Inside Toyota's hybrid factory

The plant at Tsutsumi aims to build 1,900 cars a day. When there's a problem, the music gets downright cheery.

TOYOTA CITY, Japan--While you're touring the assembly area in Toyota's Tsutsumi auto plant, your mind keeps telling you that you've been here before.

Then it hits you. It's a lot like the Snow White ride at Disneyland.

Robotic cars filled up with wiper blades and other parts amble along a track in the floor, taking parts from the procurement department to other ends of the factory. So that workers don't back into them, the robots emit an upbeat four-note ditty as they burble about. Overhead, chairlifts that look like they came from Disneyland's PeopleMover bring doors from one side of the factory, where they get removed from their cars, to another, where they get reunited with their parents after getting fitted with handles and interior panels.

The growth of Prius
Sales of Toyota's hybrid car have taken off in the past few years.
YearPrius shipped
* In 1997, Prius came out toward the end of the year.
Accumulated hybrid sales from 1997 through July 2006:
All hybrids:720,516
(Prius accounts for 76.7 percent of all hybrid sales to date.)
Source: Toyota

Nearly finished Priuses, Camrys and Premios (a Japan-only car) progress on automated floor belts through the final inspection area, where workers look for paint scratches and check the lights. Elevators, conveyors and other machinery seem to be shuttling metal everywhere, but nothing moves faster than your grandmother's walking speed.

Then there is the andon cord, a draping white cord that hangs overhead on both sides of every production line. When a worker sees a problem, he pulls the cord, which immediately stops his particular production line. In a U.S. factory, stopping production would be discouraged and would likely be accompanied by a loud, shrill alarm.

Not here. An andon cord gets pulled every few minutes somewhere in the factory. And, instead of an alarm, a cheery song plays.

"Each (production) line has different music. Sometimes you hear 'Happy Birthday,'" said Mika Kumazawa, who served as a guide during a visit to the factory.

The almost complete lack of anxiety around stopping production with the andon cord--which has been the subject of several papers at MBA programs in the U.S.--has huge advantages. Only about 15 to 20 minutes of a full nine-hour shift arelost, and the defect rate on finished cars is close to zero, Toyota says. Most problems that I observed were solved within 10 seconds or less.

Toyota rides high these days. The company saw car shipments increase by 25 percent in the U.S. in September, at a time when other major manufacturers--from both the U.S. and Japan--reported declines. Analysts believe that the company, ranked second now, will surpass GM in the next few years to become the world's largest car company although it could face problems with quality and customer satisfaction as it grows.

Toyota accounts for 43 percent of car sales in Japan, excluding the minicar market, and 16.5 percent in the U.S.

Push from Prius
A lot of the credit goes to the Prius, one of several car models that come out of the Tsutsumi plant. The concept of a hybrid car that runs on an electric motor and a gasoline motor goes back about 100 years, said Yusei Higaki, a product manager in the global external affairs division at Toyota. (Related story: Toyota branches out into ethanol.)

"The problem is that there was always a trade-off between performance and efficiency," he said.

Fueling Toyota's future

The first version of the Prius, introduced in 1997, suffered from the same trade-off, he acknowledged. But in 2003, the company substantially revised the design of the hybrid system so that the onboard computer could more readily switch between the electric motor (for accelerating) and the gas engine (for cruising speeds). As a result, the vehicle got good mileage and performed like a regular car.

The timing couldn't have been better. Gas prices began to climb and celebrities such as Cameron Diaz and Leonardo DiCaprio turned the Prius into a status symbol. The status symbolism surprised Toyota, Higaki said. Toyota had not invested much energy or time, at that point, in marketing the car, he said.

Sales climbed. They jumped from 28,083 in 2002 to 43,162 in 2003, and hit 175,157 last year. Toyota's goal is to reach 1 million in annual hybrid sales in the first few years of the next decade.

"The market is accelerating. Hybrid shipments from all manufacturers may hit to 400,000 this year," Higaki said, adding that Prius will account for most hybrids shipped.

Manufacturing, plays a significant role too, though, and runs deep in Toyota's blood. The company likes to emphasize that it spends its energy on car design and factory efficiency rather than quarterly profit trends. Tsutsumi, which covers about 1 million square meters, is actually only one of 10 plants the company has here in Toyota City, an industrial town in the Aichi prefecture.

Newly hired engineers and university graduates spend their first two months at the company on the factory floor and the next three months at a dealer. (Higaki found himself on an assembly line for a rack-and-pinion steering part and, for his sales training, went door-to-door extolling the company's cars to potential consumers in Japan.)

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