This year, Toyota Motor Corporation is celebrating 75 years since the company was founded by Kiichiro Toyoda in 1937. The company's official anniversary on November 3 marks the start of business at Toyota's first automotive manufacturing facility, Koromo Plant, in 1938
“Open the door, it’s a wide world out there” – Sakichi Toyoda
The early beginnings of the Toyota story started over a century ago when Kiichiro’s father, Sakichi Toyoda established the Toyoda Enterprise. Known as the “King of Inventors” and the Thomas Edison of Japan, Sakichi was born in 1867 during a period of modernisation in Japan. Growing up, he found it difficult to ignore the impoverished conditions of his village. Sakichi found his calling around his 20th birthday: to contribute to society by accomplishing something of consequence.
The “something of consequence” became clear as he observed the hard manual labour of weaving and spinning cloth by hand, especially by his own mother. He later described the process: “I began thinking about ways to power the looms so that weaving could be done faster, and more cloth could be made at lower cost.” In 1926, Sakichi and his son, Kiichiro, perfected the automatic loom design for mass production, the Toyoda G-type Automatic Loom.
The efficiency of the new automatic loom – one worker could operate 25 at the same time – quickly gained the attention of the world’s largest textile manufacturer, Platt Brothers & Co. Ltd. in England. In 1929, as company representative charged with the responsibility of concluding a patent agreement for the G-type, Sakichi’s son, Kiichiro, decided to go to England via the United States. He wanted to see for himself how the automotive industry has developed.
What Kiichiro saw in the United States became his singular goal: to build a car himself. Some space was set aside at Toyoda Automatic Loom Works and a team of engineers were assembled. Despite various setbacks designing their first engine, Kiichiro and his researchers persevered and succeeded as his father had done when developing the automatic loom.
The 1930s were a precarious time to venture into an entirely new industry, especially as skill set and expertise were few and far between. Kiichiro was nevertheless able to convince Risaburo Toyoda – then in charge of Toyoda Automatic Loom Works – to create a dedicated Automobile Department within the company.
Kiichiro’s original plan to build mass produced passenger cars was forced to take a different course as the threat of war approached. Government focus shifted from passenger cars to truck production, prompting Kiichiro to draw up new plans to build trucks. The Model G1 truck was completed in 1935 after less than six months of development. As soon as truck production began, Kiichiro returned to work on his ultimate goal of building a passenger car. The prototype Model AA was completed in 1936.
To decide the brand name to affix to the Model AA, the company ran a public contest. The winning entry out of 20,000 featured the Japanese characters for “ Toyota”. The new design was chosen as it gave a sense of speed, but also because of the auspicious eight strokes of the characters. Toyota was born, and the Model AA became the first car to carry the new brand name.
On August 28, 1937, Toyota Motor Company (today known as Toyota Motor Corporation) was established with Risaburo as its first President.
“I shall keep on struggling till I drop” – Kiichiro Toyoda
At the end of World War II, although automotive manufacturing facilities in Japan suffered relatively little damage, they were in need of improvement. By the end of 1945, less than half of the employees at Toyota’s Koromo Plant remained. Food shortages prompted Toyota to begin cultivating crops at its facility to feed remaining employees while taking on side businesses in order to survive, such as selling pots and pans made from materials previously intended for airplane production.
Always with a visionary foresight, Kiichiro revised the company’s direction after carefully observing post-war conditions in Japan, proclaiming: “This will be the era of the small car.” As early as October 1945, Toyota’s engineers began designing the four-cylinder, 1,000 cc, Type S engine. In 1947, Toyota’s first post-war passenger car, the two-door, 27 hp, Model SA fitted with a Type S engine was completed. The company immediately began lobbying authorities for permission to restart production of passenger cars. The nickname given to the Model SA, “Toyopet”, became the hallmark name for Toyota’s small cars.
Business conditions at the start of the 1950s were becoming challenging with the introduction of depreciatory financial policies. Plans for increased production were quickly dropped and soon the company was struggling to pay employees. Despite this, Toyota maintained its non-dismissal policy, eventually negotiating a 10% salary reduction with the employees to weather the storm.
Personnel cuts eventually became unavoidable, forcing the company and labour unions to return to negotiations. Even though a loophole was available for the company to backtrack on its non-dismissal policy entrenched in the labour agreement, Eiji Toyoda, then Director of Toyota Motor Company, rejected taking this route in favour of maintaining a relationship of trust with employees.
Labour disputes finally came to an end when Kiichiro Toyoda along with several executives resigned in a display of solidarity towards the employees. This action prompted a wave of voluntary retirements, helping the company survive through the financial turbulence.
“The ideal conditions for making things are created when machines, facilities and people work together to add value without generating any waste” – Kiichiro Toyoda
The company’s attention turned to increasing efficiency in the 1950s. Even though Kiichiro incorporated his Just-in-Time method into the blueprints of the Koromo Plant, full implementation was never realised with wartime disruption.
Enter Taiichi Ohno, then Manager of Final Assembly in the Manufacturing Department. Ohno was inspired by Sakichi’s automatic loom which detected broken threads and stopped production, thereby eliminating wasteful defective products, improving quality and efficiency. In a bid to improve efficiency, Ohno introduced a number of innovations to the production line which became known as jidoka ,or automation with a human touch.
Employees were able to pull on an andon cord to stop the production line if problems are detected, preventing problems from progressing and multiplying further down the line. The Kanban System ,using cards to indicate where and when certain parts are used, strengthened Just-in-Time and reduced the need to stockpile parts which are delivered when needed.
The new Toyota Production System ,a combination of Kiichiro’s Just-in-Time and Ohno’s jidoka ,was implemented in all Toyota plants and continues to be the cornerstone of Toyota’s production facilities worldwide.