Proof is the evidence that something is true.
The Toyota Template, with its focus on production, is in no way meant to exclude other parts of the Toyota Production System (TPS), particularly the many benefits enjoyed by their employees and the communities where they live. I would be remiss if I didn’t mention a few that are sometimes taken for granted. For example, the many Human Resources policies that demonstrate fairness and respect for their team members. Or their multi-tiered hiring process that seeks out those who match their desired mental, emotional, and personal attributes. I also did not delve into the highest environmental standards met by Toyota, which demonstrate their commitment to the well-being of the local community and the world. Or their generosity in gifts to numerous local endeavors. There was no mention of the many visible, tangible benefits provided to team members, such as onsite 24-hour daycare, an onsite pharmacy, an on‑site fitness center, a team store, and a credit union at the Georgetown facility.
Toyota has shown their commitment to their employees and the community in other ways, too. When the Toyota plant was completed in 1988, the population of Georgetown, Kentucky was around 11,000 people. With the addition of an employer of this size, Toyota realized the town would grow quite a bit, with many employees locating there with their families. Today, the population is over 30,000. In anticipation of what was about to happen, Toyota made a commitment to the Scott County School System.
On January 20, 1988, Toyota Motor Manufacturing, Kentucky (TMMK), Inc. and the Scott County Board of Education signed an agreement confirming that TMMK would pay the school system annual in-lieu-of tax payments over the next 20 years. A portion of the construction financing for the manufacturing facility was done through Industrial Revenue Bonds, making the financed property exempt from property taxes for the life of the Bonds. Each year, TMMK pays the school what TMMK would pay in property taxes.
Payments to the school system over the 20-year period amounted to $28,865,045. 1
Take a look at some of the results Toyota has gleaned relative to the competition from their incredible business system. It’s astonishing how well they perform in so many areas.
In the Forbes ranking of the 100 most valuable brands in the world for 2017, Toyota ranked #8. They were the only car maker in the top 15 (Figure 12.1).
The Detroit News analyzed earnings/vehicle sold in 2014. Though many factors contribute to earnings, it’s interesting that Toyota’s earnings are more than the combined earnings of Ford, FCA, and GM for 2014 (Figure 12.2). 2
FIGURE 12.1
Car brand values (2017). (Adapted from Forbes. 2017. The world’s most valuable brands. 2017 ranking. www.forbes.com/powerful-brands/list/2/#tab:rank.).
Cars.com ranked most American-made cars for 2016. The ranking considers such factors as whether the car was bought and built in the United States. and the percentage of domestic parts used. Cars with a domestic content less than 75% or built outside of the United States are not listed (Figure 12.3). 3
FIGURE 12.2
Average earnings/vehicle sold (2014). (Adapted from Wayland, Michael. 2015. Toyota’s per-car profits lap Detroit’s Big 3 automakers. February 22. http://www.detroitnews.com/story/business/autos/2015/02/22/toyota-per-car-profits-beat-ford-gm-chrysler/23852189/.).
Out of only eight cars that qualified for the list, Toyota occupies two of the top three places, including the #1 slot. Interestingly, foreign nameplates hold the top five places (Figure 12.3).
Edmunds.com put together a list of the projected retained value of cars after 5 years on the road. The #1 vehicle in each category is shown along with the projected retained value for each. Of the 24 categories, Toyota/Lexus brands lead in 8 (33%) (Figure 12.4).4
FIGURE 12.3
American-made index (2016). (Adapted from Mays, Kelsey. 2016. The 2016 Cars.com American-Made Index. June 28. https://www.cars.com/articles/the-2016-carscom-american-made-index-1420684865874/.).
Since Toyota began manufacturing cars in North America, they’ve made steady gains in market share, more than doubling their market share since 1985 (Figure 12.5).5
FIGURE 12.4
Projected 5-year retained value of 2016 Vehicles. (Adapted from edmunds. 2016. Edmunds.com recognizes top new car models and brands with 2016 Best Retained Value® Awards. April. https://www.edmunds.com/about/press/edmundscom-recognizes-top-new-car-models-and-brands-with-2016-best-retained-value-awards.html.).
Toyota is the clear leader in the hybrid car market according to Wardsauto.com (Figure 12.6).7
FIGURE 12.5
U.S. market share (%). (Adapted from www.epi.org/publication/the-decline-and-resurgence-of-the-u-s-auto-industry/U.S. Vehicle Sales Market Share by Company, 1961–2016 Feb 6, 2017.)
The U.S. Environmental Protection Agency (EPA) has certified 70 manufacturing plants for their “superior energy performance” five of these were Toyota plants. 8 2 The plants receiving the Energy Star designation are in Kentucky (2), Indiana, Mississippi, and Texas.3
Autoguide.com put out an interesting “Lemon List” of cars made in 2010 or later that included only complaints made in the calendar year 2015. They normalized the data for an apples-to-apples comparison between brands. Toyota averaged 1 reported lemon per 11,655,566 cars. Second on the list was Honda, which averaged 1 lemon per 2,782,495 cars. Toyota produced a lemon at one-quarter the rate of #2 Honda. The industry average was 1 per 1,144,744.
However, Toyota are so much better than everyone else that they skew the average. If Toyota’s data are taken out of the survey, the industry average is 1 per 740,512 cars. The industry average goes up more than 30% without Toyota (Figure 12.7).9
FIGURE 12.6
U.S. hybrid sales (2016). (Adapted from www.wardsauto.com/engines/toyota-leads-hybrid-market-record-sales-2016. Toyota Leads Hybrid Market to Record Sales in 2016 Mar 1, 2017.)
FIGURE 12.7
Autoguide.com Lemon List (2015). (Adapted from AutoGuide.com staff. 2016. Toyota tops, Fiat flops in AutoGuide’s 1st annual lemon list. January 28. AutoGuide. http://www.autoguide.com/auto-news/2016/01/toyota-tops-fiat-flops-in-autoguide-s-1st-annual-lemon-list.html.)
The Department of Energy’s Better Buildings, Better Plant program is focused on industrial energy efficiency. The goal is to reduce energy intensity by 25% over 10 years. Toyota’s cumulative improvement was 27% in 2012 after 4 years.
1. The Official Website of Toyota Motor Manufacturing, Kentucky, Inc. Terms. http://toyotaky.com/comm3.asp.
2. Adapted from www.forbes.com/powerful-brands/list/2/#tab:rank.
3. McDonald, Jason. 2016. EPA announces Toyota Motor Manufacturing achieved 2015 ENERGY STAR Certification. February 24. U.S. Environmental Protection Agency. https://19january2017snapshot.epa.gov/newsreleases/epa-announces-toyota-motor-manufacturing-achieved-2015-energy-star-certification_.html