ToyotaC HR TVC 26t0
Ken Gratton23 Jun 2017
NEWS

Toyota on the road to Transition

The final chapter plays out for Toyota Australia's manufacturing program

Camry production at Toyota's Altona production plant will end in October of this year, 30 years after the mid-size model entered production in Australia. Naturally that means an end to the V6-engined Aurion as well.

There's a new Camry in the wings, but that car will be imported from Japan, completely built-up.

To a large degree the decision to pull out of manufacturing in Australia was one forced upon Toyota, which ranks as the last domino to fall after Ford Australia and GM-Holden toppled over. It was not a decision the company made lightly, but the economics of the situation made Toyota's ongoing manufacturing presence untenable in Australia.

The ripples of Toyota's decision are still spreading, and not only is Toyota closing the Altona plant, in Melbourne's western suburbs, it's also closing down its Sydney office in Caringbah and offering staff transfer to the company's head office in Port Melbourne. That has been on the cards in the past, but there was always resistance to quartering all the staff in the one facility. Now that push has come to shove, the vast majority of Sydney staff have chosen to step down, rather than shift away from family, friends and the life they know. Of the 350 staff in the Caringbah office, just 50 have accepted the offer of a transfer to Melbourne.

To add to Toyota's woes, as recently as last week Toyota Australia announced a profit slump for the Japanese financial year ended March 31.

During the same week, motoring.com.au was in the US for the North American launch of the new Camry. We took the opportunity to question Tony Cramb, Toyota Australia's executive director of sales and marketing, concerning profitability, resettlement of staff and the prognosis for Toyota in a post-manufacturing future.

Profit or loss next year?
On the subject of reduced profitability, Cramb explained that the hit to Toyota Australia's bottom line – not a loss, just a lower profit – was largely a consequence of what Toyota calls 'the transition', the migration from mixed importation and manufacturing to full-line importation.

"All the costs involved in closing down manufacturing and transitioning from Sydney to Melbourne... they're the things that are the big issues for us at the moment," he said.

"The big one, the redundancies, haven't been paid yet."

With that the case, what does that mean for Toyota Australia's financial results for this financial year? Will the company be in the red as of March 31 next year?

"I guess it's conceivable," Cramb replied. "That's not our plan, but it's conceivable.

"It's a huge cost to close down the operation...

Cramb himself is one of the Sydney staff who will not remain with the company after the production plant and the Caringbah office close. He revealed that despite 300 of the 350 staff employed in Sydney opting to leave the company, only 100 vacancies remain to be filled.

"Estimated number of new starters by the time we move all of the operation from Sydney to Melbourne – and including people coming in from regions – there's roughly a hundred roles that we're in the process of hiring. Some have already been hired."

Internal promotion
Toyota has embarked on a major recruitment drive, but most of the vacant positions are being filled from within the company. It is, in fact, a great opportunity for promotion among the capable applicants working out of Toyota's regional offices around the country.

"There are very experienced people out in the regions, so a lot of them have come in," Cramb explained.

"The regional folk have been restaffed, and then in some cases that's where the extra hundred are going. There's people that are in the headquarters office. We do have sales and marketing operations based in Melbourne, so some of those people are moving into other roles to cover over those 350 [staff based in Sydney].

"And of course in manufacturing and in corporate services there's a group of very talented people that have the capability to transfer across into a sales and marketing environment. Not everybody has that desire, firstly, and secondly the capability. So we've been through an exhaustive process where we've firstly questioned every single person in the company to see whether they had an interest in an ongoing role and secondly, whether they have the capability to take on that ongoing role.

"And as a result of all of that, we find ourselves about a hundred short."

Brand tweaking and new vision
Whether by accident or design, during the transition Toyota Australia is undergoing a change of direction that will influence marketing and product planning in the period after the cessation of manufacturing.

That is driven from above by none other than the high-profile president of Toyota Motor Corporation, Akio Toyoda. It's a global initiative, but just happens to promise a significant impact on Toyota Australia during the transition phase.

According to Cramb, Akio would object to the writer's characterisation of Toyota as 'Mazda without the Zoom-Zoom'.

"Akio would definitely not perceive it as you've just described it," Cramb declared.

"Akio's sense is we've got to get back to our roots. And we've got to reignite the passion for cars. He wants to build ever better cars; he is a race-car driver himself...

"He wants to inspire that passion throughout the organisation, because when he became president, the place was run by administrators that didn't have that passion for cars.

"And he was disgusted by [that]. And he has single-handedly turned the place on its head, and you're starting to see it in cars like this [the new Camry], that are more engaging, that are better looking, that are genuinely more fun to drive.

"It's exciting to be part of [it]; I'm personally not a car enthusiast... but I've been swept up in the passion, and I love it. I've become more passionate as a result of it all. It's more important to me than it was five years ago.

"His overriding observation was that we were making decisions by committee. As a result, it was averaging out everything, so that we didn't offend anyone, but we didn't excite anyone either.

"The polarisation discussion became one that we hadn't had in Toyota for a long time, because our cars were so 'acceptable'."

That is the tack for product development within Toyota globally, but Akio's strategy extends to honing Toyota's brand image – and Cramb confirmed that would trickle down to Australia.

"Definitely," he said. "That's in train right now.

"Not necessarily a change away from 'Oh, what a feeling', but maybe a new interpretation."

The current TV commercial for the C-HR (pictured) is an indication of Toyota's marketing strategy and tactics moving forward, Cramb agrees. It's louder, more in your face and aimed at younger buyers.

"We've got a wonderful brand in Australia, don't get me wrong, but there needs to be an update... of our image. Those discussions are taking place as we speak. Part of the job of the new marketing group is to guide that. That's amazingly relevant. That's – outside the transition – probably the biggest focus for the next six months."

This push for a new marketing and brand management strategy is coincidental, occurring just as the old order changes in Australia, with the closure of the Altona plant and literally hundreds of senior staff walking away from established sales and marketing roles.

"Kind of makes sense, doesn't it?" Cramb responds to that observation.

"If you had a grand plan, it would probably be part of that."

And Cramb's personal 'grand plan'? Lots of hours on the golf course, if his wife lets him...

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Written byKen Gratton
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