Toyota Motor Manufacturing Canada (TMMC): The Lexus RX 330 Line 1 On the day of April, 25th 2000, Greig Arnold found himself both anxious and excited as he approached the offices of Toyota’s worldwide headquarters in Toyota City, Japan. He was about to meet with the Chairman of global operations, Ikebuchi Nakatani, at the world’s third largest automaker. His hope was to convince the Chairman to support his company’s bid for the new Lexus RX 330 line, which would be the first of its kind manufactured outside of Japan. This would not be easy. Greig, along with the President of the division, was part of a delegation from the Toyota subsidiary in Canada, the Toyota Motor Manufacturing Canada (TMMC), which was 100% owned by the Toyota Motor Corporation. Although he was the Director of Operations at the Cambridge, Ontario plant, decision-making was very much a consensus-building process at Toyota and involved not only the President but inputs from line employees as well. After all, he was part of a company that was famous for its quality production system and employee involvement initiatives embodied in terms such as Total Quality Management and kaizen, Japanese for Continuous Improvement. All of these had originated within the company and were now standard terms in most business schools. Greig knew the strengths of having the global company locate its newest manufacturing venture at his plant but at the same time also knew that he had to act in accordance with the company’s values and ways of doing business. Meanwhile, Ikebuchi Nakatani looked over the one sheet of A3 paper in front of him with intense eyes. The paper took up only 14 inches by 10, but within it was information that helped him cope with making a decision that would be worth multiple millions of yen and could perhaps put the reputation of the company’s premier vehicles on the line. As the Chairman of global operations he was one of the highest authorities for making the final decision as to where the new Lexus RX 330 manufacturing line would be located. Ultimately, however, he would have to make his recommendation regarding the global manufacturing location decision to the Chairman, Hiroshi Okuda, and the President, Fujio Cho, of the Toyota Motor Company. Toyota Motor Corporation The Toyota Motor Co. Ltd was first established in 1937 as a spin off from the Toyoda Automatic Loom Works. The Loom Works, then one of the world's leading manufacturers of weaving machinery, was headed by Sakichi Toyoda, heralded by some as Japan's ‘King of Inventors’. It was the patent rights to one of his machines that were sold to Platt Brothers in the U.K. that ultimately provided the seed-money for the development and test-building of Toyota's first automobiles. 1
Copyright 2003- This case was written by William H.A. Johnson, Department of Management, Bentley College, Waltham, MA and is meant for classroom discussion. It is not to be used without permission. It is the authors’ interpretation of a business situation and does not reflect the official opinions and policies of the subject company. It is a fictionalized account of a real life business case, based on public data and personal research by the author and is not to be taken as historical fact, although based on these valid data. Persons mentioned in the case are fictional for purposes of confidentiality. The case is meant to be an instructional aid in the classroom as an example of the processes of global plant location decision-making and strategic initiatives in a Japanese firm. It has been prepared as the basis for class discussion rather than to illustrate either effective or ineffective handling of a managerial situation.
In 1947, Toyota launched its first small car, the SA Model. The production of vehicles outside Japan began in 1959 at a small plant in Brazil. Recently, the move to globalization is even more evident. As the company’s website stated in the 21st century, ‘Toyota believes in localizing its...