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Fujio Cho has a soft spot for Kentucky bluegrass. Before becoming president of Toyota Motor Corp. in 1999, he earned his spurs as a global manager during a seven-year stint overseeing the company's main U.S. manufacturing base in Kentucky. One day not long after his arrival, a rare snowstorm swept in, threatening to seize up Toyota's famed just-in-time production. But when Cho set foot in the Georgetown factory that morning, fearing the worst, he found it humming. "Workers either spent the night at the plant or set out to work three or four hours early to make sure the line would start on time," he recalls. "It's something I'll never forget."
Cho himself is no less dedicated to the job than those Kentucky workers. Unlike his outspoken and swashbuckling predecessor -- now company Chairman Hiroshi Okuda -- Cho is known for his easygoing personality and careful, steady management style. Despite a sluggish home market and worries about a slowdown overseas, Cho, 66, has steered Toyota to record earnings. The world's third-largest auto maker (after General Motors Corp. and DaimlerChrysler Corp.) posted a 53% jump in net profits, to $8 billion, for the year ended Mar. 31. Sales rose 6%, to $130 billion. That's almost double those of rival Nissan Motor Co. and marks an all-time high for any Japanese company.
What's behind Cho's success? An ability to juggle many challenges. He has managed to keep a 42%-plus share of Japan's shrinking car market, roll out popular new cars such as the restyled 2004 Lexus RX 330 in the U.S., and even turn a profit in Europe, where his company perennially lost money. Toyota's Yaris subcompact, made at a new factory in Valenciennes, France, is a hit with finicky European drivers, helping Toyota to rack up a $30 million operating profit in Europe last year.
Toyota's success abroad is no fluke. Cho's legacy may be his commitment to spreading the "Toyota Way" of manufacturing farther and wider than ever before, even as he gently puts the brakes on output in Japan. Since January, he has announced plans for expanded production in France and Britain, a new, $800 million pickup truck factory in San Antonio, and a second plant in Tianjin, China, to make 50,000 Crown mid-luxury cars by 2005.
Although Toyota now has just 5% of all passenger vehicle sales in China, that's where Cho is making his biggest bet on future growth. Beijing snubbed Toyota for years, but in 2000, Cho finally won approval to build its first Chinese factory, in Tianjin, with local partner First Automotive Works Corp. That facility started up last fall and is on track to pump out more than 50,000 Vios subcompact models this year. But Toyota still has a long way to go to reach Cho's lofty goal of making and selling up to 400,000 cars annually in China by 2010. That's key to another ambitious target: capturing 15% of the global automotive market by 2010, up from 10% now.
No wonder the University of Tokyo graduate believes his toughest job will be getting all those new worker bees and their managers in tune with the Toyota corporate philosophy of kaizen, or continuous improvement. "We are depending more and more on people hired locally to lead our overseas affiliates in just about every post," he says. "One of the most important parts of running our operations is getting employees throughout the world to fully understand the Toyota Way."
To do that, Cho has set up an in-house MBA program of sorts, complete with visiting professors from the University of Pennsylvania's Wharton School. Called the Toyota Institute, it's on a campus located not far from global headquarters in Toyota City. Toyota's president enjoys being back in Japan and teaching part-time at this corporate version of the Ivory Tower. But he says he'll always cherish his memories of his Kentucky days.