Tetsuo ‘Ted’ Agata, President and CEO of R&D/Manufacturing at Toyota Motor Europe tells AMS about how the carmaker will grow the seeds of new technology in Europe.
Ted Agata joined Toyota 1977 and moved to Toyota Motor Manufacturing North America in January 2000. A year later, he returned to Japan and was appointed General Manager of the Project Planning & Management Division. After various roles in the organisation, including Project General Manager at the Tsutsumi Plant, in July 2003 he became General Manager of the Project Planning & Management Division. Following this in January 2004 he was appointed General Manager of the Production Control Division, becoming Managing Officer soon after.
He believes that, in order to support Toyota's further global expansion, it goes without saying that the company must enhance its method of "making things". Specifically, he believes that the points of "strengthening internal competitiveness" and "developing efficient overseas production", together with the underlying, "fostering of human resources", will become important future issues to consider. With this very rounded background in both manufacturing and product and production development, Ted Agata is possibly the best candidate for running the carmaker’s European manufacturing activities. I caught up with this ‘renaissance man’ recently and asked him a few questions about his experiences in Europe so far and his plans to grow the company in this most challenging region.
AMS: How are you driving more flexibility into Toyota plants and operations in Western and Eastern Europe? More through automation and improved manufacturing technology or through flexible working times and the Total Production System (TPS)?
Ted Agata: To respond to varying levels of demand from our customers, we are bringing in overtime and ‘time banking’ in the French operation [at Valenciennes]. Of course we are very restricted by the French labour laws on overtime.
We are conducting three shift operations, which is very rare for Toyota, and in the French operation we have linked production to Toyota in Japan. In Japan, where major plants are located very close together we can move people between locations quickly – such as inside Toyota City – as demand dictates. France, of course, is a lot more isolated in this respect.
AMS: Do you feel that you would like to make a Toyota City-type operation in Europe?
TA: Our basic policy is that we want to make cars where the market is. At the moment we have no plans for expansion in France, if our sales volume increases dramatically in Europe, we would definitely look to increase production in Europe rather than exporting from Japan.
AMS: Do you still have a lot of faith in Western Europe? Do you believe that you can stay competitive making cars in the West and not keep moving East?
TA: Again, this depends on the market. Some carmakers go East just to chase the cheap wages. This is not our policy, because even though wages are presently lower in Eastern countries, they are increasing year on year. Toyota is always thinking longterm.
Also, you must remember that with increasing automation the labour cost content of a car remains large, but not so large that it should dictate where you make the car. You need to look at many other costs, like logistics, power, raw material and plant costs. We would rather be chasing the market than chasing the cheap wage.
AMS:When I spoke with Roland Vardanega [see AMS November/December 2006], he said PSA had learnt a lot about manufacturing from Toyota; are there any particular areas where you feel you learnt from PSA in the Kolin joint venture?
TA: We learnt a great deal from their purchasing teams; they took the responsibility for purchasing in the JV and we learnt how they are very, very strict on cost per unit of components and good at driving the price of parts down. One example is where you might have an engineering change – these changes happen on every project. In my experience, in product planning and management, I have found that timing is everything – implement the engineering change immediately to keep the timing right. Then, after that, purchasing can negotiate the new parts required from the suppliers. But at PSA, they would never allow us to implement an engineering change until the negotiation with the supplier had been completed.
AMS: Would this include taking the specification for the new or changed component to the supplier and getting the new price and setting the timing for the change?
TA: Yes, as a result we sometimes struggled on timing. On a cost basis, this policy is very successful; it has been a very interesting lesson for us.
AMS: Have any of these practices found their way into the Toyota system – or will they?
TA: Not immediately or directly, but I think that the philosophy of cost management through a target-based system is one that we would like to implement more.
AMS: Quite a lot of Yaris and Aygo parts are outsourced. Do you have plans for more outsourced manufactured parts such as pressings and modules?
TA: We think we have reached a good balance of outsourcing with a fairly high level of bought-in components. For module-based production we may see more modules in systems, for example, brake systems and fuel handling. The reason is that in module purchasing, a supplier can integrate many components into one module and we can benefit from their expertise and the economy of scale gained from their purchasing.
AMS: Which manufacturing technologies have you seen since being in Europe that have really impressed you?
TA: Laser welding is very interesting but we have not decided on our strategy in this area yet. I have found that here in Europe there are so many engineering and production ‘seeds’ – germs of great ideas. We would like to dig out many of these seeds and combine them with Japanese technology and working practices to grow together.
AMS: Where do you need to make the greatest improvements?
TA: Paint is still the most challenging area, particularly now with the environmental issues. We are embracing water-borne paint technology [but] it is a big challenge to maintain the quality of finish with this technology.
AMS: Are you considering any further joint ventures in Europe with existing or new partners?
TA: Not at the moment, I would have to say no for the foreseeable future.
AMS: Your management teams are now spread quite thin outside of Japan, due to Toyota’s rapid global expansion. Do you have any special training and recruitment initiatives to find people and educate them in the ‘TPS way’?
TA: Our first priority is to train our teams well and to promote from within, the Toyota philosophy takes time that would make it more difficult for managers coming in from other companies.
Sometimes we have so many vacancies that we have to hire someone suitable from another company, sometimes from another European industry.
This is a challenge – for a newcomer to understand the TPS is very difficult. When I look for new managers outside the company, I look for down-to-earth and hard working people with good communication skills; I don’t look too hard at the company or industry that they came from.