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Toyota to cut executive pay, end bonuses in U.S.

The automaker, which saw U.S. sales fall 15% last year, also plans to reduce shifts and offer buyouts.

February 13, 2009|Ken Bensinger

Facing further declines in sales, Toyota Motor Corp. said Thursday that it would eliminate bonuses for 3,000 employees, cut executive pay and reduce shifts at its plants in North America.

The world's largest automaker saw its U.S. sales fall 15% last year and 32% in January compared with the same month a year earlier.

Breaking from custom, the company has not released a forecast for U.S. industry sales in 2009 because the market is so unpredictable.

Toyota has 14 plants spread across California, Texas, Indiana, Kentucky, Mexico and Canada and said that it would reduce or temporarily halt production at some facilities. It also raised the possibility of cutting some workers from 80 hours per pay period to 72 hours -- what it calls "work sharing."

The work sharing would most likely happen at the Texas, Indiana and Kentucky plants.

In addition, the company is canceling all bonuses for white-collar workers and cutting base executive pay by 5%, a company spokesman said. It will offer buyouts for employees who wish to leave the company.

"We hope the new measures will help us adjust while protecting jobs," said Jim Wiseman, spokesman for Toyota's North American manufacturing division, stressing that the cuts would affect hourly and salaried workers. "The philosophy of shared sacrifice is the best approach for us."

Like all major carmakers, Toyota has been working to reduce production and costs in the face of the worst auto sales market in at least a quarter of a century. Last week Toyota reported a fiscal third-quarter loss of $1.8 billion, in great part owing to the weak U.S. market, and predicted its first full-year net loss since 1950.

Before Thursday, Toyota had instituted a hiring freeze in its North American manufacturing operation, eliminated overtime and postponed plans to build the Prius hybrid in Mississippi.

The company's U.S. sales arm has canceled its annual dealer meeting, cut back travel and suspended merit raises, said spokesman Mike Michels. Toyota has a policy to use layoffs as a last-ditch effort, and the company has said it would take every other possible step before letting employees go.


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