Toyota to Cut Hours, Offer Buyouts to US Workers

Toyota Motor on Thursday offered buyouts to some 18,000 U.S. workers and said it would cut pay for executives and blue-collar workers in its North American manufacturing operations in response to plunging auto sales.

AP 2007 Toyota Camry

The Japanese automaker said it would shut down production for additional days in April at plants in the United States, Canada and Mexico. It said it would also cut pay and eliminate bonuses for executives.

The unprecedented cost-cutting steps for Toyota underscored how the world's top automaker and a perennial blue chip in a notoriously volatile sector is struggling amid the worst auto slump in decades.

Toyota said the moves were intended to keep as many of its North American workers on the payroll as possible.

"We hope the new measures will help us adjust while protecting jobs," Toyota Motor Engineering and Manufacturing Vice President Jim Wiseman said.

Toyota is on track to post an operating loss of some $4.95 billion for the fiscal year that ends in March. The loss will be the first group-wide operating loss in Toyota's 70-year history.

The automaker has cut North American production of top-selling cars such as the Camry and Corolla after sales dropped 15 percent in 2008 in the United States, Toyota's largest single market.

It has also suspended work on a new plant in Mississippi, slated to produce its Prius hybrid car beginning in 2010. Rivals Honda Motor and Nissan Motor have also been forced to cut output.

Toyota said the buyout program would not be offered at two plants where its workers are unionized.

Those are the joint venture manufacturing operations it has in California with General Motors and a truck assembly plant in Tijuana, Mexico, the company said.

Toyota spokesman Mike Goss said the automaker expected most of its cost savings would come from the executive pay cuts, lower bonuses, frozen wages and the savings from paying factory workers for a 10 percent cut in work hours.

"In this economy we don't expect many people to take the exit program," he said.

Such buyout programs have become common in the past three years at U.S. rivals GM, Chrysler and Ford Motor .

Both GM and Chrysler, which have received U.S. government funding, are offering incentives to hourly workers to retire or leave the payroll.

Toyota, whose sales fell 34 percent in January, is also planning to implement a program at some plants that would reduce work hours to 72 from 80 over a two-week period. As a result, workers would be paid 10 percent less.

The automaker has not yet decided which plants would adopt the new program, Goss said.

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Like its rivals, Toyota has been stung by the collapse in U.S. demand for cars and trucks, a downturn that accelerated in October and November amid tightening credit and deepening consumer uncertainty.

U.S. auto sales in January plunged to an annualized rate of 9.5 million, the lowest in 27 years.

Toyota has about 30,000 workers in its North American manufacturing operation. That includes about 25,000 hourly workers. Toyota's two Canadian plants employ just over 6,000 workers. Another 1,000 work at its Tijuana plant. 

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