporators, and electronics. Yazaki-Torres Manufacturing, Inc. was already inexistence, making wiring harnesses and some instruments. But anything made ofsteel, plastic, glass or requiring any sort of precision, had to be imported. 31

TMP invests in developing every memberof Team Toyota such that each one goesthrough hours of conceptual and practicaltraining to ensure that each task is done inan acceptable manner in the workplace.



Thus, in the early years of Toyota Motor Philippines, the challenge was to makecars that met 1990’s standards, using 1970’s equipment. It was a typical Toyotachallenge, in other words, on the face of it, impossible. But, Toyota’s internal culturemade it possible. Initially, the volumes of locally produced cars were, in any case, low, soproduction capacity was not a major issue. But in 1996, total volume of automobilesales hit an early peak of around 160,000 units, a volume which was not to be seenagain until 2010. Toyota had to ramp up production to meet this demand, but then,the Asian crisis hit, and the economy went into a slump. The automotive industrypicked up again in the early 2000’s, and grew more or less steadily. One of the best examples of how TMP adapted to the conditions once againconcerns car doors. In all automotive factories, vehicles have their doors attached during the bodyshell assembly phase, because they are painted together with the rest of the body. Itdoesn’t make sense for them to be painted separately, as there is, for instance, a riskthat the paint will not match. After the paint station, as they move through the line,the interior parts are installed. At plants elsewhere in the world, the installation isperformed by machines. In the case of Toyota Motor Philippines, the interior installations were, from thebeginning, performed by human workers. The domestic market was just too small, inthe beginning, to invest in the expensive machinery to automate this process. Every time a vehicle would be ready to move on from a station in the line, thedoors would first have to be closed, then opened again when the vehicle arrived atthe next station. The presence of the doors, even opened, made it difficult to installthe interior parts, because they took up a lot of the limited space. The operation ofconstantly opening and closing the doors not only took time, but also created a riskof damage from objects in the crowded workspace. The manufacturing team came up with a solution of simply removing thedoors from the car after the body shell assembly and painting stations. The doorswould have all their components, including lock mechanisms and handles, wiring,windows, window mechanisms, rubber seals, interior trim and exterior trim,installed elsewhere. Meanwhile, the body shell would move through the line without doors, makingit much easier and faster to install all the interior components, including seats,consoles, carpets, seat belts, ceilings, headliners and sun visors, air-conditioning,dashboard and instruments, steering wheel and pedal box, gearshift trim,weatherstrip, and the like. This was only possible because of the degree of precision that had laboriouslybeen incorporated into the door-making process. If the doors required any kind offitting, then more time, skill and tools would be required.34

It speaks volumes about It speaks volumes about the culture, that Toyota was willing to try a radicalthe culture, that Toyota solution, one not used in any other plant at that time. At Toyota, despite theirwas willing to try a obsession with process, there is a total absence of a ‘This-is-the-way-we-do-things-radical solution, one not around-here’ attitude. This is because the way things are done at Toyota is always aused in any other plant work in progress.at that time. At Toyota,despite their obsession Between 1988 and 2007, TMP produced about 400,000 vehicles, an average ofwith process, there is around 40,000 per year, and imported and sold another 100,000. In 2017, TMP solda total absence of a 183,908 vehicles, and held 38.9% market share of total vehicles. The runner-up,‘This-is-the-way-we- Mitsubishi Motors Philippines, sold 73,590 units for a 15.5% market share.do-things-around-here’attitude. This is because This success has created a new set of challenges for Toyota. It is now making andthe way things are done selling 3 to 4 times the number of vehicles that it used to, and all of those vehiclesat Toyota is always a need to be processed and delivered, whether they are made in the Santa Rosa facility,work in progress. or imported. The immediate problem is logistics, as the now massive throughput of vehicles has begun to strain the physical limitations of Santa Rosa, which used to have many empty spaces, but now has new buildings everywhere. Production capacity is another concern, and Toyota is quickly marshalling capital investments both to increase the capacity of the Santa Rosa plant and its suppliers. At the Santa Rosa plant itself, a brand new facility has started making injection- molded plastic parts, using imported raw materials. The plastic pellet stock is melted and pumped into molds, producing precise castings at a rapid rate. This capability had to be developed in-house, as no existing supplier had both the capacity and precision. The number of stamped metal parts is also rising, both from brand new stamping machines that Toyota is already installing, and from suppliers, who are likewise investing in new machines. The wider story is that the Philippine market has reached the threshold of motorization. From the experience of all its years in the business, Toyota has adopted studies that predict that motorization will start growing exponentially in a society when per capita income breaches US$2,500. The National Economic Development Authority reckoned 2013 per capita income at US$2,750. Ten years ago, when TMP celebrated its 20th anniversary, the general feeling was a certain gratitude at having survived many crises, including labor problems and difficult economic cycles. While profitable, it was by no means a star performer. Nowadays, TMP has 38% of the local market. It has achieved the “Triple Crown” of highest passenger car sales, highest commercial vehicle sales, and highest overall sales for the past 16 consecutive years. In other words, TMP has not only attained success, it has sustained it. This is not simply due to its ability to produce better cars. It is perhaps equally because of its unrelenting struggle to be a better company. 35

BUILT-IN QUALIT YIN PRODUCTION

TMP’s stamping plant in Santa Rosaproduces body shell panels for its Innovaand Vios models.

“In new vehicle project development, we develop and introduce the dies, equipment and facilities necessary to locally-produce the steel panels here at TMP. In production support, weensure that the current production runs efficiently, by providing engineering support and solutions.” MR. BRYAN CARLO OCL ARINO Supervisor Press and Chassis Engineering Section

Above, a single team member canhandle, transport, and install the massivedies, weighing dozens of tons, used for thestamped steel parts. He uses a powerfulceiling hoist running on rails, controlledby the yellow remote he is holding. Thechallenge here is to have the dies in placeso that production can shift from one partto another in a matter of minutes. 39



Stamped metal panels stacked in a veryorderly fashion waiting to be delivered tothe welding line.

This newly-inaugurated Resin InjectionMoulding facility is one of TMP’s newestinvestments to realize localizationcommitments under the Government’s CARSProgram. The facility produces the bumpersand instrument panels of the new Vios.

Vanessa or Bang has been working with the Cost Accounting and ManagementDepartment of TMP for over 16 years. The Resin Injection Moulding facility is a new investment for the new Vios under the government’s Comprehensive Automotive Resurgence Strategy or CARS program. “Our team conducts cost and profit study of locally-produced models. We support Manufacturing Division in budget-planning and cost performance monitoring. “We also do benchmarking with affiliates like Thailand and Indonesia.” MS. VANESSA DELOS SANTOS Manager Cost Accounting and Management Department



These Vios instrument panel subframes, dashboard mouldings, and bumpersare the principal products of TMP’s new injection-molded resin facility. Theyare colored black when they emerge from the mold, and will be painted in theappropriate colors. This new process requires critical dimensional precision,which involves factors such as chemical composition, temperature, pressure, andtiming. TMP has had to assimilate and execute a host of new skills to achieve anacceptable rate of accuracy. 45



Team Members buff newly produced Vios frontand rear bumper assemblies. This looks like asimple operation, but kaizen and TPS have carefullydesigned it. The workers are in a spacious, well-litarea. They employ sophisticated hydraulic standsto enable them to reach every part of the assemblywithout having to climb up, bend down, or movearound too much, which enhances their productivity,and allows them to concentrate on the process.Their special coveralls prevent contaminating thepart with dust. All the tools they need are easilyaccessible nearby, and neatly organized.