TOYOTA MOTOR THAILAND: Proof of quality recognition from its Japanese parent lies in a push to find new export markets

The growing number of Toyotas shipped out of the country is the stamp of approval that has elevated Toyota Motor Thailand (TMT) into "global Toyota company", according to TMT president Yoshiaki Muramatsu.

‘If Thailand wants to become the automobile hub of this region, import duties for parts suppliers should be lower: The private sector must discuss this amicably with the government in order to be internationally competitive’
YOSHIAKI MURAMATSU
President, TMT

Mr Muramatsu, who has been at the helm of local Toyota operations since late 1996, was
Referring in particular to the international competitiveness of Toyota one-ton pickup exports to Australia.

"The fact that our parent company Toyota Motor Corporation, recognises TMT's products
to be on par with international standards makes TMT a global Toyota company," he said.

Known for his viewpoints on such issues as corporate citizenship, "Thai-nisation" and the
team concept, Mr Muramatsu explained why Toyota chose to enter the Thai market back in 1962: "Toyota's policy is to produce where the customer is and to contribute to the country and its people."

He noted that parts quality during the 1960s was quite poor, which is why Toyota stepped in with support such as technical advice, joint ventures and fully-owned subsidiaries.

Toyota has been Thailand's best-selling vehicle brand for the past 18 consecutive years. A major part of Mr Muramatsu's responsibility is to ensure this perennial leadership continues despite the slow economy and the automotive slump.

The Tiger pickup, launched in July, marked the end of the Hilux product life-cycle and
promises to carry TMT to another best-selling year, in addition to improving one-ton pickup sales, which have been dominated by rival Isuzu in the first half of 1998.

Stressing corporate citizenship is an integral part of Mr Muramatsu's mission in Thailand. He stresses t 'bat the company's presence in Thailand is successful only because Thai people allow it to be so. Accordingly, TMT believes in giving something back to the country it calls home.

The Toyota Foundation spends 30 million baht a year on projects dealing with education, life improvement, the environment and other causes.

"Some projects take a year or more to realise the benefits of the Toyota Foundation. There are projects that involve children, a nursing programme and used books for needy schools. These activities are essential as long as we do business here," said Mr Muramatsu.

"Thai-nisation", in layman's terms, is the policy of promoting Thai nationals into the upper management ranks of TMT "It is my mission as long as 1 am in charge of TMT," Mr Muramatsu said.

TMT's 13-member board of management, for example, now contains two Thai members.

Elaborating on the team concept, Mr Muramatsu has strong views on the roles of generalises versus specialists. He prefers generalises due to their ability to handle managerial tasks of a broader scope.

However, he is careful to point out that specialists play an important role in product development and technology.

Asked what areas needed improvement in order to attract more foreign investment, he said: "If Thailand wants to become the automobile hub of this region, import duties for parts suppliers should be lower.

"This is the responsibility of the Thai government, which the private sector must discuss amicably with the government in order to be internationally competitive."

Mr Muramatsu said he was encouraged by the Industry Ministry's proposal to set up an Automobile Industry Institute.

"Common information about the automobile industry is inadequate. This institution is a very good idea. It can act as a centre for information, evaluation, exhibitions and training."

Like many other locally-based automakers, Toyota has been looking at ways to increase exports in order to offset flagging domestic sales, Mr Muramatsu said. "There are three main Toyota pickup truck producers: in Japan, the United States and Thailand. This is why TMT has to compromise with the Japanese and American markets which already have manufacturing facilities."

Mitsubishi, currently Thailand's largest exporter of pickup trucks, does not have to compete with plants in other centres because the company's entire one-ton pickup truck production capacity is in Thailand.

"Toyota has a good export potentiail for completely knocked-down (CKD) vehicles in South America, South Africa, the Middle East India and the South Pacific. Completely built-up units might not be a good option but CKD kits of the new Hilux Tiger have a good chance. It is our first test of international competitiveness," he said.

Training of personnel is another matter of importance at TMT, with employees at all levels encouraged to gain additional 5k-ills. "Our jig and die factories are training centres for Pakistani trainees and likewise, TMT employees are sent overseas. We also have an in-house training centre for TMT employees."

However, Mr Muramatsu acknowledged the impact of the auto slump and its adverse effects on TMT "We used to have a staff of about 5,700 but it has been strategically reduced to 4,200.

"Our peak production was 150,000 units per year which in turn has been reduced to about 50,000 units this year. This spells surplus labour.

"What I am telling my staff is to be prepared for the 21st century. There are still litany points to study and implement regarding the management style of parts suppliers, because it is a time for change. In short, 1 am telling, everyone within TMT's domain to be more professional and promoting a team concept in order to reach a common point of understanding."

Technology and research and dlevelopment at the local level still appear limited. Analysts attribute this mainly to the fact that the country is an assembly centre(one million plus units per year) rather than a manufacturer.

TMT has donated about 50 million baht worth of used equipment to set up an automotive laboratory housed within Chulalongkorn University. This will increase the automotive emphasis in the mechanical engineering department, although students do not graduate with a specific automobile engineering degree.

"Thailand is an agriculture-based country, which explains the shortage of engineers amid a time of high [industrial] expansion."

Mr Muramatsu faces some challenges in steering Toyota out of the auto slump.

The one-ton pickup truck market, usually characterised by a neck-and-neck battle with Isuzu, has brightened due to the introduction o the Tiger pickup. With 16 versions and a competitive pricing strategy, TMT is confident that Toyota will return to its customary prominence by the end of 1998.

The price of the 4x4 version of the Tiger is clearly cheaper than that of its rivals, as it has been categorised as a modified pickup instead of a sport utility vehicle,@ which paves the way for a lower tax rate.

Toyota has also seen passenger car demand shift considerably, but is still confident of maintaining leadership with an array of products that includes the much-acclaimed Soluna.

Toyota Motor Thailand
Established: 1962
Major shareholders: Toyota Motor Corp 69.6; TABT Co Ltd 24.4%; Bangkok Bank Plc 2.2%; Siam Cement Plc 1.2%
Registered capital: 4.52 billion baht
Main businesses: Automabile manufacture, distribution, import/export and leasing
Subsidiaries or joint ventures: Toyota Auto Body Thailand, Toyota Auto Works Co, Toyota Body Service Co, Toyota Leasing (Thailand), Toyota Transport (Thailand) Co
Number of employees: 4,538

Worldwide
Headquarters: Toyota City, Aichi prefecture, Japan
Number of countries: 33
Number of employees: 70,663 (administrative and technical staff 38%, shop workers and others 62%)
1997 net sales: 12.24 trillion yen (consolidated)
1997 net profit: 3.1 trillion yen