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Toyota Cutting Labor Costs? Probably Not

Thursday, 8 Feb 2007 | 4:34 PM ET

Toyota Cutting Labor Costs? Maybe, Maybe Not
Today at the Chicago Economic Club, Jim Press, the highest ranking American member of Toyota Motor's executive corps caused a bit of stir, when he said the Japanese automaker would like to cut labor costs without cutting wages. Though vague, the comment has investors wondering if Toyota is talking tough on labor -- and if this is a sign of problems for the folks that make the Camry.

I wouldn't read too much in to Press' comments. For a couple of reasons:

1. Toyota, like any manufacturer, would like lower labor costs. But this company does not want to do anything that would rattle its non-unionized line workers. The quickest way to make the UAW welcome in a Toyota plant would be to cut worker wages or benefits.
2. Press, and all the other Toyota executives, constantly talk about making their manufacturing process more efficient -- doing more with fewer people. That's a proven method Toyota has used to make its plants more productive, with lower labor costs.

I suspect Press was answering a question about making Toyota more efficient, when he made the remark about cutting labor costs from the perspective of improving manufacturing. There's no indication Toyota is facing cost pressures that need immediate correcting. But if the company can continually make its plants -- already the most efficent in North America -- run at even lower cost, then the Japanese automaker can keep its business growing.

Questions? Comments? BehindTheWheel@cnbc.com

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  • Phil LeBeau is a CNBC auto and airline industry reporter based in the Chicago bureau and editor of the Behind the Wheel section on CNBC.com.

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