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Continuous Improvement: The Evolution of Toyota
Continuous Improvement: The Evolution of Toyota

“Before you say you can’t do something, try it.” Sakichi and Kiichiro Toyoda

From its origins as an offshoot of the cloth industry, Toyota has become one of the most influential car companies in the world.

Origins

Toyota began as a loom-making company founded by the inventor Sakichi Toyoda. In 1933, Toyoda created a new branch of the company dedicated to making automobiles, under the leadership of his son, Kiichiro Toyoda. This branch became independent in 1937, formingthe Toyota Motor Company.

From the start, the Japanese government encouraged Toyota. Politicians were keen for the country to have access to cheap motorcars, as well as vehicles for the war with China. Providing trucks that the military could use was an important part of the company’s early growth.

Post-War Revival

Defeat in the Second World War devastated Japan’s economy. In the aftermath, the government went through successive economic policies that rebuilt the economy in stages and proved a boon to companies such as Toyota.

During the immediate post-war years, this meant a focus on producing raw materials such as coal and steel. While this didn’t directly affect Toyota, it ensured the flow of materials that companies needed to survive a difficult period.

Despite this, the company almost collapsed in 1950 due to a lack of business. It was saved by a change of management and a surge in sales to American armed forces serving in Korea.

In the 1950s, the government of Prime Minister Hayato Ikeda brought in a policy of heavy industrialization. The Bank of Japan gave large loans to individual banks, which in turn leant large sums to companies such as Toyota. Accompanied by import controls and financial allocations to stimulate the economy, this created fertile ground for Toyota’s recovery.

Becoming a Global Company

Toyota set up its first American dealership in 1957 and its first foreign plant in Brazil in 1959. By adapting its designs to local markets, the company gave itself a better chance of appealing to customers.

It was in the 1970s that Toyota really took off as an international company. The oil crisis created demand for smaller, more fuel-efficient cars, which Toyota could provide.

Having benefited from more efficient models in the 1970s, the company adapted again in the late 1980s, introducing the Lexus luxury car brand. This made the most of the troubles of American luxury car makers, carving out part of their market.

The Modern World and the Toyota Production System

Toyota is now one of the largest car manufacturers in the world and one of the most adaptable. It is currently expanding its range of electric and hybrid vehicles, to reduce carbon emissions.

Throughout its history, the company’s adaptability and efficiency have been driven by the Toyota Production System, an approach to manufacturing grounded in the ideas of Sakichi Toyoda. This encourages management through continuous improvement – being alert to faults, quick to adapt, and constantly looking for ways to work better.

Toyota has become an industrial giant thanks to its efficiency and ingenuity, but none of this would have been possible without the assistance of the government.

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