By Alan Ohnsman and Kae Inoue Nov. 24 (Bloomberg) — Toyota Motor Corp. may move some U.S. jobs out of California to cheaper states as declining sales force the world’s biggest carmaker to cut costs and reorganize operations, two people familiar with the plan said. The automaker may shift U.S. product planning, accounting, travel and data services from its sales company near Los Angeles to Kentucky or Michigan, where its North American engineering and assembly units are based, the people said. Details may be decided over the next several months, said the people, who declined to be identified because the plans aren’t public. Toyota aims to reduce costs and better meet customer preferences after a recession and rising unemployment cut U.S. sales 26 percent in the first 10 months of this year. President Akio Toyoda said last month the carmaker, headed for a second annual loss, needs to listen more to consumers and make better cars to avoid “irrelevance or death.” “Toyota may be trying to produce vehicles that will sell by bringing development, production and sales together,” said Koji Endo , managing director of Advanced Research Japan, a Tokyo-based equity research company. “But it’s probably not enough. Toyota really needs to slash costs.” The Toyota City, Japan-based carmaker is also grappling with a record recall and rising competition from Hyundai Motor Co. in the U.S., traditionally its most profitable market. ‘Committed’ to California While there’s no plan to leave California, as Nissan Motor Co. did in 2006, a “significant” number of positions may eventually move, the people said. Toyota’s Torrance, California, sales unit may also encourage about 200 managers to retire early, one of the people said. Bob Daly , senior vice president for Toyota’s U.S. sales, said the carmaker doesn’t plan to change its multi-company structure in North America, which contrasts with its single- company organizations in Japan, China and Europe. The company is reviewing its management in the region, he said by phone. “There’s heightened emphasis on finding new efficiencies, new ideas — not a new organizational structure,” Daly said. “We’re committed to the state,” he said, adding there’s no push to move operations from California. Irv Miller , group vice president for public affairs for the sales unit, said no new early-retirement offers have been made. U.S. Troubles “Toyota’s president is accelerating the process of reviewing the company’s businesses and getting them to move in a single direction,” said Masayuki Kubota , who oversees about $1.7 billion in assets in Tokyo at Daiwa SB Investments Ltd. “This will help improve its finances and structure.” Toyota has forecast a net loss of 200 billion yen ($2.2 billion) for the fiscal year ending March 31, after posting a record loss of 436.9 billion yen last year. Compounding weak sales, the carmaker faces hundreds of millions of dollars of costs related to closing its New United Motor Manufacturing Inc. factory in Fremont, California. The plant was a joint venture with the former General Motors Corp. for 25 years until GM abandoned it in June. U.S. troubles also include a 3.8 million-vehicle recall for unintended acceleration. So far, Toyota has told customers to remove floor mats that can slip out of place and potentially jam the accelerator pedal. The company has said it is reviewing the flaw and will announce other steps. Market Share Declines Toyota’s U.S. market share fell 0.1 percent to 16.7 percent in the first 10 months of this year as industrywide vehicle sales declined 25 percent from a year earlier to 8.65 million, according to data compiled by Bloomberg. By contrast, Hyundai Motor boosted its market share in the country to 4.3 percent from 3.1 as the Seoul-based carmaker increased sales 4.1 percent. Toyota’s U.S. sales unit, begun in 1957, predates its manufacturing operations in North America by decades and is the basis of the company’s U.S. success, said John Shook , a University of Michigan management instructor and former Toyota engineer, who helped set up the company’s plant in Georgetown, Kentucky. As a result, it plays a dominant role in regional operations, he said. The company’s 134-acre, 18-building campus in Torrance has more than 10,000 full-time employees at the sales and finance units, said Celeste Migliore , a company spokeswoman. Total investment in the Torrance facilities is about $2.2 billion. The carmaker’s North American manufacturing and engineering operations are in Erlanger, Kentucky; near Cincinnati; and in Ann Arbor, Michigan. Europe, Japan Under the planned restructuring, Toyota Motor North America, the carmaker’s U.S. holding company, will play a larger role and become an intermediary between the region and the Japanese parent company, the people familiar with the plans said. The New York-based holding unit handles investor relations, government affairs and corporate philanthropy. Toyota merged its European operations under a single company, Brussels-based Toyota Motor Europe, in 2005. In 1982, the company merged the former Toyota Motor Sales and Toyota Motor Manufacturing into the Japanese parent, Toyota Motor Corp. To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net ; Kae Inoue in Tokyo at kinoue@bloomberg.net
