Toyota motors into town: Car maker counters criticism by forging ahead with an increase in local content. David Bowen reports

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The Independent Online
THERE is a large room in Toyota's factory at Burnaston lined with desks covered with car components. They are in pairs, as though waiting for an automotive Noah's Ark: two widgets here, two squidgets there. A room of identical twins.

They may look alike, but they all differ. Here is an alternator made by Nippondenso in Japan; next to it is one from Bosch in Cardiff. A power steering rack - one Japanese, the other German. A parcel shelf - one from Japan, one from Gloucestershire.

In each case it is the European component that is or will be fitted to the Carina E's that have been coming off the Derbyshire line since December, replacing the part fitted to the same model in Japan. Mel Shutes, the components purchasing manager, says that in several cases the European part is superior: the Gloucestershire parcel shelf is moulded out of one piece of resin-based material while the heavier Japanese one is an old- fashioned affair based on hardboard.

Toyota's managers are proud of this unusual exhibition - it is their ammunition against criticism that the Japanese car factories in Britain are destroying the technical base of the European motor industry. The most recent assault came in March from Ian McAllister, chairman of Ford UK. He told the House of Commons employment committee that 'within a few years, the technical expertise which exists today in the UK supply base may no longer be capable of supporting the long-range research and development requirements of the motor industry. The suppliers will become no more than makers of Japanese-designed parts.'

Yukihasa Hirano, managing director of Toyota Motor Manufacturing UK and the car giant's top man in Europe, is determined to show that the charges are unfounded.

For a start, he says in his first British interview, Toyota will achieve its aim of achieving 80 per cent local content six months ahead of schedule, at the end of 1994. He concedes that Toyota will find it difficult to increase it beyond this, to the levels achieved by Ford or General Motors. Transmissions and specialist engines are imported and he sees no prospect of these being made in Europe.

It is no secret that in the absence of political factors, the Japanese would build up their local sourcing much more slowly. While volumes are low - Burnaston will build only 36,000 cars this year - it makes little commercial sense to commission parts locally. But Toyota has made a promise that it cannot afford to break. 'We have to get to 80 per cent, and we will have to take some pain getting there,' Mr Shutes says. 'We will source from Europe even if it is more expensive.'

Faced with this commitment, the company drew up a list of 2,000 potential European suppliers, 40 per cent British. It whittled this down to 400 and visited each to check on facilities and, more importantly, the attitude of the management. The Japanese are unimpressed by traditional Western manufacturing techniques: anyone who appeared wedded to them would be unlikely to get business.

Now the list stands at 160 - still 40 per cent British, which suggests that UK factories are no better or worse than anyone else. 'It is very difficult to say if there is a difference between British and Continental companies,' said Mr Hirano. 'The difference from company to company is much bigger than that from country to country.' What he does say is that the Germans are stronger on development facilities. British companies tend to be more flexible and also cheaper. Even before sterling's departure from the ERM, German wage costs were estimated by the consultancy DRI at dollars 24.90 an hour, compared with dollars 12.40 in Britain.

The proportion of European parts in the Carina is building up gradually. Currently 65 European companies are supplying the factory; this will increase to 120 this summer, with the full 160 on stream by the end of next year.

Like Nissan and Honda, Toyota has had to work hard to get the quality it wants. Of the 120 suppliers in the first two stages, 85 were already producing high quality and were given only gentle advice. But 35, which were judged to have the right attitude but the wrong processes, were given the full treatment by 'supplier part teaching teams'. Toyota sent 30 specialists to crawl all over them, spending 400 man days helping them to reorganise their factories to make sure products flowed smoothly.

Mr Hirano is pleased with the results. 'At first we had problems, but we have them even in Japan at first because we don't know the suppliers and they don't know us.' The company has noticed problems increasing as volumes build up, suggesting that some suppliers have been picking out the best products and sending them to Toyota. If this continues, they will inevitably find themselves visited by the men from Burnaston, spanner and big stick in hand.

Toyota also encourages suppliers to makes suggestions that could improve the components. 'We have already received 500 ideas,' Mr Hirano says. If a better material is used by Burnaston, there is a very good chance that it will eventually find its way to Japan.

He says that the standard of its members - workers - is excellent, and dismisses the notion that poor education is a problem. 'German manufacturers use workers who went to school in Turkey,' he points out.

Toyota is less happy with its machine tool suppliers. The bulk of Burnaston's equipment comes from the Continent, especially Germany, but the back-up service is not up to scratch. 'It's a big concern. If a machine is broken, the time to repair it is different from Japan - we have to make their builders understand what we require.'

Nissan has a pounds 50m design and development centre at Cranfield, which is already developing cars specifically for Europe. The recently launched Terrano II four wheel drive (also badged as the Ford Maverick) was largely designed there, although it is made in Spain. Toyota has no plans to build a similar operation yet, although its small development centre in Brussels will grow gradually.

Mr Hirano concedes that in at least one important area Toyota will not bring as much to the European party as the established manufacturers. 'I don't think we will ever have engine design done in Europe, because it needs so many engineers,' he says. 'We have already worked with Bosch to develop engine control systems. Such activities will increase, but it's almost impossible to develop an engine as a whole here.'

Burnaston cars are, he says, of an equally high quality as those produced in Japan. The difference is that the level of production is much lower.

That will be built up only as fast as quality allows. 'Eventually I hope productivity will be close to that of Japan, but currently we are training our members.' With the complexity of increasing local content, thinking about new models and getting a second shift in, productivity takes second place.

The factory's modest production rate is no bad thing at the moment. The Carina E is pitched against strong competition, including the upper end of the Ford Mondeo range and Nissan's Sunderland-built Primera. Despite the collapsing German market, Mr Hirano says Burnaston will be shielded. As sales to Germany fall, it will be imports from Japan - which still make up two-thirds of the 100,000 Carinas sold in Europe - that will suffer.

(Photograph omitted)