Toyota staff agree to cut in pay and hours to save jobs

By Sarah Arnott

Toyota joined the growing list of car makers doing deals with their workers yesterday after staff agreed to fewer hours and reduced pay to avoid redundancies. Some 4,400 staff at the Japanese automotive giant's two factories in Burnaston in Derby and Deeside in Wales will receive 10 per cent less pay in return for a 10 per cent reduction in working hours.

The "work share" arrangement will come into effect at the start of April and will remain in place for a year, involving everyone from the most junior to the top executives. The downtime equates to one half-day per week, so every other Friday will now be a non-production day.

The plan is designed to safeguard jobs. But in the current climate – with Toyota's European sales down by 10 per cent last year and expected to crash by a further 30 per cent in 2009 – nothing is guaranteed. "The arrangements will give us a greater opportunity to maintain employment throughout this difficult period," a spokesman for the company said. "But we will need to continue to monitor the market and the company's situation throughout."

The package is designed to cut costs, rather than the volume of vehicles produced. In response to changes in demand, the manufacturer can either speed or slow the production lines, or take production breaks. "The work share agreement does not constitute a volume decrease, it is a way of reducing cost in the light of market conditions," the spokesman said.

Car industries across the world have been hit hard as wary consumers rein back on big-ticket purchases, and those that want to buy struggle to find finance. Toyota's work share deal is supported by the trade union Unite as a necessary measure in the face of the economic situation. "Our members are reminded daily of the tremendous insecurity this recession has brought to our industry," Peter Tsouvallaris, the Unite representative at Toyota, said. "Any decision to cut wages and working time is never taken lightly but the agreement with Toyota will ensure that these skilled workers remain in place ready for when the upturn comes."

The Japanese company, which makes Avensis and Auris models in the UK, instituted a two-week non-production period earlier this year, and has another eight-day period – of which two days will be work share days – in the fortnight surrounding the Easter break in April.

Toyota is not the first. Last week, Jaguar Land Rover (JLR) workers agreed to a pay reduction deal guaranteeing job security for two years. Job cuts are also rife. JLR has already axed more than 1,000, Mini 850 and Nissan 1,200. Further down the supply chain, among the multitude of components makers, the situation is even bleaker. The Birmingham Chamber of Commerce estimates that 1,000 jobs are lost every week in the region as companies relying on demand from the major manufacturers struggle to remain in business.

Outside the UK, car makers are performing no better. Toyota is predicting $5bn (£3.6bn) losses worldwide this year and Nissan ¥265bn (£2bn). In the US, Chrysler and GM have been bailed out to the tune of $17.4bn already and are still asking for more. GM's problems are reverberating through Europe. Saab in Sweden, Opel in Germany and Vauxhall in the UK are all pleading for support from their respective governments as GM predicts their demise.

Even the marques that have withstood the worst so far are predicting horrors to come. Audi released annual results yesterday showing record-breaking figures for production, revenue and profit. But the VW-owned brand is predicting that "2009 will probably be the most difficult year in the history of the automotive industry".