Not surprisingly, the stunning collapse of Toyota Motor Corp.'s fortunes in Europe has hit its suppliers hard. Pinched first by the global economic crisis that began in late 2008, and then battered by consumer response to the safety recall of nearly 2 million vehicles early this year, Toyota's European sales and production have tumbled.
In 2009, the automaker used only half of its 700,000 units of installed capacity in Europe. This year, it has continued to trim output at plants in Britain and the Continent as sales remain weak.
After Toyota announced the recall of eight models in January, year-on-year sales slid 20 percent in February, 13.6 percent in March, 21.3 percent in April and 21 percent in May, according to the industry association ACEA. Sales for the five months through May are off 11 percent from a year earlier, roughly in line with Toyota's goal of holding the full-year slide to 10 percent.
Toyota Europe purchasing boss Mark Adams knows that the turmoil has hit many of his 245 suppliers hard. More than one-third were “financial wrecks” coming into 2010, he said in a recent interview.
For better or worse
For Adams, an 18-year company veteran steeped in the Toyota Way, the distress of his suppliers meant that he and the company had two firm obligations: to lend a hand and to deal fairly and honestly with any of their problems.
“Toyota and its suppliers work together as one entity, not only in times of prosperity, but also in adversity,” he said, quoting from the tenets of Toyota Motor founder Kiichiro Toyoda. “We faced a crisis, but we went through (it) firm but fair.”
Born in Derby, England, Adams holds a bachelor of technology honors degree from Loughborough University. After stints at Rover Group and Leyland DAF, he joined Toyota Motor Manufacturing UK in the purchasing group in 1992.
He was named to his current post, vice president of purchasing for Toyota Motor Europe, in January 2008. He says he holds out hope that the perception of purchasing executives as narrowly focused price-hagglers can be dispelled over time.
“We are seen only as a commercial organization bargaining on price all day long,'' he complains. “But half of my staff are engineers who check the quality of suppliers and parts, and the timing of parts flow for new models.”
Toyota buys 95 percent of its parts for European production in Europe, with the remaining 5 percent still coming from Japan. Roughly 50 percent of the purchasing bill goes to European suppliers and half to the European subsidiaries of Japanese companies.
“We have been buying parts in Europe for almost 20 years,” he says. “Any company unable to become one of our suppliers probably understands that we have very high requirements – and that we are not relinquishing any of them.”
Adams's attitude and approach to business relationships helped Toyota Europe finish No. 1 in the 2010 Automotive News Europe/SupplierBusiness Supplier Relationship (SuRe) Index, which rated automakers in areas such as trust and in their willingness to allow partsmakers the chance to earn a good profit.