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Toyota: Auto Industry Race to the Bottom

by Barbara BriggsSpecial to CorpWatch
September 16th, 2008

Cartoon by Khalil Bendib

Beneath Toyota’s buffed shine lies a dark undercoat. The Toyota Corporation enjoys a fine reputation for well-built cars, environmental innovation, flexible production lines and effective management practices. But in its quest for ever-increasing efficiency, profitability and growth, the world’s largest auto manufacturer has sparked a race to the bottom that, like its car sales, is global in scope.

Around the world, the company has been complicit in union busting in the Philippines, and engages in cozy relationships with Burma/Myanmar’s military dictatorship.

In the U.S. – where Toyota has 13 facilities employing some 36,000 people, and sells an average of 56,923 vehicles each week – the need of the Big Three (General Motors, Ford and Daimler Chrysler) auto companies to compete is causing profound changes in the industry.

And in Japan, at its flagship operation in Toyota City, some 30 percent of the workforce is temporary workers who earn as little as half what permanent employees do. In the surrounding area, a network of closely-related supplier companies utilizes thousands of foreign guest workers under conditions that, by many definitions, qualify as human trafficking.

Toyota Japan has also created a work environment so stressful that, each year, an estimated 200 to 300 employees are incapacitated or killed from overwork and stress related illness.

Prius in the Making

In 2002, the year he died, Kenichi Uchino was 30 years old and married, with a three-year-old daughter and a one-year-old son. He had worked as a quality control inspector for the Prius hybrid at Toyota’s Tsutsumi plant in Toyota City, north of Nagoya. Following his father and grandfather, who were both lifetime Toyota employees, Uchino had joined the company right out of high school, and was a good worker.  

But as Toyota management added more and more responsibilities to his work load, Uchino began to feel the strain of the enormous overtime that was expected – and mostly unpaid. After his official, eight-hour shift was over, he prepared reports for the next shift. He had additional tasks relating to health and safety and traffic control inside the plant. Uchino was also a quality-circle leader. Toyota prides itself on employee participation in problem solving and constant improvement. Several times a month, workers meet in groups of ten or so, and are expected to submit at least two well-fleshed-out suggestions each month for improvement. All this time – to meet, to coordinate the group, write up suggestions and so forth – took place off-the-clock.

Adding to their physical and mental strain, Toyota workers alternate weekly between day and night shifts. On the day shift, Uchino routinely worked 13 to 15 hours a day, often six days a week, from 5:40 a.m. to 8:00 or 9:00 p.m. The week before he died, he put in 85 hours counting the three hours he worked at home on Sunday. The week he died, he was on the night shift, normally 70 hours a week, from 3:20 p.m. to 5:20 a.m. He typically got home around 7:00, just as his wife Hiroko was getting up to make breakfast. But on the morning of February 9, 2002, he never came home. At 4:20 a.m., 13 hours into what would have been his regular 14-hour shift, he collapsed in his office. Twenty minutes later he was pronounced dead from a heart attack. But the real cause of death, was a condition so common that a word was created to describe it: “karoshi,” literally death from overwork.

“He kept saying and hoping things would get better,” said Hiroko Uchino in an April interview, “but they didn’t, and he died.”

Hiroko was left with two young children to support. When Toyota refused to acknowledge her husband’s death as work-related, she went to the Japanese Labor Bureau and then to court to win his pension. Kenichi Uchino had kept meticulous records of his work time, which totaled a stunning 155 hours of overtime in the 30 days before his death. Toyota claimed that he had only worked 45 hours of overtime – saying that the rest of the time was voluntary. Almost six years later, in November 2007, the court recognized 110.5 hours of overtime (putting aside the hours Uchino had worked offsite) and judged that, indeed, Uchino had died of overwork.

This was the first time that anyone had won a judgment from Toyota establishing that karoshi qualified as a work accident. But Hiroko Uchino did something else that was a first: She spoke publicly about her husband’s death by overwork – practically a revolutionary act in a culture where families and communities are expected to be completely loyal to the companies that employ them.” People don’t talk about the problems [work-related illnesses and deaths] as it reflects badly on Toyota,” Hiroko Uchino said. “People tend to keep it to themselves.”

What Hiroko Uchino did not know, when she decided to fight for her children’s future, was that she would become the voice in Japan for Toyota’s overworked employees. Uchino’s case paved the way for a July 2008, Japanese Labor Bureau ruling that overwork was the cause of the January 2006 heart attack death of a lead engineer for Toyota’s Camry hybrid, days before the car was to be introduced at the Detroit Auto Show.

But pressure on workers to “ganbaru” – endure without complaint – remains so strong that the few cases make it into the legal system. Those that do, are the “tip of the iceberg,” said a highly regarded lawyer familiar with karoshi and disability cases in the Nagoya/Toyota City area. Speaking anonymously in an April 2008 interview, he charged that up to 300 Toyota workers suffer serious work-related illness or death each year.

Visit to a Toyota Factory

On the Toyota Motormachi shop floor, the intensity is palpable. In April, a tour group, including this researcher, walked along an elevated pathway above the fray and observed the production lines at close range. Some 4,700 full-time workers, plus a large number of temps and subcontract workers race to produce 13,000 cars and vans a month. Efficiency has been taken the extreme. Huge robotic arms that move with great power, precision and speed carry out jobs, such as putting together large components of the auto bodies. The automation is controlled by computers on either side of the line.

Elsewhere in the factory, the production lines are mostly supplied by remote-controlled carts that zip along designated pathways. The factory is a cacophony of machine noise and nursery rhyme melodies, each of which is actually an auditory warning that a cart is in motion. The auto bodies move down the line, but not just one model at a time. Each line is producing up to five different car models, according to demand. The workers move quickly and with machine-like precision, installing a sedan’s rear door one minute, a minivan’s sliding door the next. Highly specialized machinery assists. A crane-like arm, for instance, grabs each door from the dolly where it sits lined up and waiting, and guides it into place on the auto body. The arms are hung with every tool as well as pouches filled with all the screws and rivets that the human worker will need to install each different door.

The workers are in constant motion, fetching pieces, stretching, bending into the cars and back out again, meanwhile planning several steps ahead for the motions needed to handle the next, different model car. After two hours, they get a ten-minute break; two more hours work, a half-hour for lunch; two more hours, and so on. But very few workers seem to rest during the breaks. Most are busy tidying and re-supplying their work areas. Even with the physical assists, one experienced worker commented that the physical and mental stress are such that “few workers past 40 years of age can work on the fast-moving production line....The work is just to hard and wearing.”

Almost a third of the assembly line workers at Toyota City are temporary employees who earn an average of $12.13 an hour. These 10,000 temps toil alongside permanent workers, who earn almost twice as much – $20.49 an hour including bonuses. The permanent workers also enjoy benefits including child subsidies, cheaper meals at the company cafeteria, and far greater job security. Temps are, well, temporary, hired month-to-month, laid off at will and not represented by a union.

Company Union Supports Management, Not Workers

In line with the usual practice in Japan, Toyota’s official union, which represents only that company’s permanent employees, functions as a human resources management mechanism that doesn’t oppose management or stand up for worker interests. According to a number of long-time Toyota employees interviewed by National Labor Committee researchers on an April 2008 research trip to Toyota City, the company union works hand-in-hand with management, and worker demands for raises, job actions or even challenges to management policy are out of the question.

Despite the fact that Uchino had been a union member in good standing, his widow charges that the union turned a deaf ear to her pleas for help in having his death ruled work-related and making his family eligible for his pension. Nor has the union taken any position on the company’s continued activities in Burma, on behalf of workers at Toyota’s many Japanese supplier companies, or in response to requests for help by Toyota workers fired for organizing a union in the Philippines.

Toyota Troubling Supply Chain

People in Toyota City, home of Toyota’s corporate headquarters and seven sprawling plants, like to say that “All roads lead to Toyota.” The adage is based in cartographic reality as well as the fact that Toyota’s own assembly facilities are constantly fed parts by the city’s robust network of car-related facilities. The more than 400 suppliers in the area, employing an estimated 280,000-plus workers, allow Toyota even greater flexibility and cost reduction. Employment in these subcontractor plants is far more unstable and, according to many workers interviewed by National Labor Committee researchers, conditions are much tougher. (The workers interviewed all insisted on anonymity, in most cases asking that not even the name of their subcontract company be mentioned.)

In its zeal to “increase productivity,” Toyota presses its suppliers to produce more and more for less and less money. When there is a downturn in auto sales, the parts plants are the first to feel the pinch – and since a high percentage the workers at Toyota’s subcontract plants are temps, they are easily shed. Extensive, obligatory overtime is the rule, and it is very common for workers not to be paid correctly. For example, in one plant, workers interviewed normally worked 97-hour-weeks, typically receiving only one or two days off a month and no paid holidays. Some workers told investigators that their employers failed to pay what was owed.

Toyota’s supplier plants also make extensive use of guest or “trainee” workers – under conditions that in some respects qualify as human trafficking: The workers, most of whom come from China and Vietnam, pay manpower agencies in their home countries as much as $8,000 to $10,000 for a two- or three-year contract.

Toyota’s website touts its commitment to diversity, calling it: “one of our top ten business initiatives, and our goal is to continue to foster best practices in every aspect of our business, including employment, dealers, procurement, communications and advertising, and philanthropy.”

Despite this commitment, Toyota’s foreign workers in Japan are second-class citizens. On arrival the guest workers’ passports are confiscated.  During the first year as “trainees,” they are not covered by Japan’s labor or minimum wage laws. They work alongside Japanese workers, putting in the same long hours, but often earning less than half the minimum wage – as little as $2.76 an hour, or $479 a month. As guest workers, they are required to remain with the same employer – no matter how bad the working conditions – and to live in the company housing assigned to them – even though some are charged twice what their Japanese colleagues pay for comparable accommodations. Any worker who tries to change jobs, or who complains about conditions may be forcibly deported. By the time food, housing, and taxes are deducted, some guest workers end up earning less than $600 for an entire year, according to several advocacy organizations and unions that work with subcontract plant temp and guest workers.

Union Busting in the Philippines; Supporting Burmese Dictators

It turns out, some of Toyota’s foreign workers didn’t need to leave home to enjoy poor working conditions.

In March 2000, despite years of management attacks, the workers of Toyota Motors Philippines Corporation won legal recognition and the right to bargain collectively. Management’s response was to fire 227 newly elected union officers and members. Toyota Motors Philippines refused to reinstate them despite orders from the Philippine Labor Ministry, the country’s Supreme Court, as well as urging from the International Labor Organization (ILO) and many other international bodies. The ILO Working Group charged in 2003, that Toyota in the Philippines is “an illustration of how a multinational company, apparently with little regard for corporate responsibility, has done everything in its power to prevent recognition and certification of the Toyota Motor Company Workers Association.”

Toyota headquarters in Japan has tried to distance itself from the situation, claiming that this is a “local matter” in which it would be inappropriate to intervene. But given that Hiroshi Ito, the president of Toyota Philippines comes straight out of Toyota Japan headquarters along with 30 other Japanese managers, it is likely that a word from headquarters could bring Toyota Philippines into compliance.

Despite appeals for help, the official union at Toyota has also refused to support Toyota Philippines’ unionists, who continue to fight on – at great physical risk, given the level of political violence against unionists in the Philippines.

In Burma, Toyota Tsusho – part of the Toyota Group and 30 percent owned by Toyota Motors/Toyota Industries – is involved in several joint ventures with the military dictators. The CIA noted Myanmar’s “military junta’s gross economic mismanagement, human rights abuses, and its policy of using forced labor ....”

Toyota Tsusho (together with Suzuki) is working with the military-run Myanmar Auto and Diesel Industries (MADI) in the manufacture and sale of vehicles – including, presumably, vehicles used by the military. This collaboration with the military lends support to continued repression, the impoverishment of the Burmese people, and a broad pattern of human rights violation. In September 2007, according to the U.S. State Department, “the Burmese Government brutally cracked down on peaceful demonstrators, using gunfire, rubber bullets, batons, and tear gas against them and those observing in the vicinity. The authorities killed at least 30 people during the crackdown and arrested more than 3,000.”

At least two other Toyota Tsusho subsidiaries – Myanmar Toyota Tsusho which operates a commodities and auto parts business, and the Tomen Company – also operate in Burma. Despite international embargoes and calls not to operate in Burma – since it is impossible to do business in the country except in partnership with members of the military or their families – Toyota has continued to generate revenues for the dictators, justifying its presence with the claim that Toyota Tsusho is a completely separate entity.

In a May 28 letter to Charles Kernaghan, director of the National Labor Committee, Steven P. Sturm, Toyota’s group vice president for the Americas wrote: “Toyota has carefully considered the current environment in Burma, has conveyed to Toyota Tsusho Corporation its concerns about that environment, and has asked Toyota Tsusho to reconsider its business activities in that country.” Sturm noted that Toyota’s business in Burma is minimal. 

Toyota Spearheads U.S. Race to the Bottom

In 2007, the Wall Street Journal noted, “Toyota Motor Company...now sets the bar for labor costs in the U.S. auto industry.” Recognition of that influence was echoed that same years by Automotive News: “Toyota is going to set the pattern for the entire industry – wages, benefits and pensions.”

Toyota’s clout was driven by its increasing profitability and market share. In the first quarter of 2008, it passed General Motors to become the world’s largest auto company, selling 2.41 million vehicles compared to G.M.’s 2.25 million. In the U.S in the first six months of 2008, Toyota sold 300,000 more vehicles than G.M.

Toyota’s strategy has been simple: Build good cars; hold wages and benefits down, to the degree possible. And with U.S. car makers in a crisis of plummeting sales, plant closings and mass layoffs, holding down wages is becoming much more possible.

In the U.S., Toyota has set up non-union plants in the South – far from the unionized auto industry stronghold of the Midwest. Blunting support for unionization is Toyota’s practice of paying wages nearly on par with the U.S. auto companies (around $25 an hour in comparison with G.M.’s $26 to $28) – although with much lower benefits.

Meanwhile the Big Three’s falling sales and market share have forced the American companies to adopt, and their workers to accept, two-tier wage and temporary worker schemes eerily similar to those used for years by Toyota – just to compete. And the race to the bottom seems to be just warming up. In September 2008, an internal Toyota memo leaked from its Georgetown, Kentucky plant, laid out management’s plans to cut $300 million in labor costs in its U.S. operations.

In April 2008, the Wall Street Journal reported that Toyota plans to end its practice of pegging its hourly wages to UAW rates, and will now pay new hires only 50 percent above the local prevailing wage. In Kentucky, this would mean a savings of about 12 percent, or $3.00 per worker hour – which, of course, will put even more of a squeeze on the Big Three U.S. auto companies and their unionized workforce.

Barbara Briggs is assistant director of the National Labor Committee in Support of Worker and Human Rights. In June 2008, the New York-based NLC released a 60 page report, The Toyota You Don’t Know: The Race to the Bottom in the Auto Industry. The full report can be accessed via the NLC’s website: http://www.nlcnet.org/reports.php?id=562