Facing a Loss, Toyota Offers Job Buyouts, Ends Bonuses

By KATE LINEBAUGH
Toyota Motor Corp. is offering widespread job buyouts to its U.S. workers for the first time and cutting the workweek at some of its American plants by 10% to contend with falling sales.
The Japanese company also said it is eliminating bonuses for approximately 3,000 executives and salaried employees and cutting executive pay. In addition, the world's biggest car maker said there will be no wage increases for the foreseeable future and spring bonuses paid to hourly workers will be reduced and later eliminated.
"We are taking every measure we can to protect employment," said Mike Goss, a Toyota spokesman. The company is also adding several days in April when its North American plants will be closed as it seeks to reduce inventory levels by about half in the second quarter.
Toyota, which has a corporate philosophy of preserving employment, has avoided cutting jobs even in difficult times. Toyota has been paying two entire shifts of workers at two plants in the U.S. even with only one shift of production running. The company uses the time to try to hone the workers' skills.
Toyota has been hit hard in the downturn, forecasting its first annual loss in 59 years. Last week, the company posted a net loss of 164.7 billion yen ($1.83 billion) for its fiscal third quarter ended Dec. 31, compared with a 458.67 billion yen profit a year earlier.
Some of Toyota's rivals announced massive job cuts this week. Nissan Motor Co. said it would lay off 20,000 workers and General Motors Corp. announced 10,000 white-collar job cuts. GM also offered retirement incentives to 22,000 of its 62,000 United Auto Workers union members.
GM is aiming to reduce its labor costs to be more competitive with Toyota's. GM pays about $1,300 more in labor for each vehicle than Toyota does, according to data provided by the companies. The terms of the $13.4 billion federal loan that GM received require it to accelerate negotiations with the union to lower that differential.
As an inducement to leave the company, Toyota is offering all 25,000 of its North American workers 10 weeks of pay, two weeks of additional pay for every year of service and $20,000. The company doesn't expect a significant number of employees to take the option and has no target for its "voluntary exit program," Mr. Goss said.
That compares with GM's offer of $20,000 in cash to certain workers to leave the company, plus a $25,000 voucher toward a car purchase.
"With the reduced workweek and other cost-cutting measures, we plan to continue to fully utilize the team members we have," Mr. Goss said. The buyout program "is only meant as an option for team members who want to do something else."
The 10% workweek reduction will likely take place at several of its plants as early as April, with operations in San Antonio and Princeton, Ind., likely to adopt the program quickly. Both plants have lines producing vehicles at half capacity. Toyota's unionized plant in California and a small car plant in Canada are less likely to implement the reduction in weekly hours.