Driving Efficiency: The Role of Technology in Toyota's Labor Strategy

Introduction to Toyota

The Success story of Toyota had been built for the sake of innovation, which was in terms of process and products through which they were established. In the year 1918, Sakichi Toyoda had brought innovation in the weaving industry by invention, an automatic loom (Toyota, 2008). He sold his patent to a British company and financed his son Kiichiro to start a car developing industry. The company took the ideas from the loom business and made a prototype of a new automotive car by 1936. The Toyota Motor corporation was made with investments of £300,000, wherein it had faced tough times establishing oneself as a Japanese company of car was dominated by various American companies like General Motors and Ford. Apart from facing various difficulties, the Company had survived and made its 100,000th vehicles in 1947. And had adopted a new system of manufacturing vehicles in the year 1950(Toyota, 2020). The Toyota production system was an exceptional set of principles which was utilized in the various motor industry.

Toyota is one of the leading and well-known business firms which builds cars and trucks and possess its company in 26 countries and 160 markets. Toyota's global production had made 10,285 million vehicles in 2014, which meant that one car had come off the lines of production every 3.1 seconds, each minute, each hour and each day. The main element in the success of Toyota is the commitment and dedication prevailed by the company to design, engineer, and build cars in the region of the world. The Toyota company had opened its first European production center of car plants at Burnaston and engine factory at Deeside in North Wales (Amasaka, 2012).

As per Eduardo Lander (2014), The production level of Toyota had made the company a key player in the manufacturing industry of the nation. Since most of the output of the Toyota was made for export, the company had made a valuable contribution to the balance of payment. Burnaston had become the worldwide producer for the Toyota Avensis and became the first factory of Toyota to export the cars to its own home company in Japan. In the year 2004, the company had invested £50 million to enhance the capacity of production to 285,000 vehicles a year at Burnaston, and the company had attained Queen’s Award for International trade in 2005 for its achievement (Toyota, 2008). The company has further invested £100 million to make next-generation Auris hatchback and Wagon and hybrid versions of cars by late 2012(Eduardo Lander,2014).

Labor economy and technology and its relationship

As per Ruttimann and Stockli (2016), Technology is defined as a state of knowledge which concerns the ways of conversion of resources in the output. It is a machine and equipment which is developed through the application of knowledge in a scientific manner. There are mainly two types of process which are associated with new technology products that include innovation and invention. The invention possesses the formulation of principles and processes. Innovation, on the other hand, entails the application of knowledge for a useful purpose to attain a profit. The new technologies which stem from the innovation possess to influence the economy and have transformed household life and ways to conduct business (Kageyama, 2011).

Technology has even affected workers, which are also called labor augmented technology or labor-saving technology. The usage of computers, the internet, and information technology have impacted the labor productivity. The digital trade and e-commerce have declined the transaction costs and have increased market transparency. This permits the consumers to attain the effective and convenient experience of shopping, which raises the standard of living. The usage of information and communication technology has enhanced the availability of market information which have led to stable and better market function (Ruttimann and Stockli, 2016).

The effects of the labor-replacement and labor augmented technologies upon the labor demands are uncertain and unclear. Labor-saving automation have reduced the requirement of labors and produced output. The new technologies have not declined the demands of the skills but have devalued redundant and have lowered the demands of middle-skilled labors. The demand for routine jobs and tasks has declined wherein the demand for highly skilled and lower-skilled workers have risen significantly. The increase in technology has reduced the number of jobs and occupations which need lower skills wherein have even enhanced the tasks which need creative skills (Blue-Green Alliance/American Council for Energy-Efficient Economy, 2012).

Taking Toyota company into consideration, it is seen by EL-Khalil (2015) that the introduction of new technology has enhanced the opportunities for new jobs, which further increased the employment and business advantages that were experienced by the supplier’s firms of UK. Toyota (GB) Plc. is one of the companies, which was responsible for the marketing, sales, customer relation, and after-sales for Toyota in the UK, which had employed 400 people at landmark headquarters, which was established in Surrey. The performance of sales of the company in the past decades has made the position of the UK to one of the strongest European markets for Toyota. It can thus be stated that the change in technology has increased the employment opportunity for highly skilled and lower-skilled employees but has declined the opportunity for middle-skilled employees (EL-Khalil, 2015).

Employment effects of technologies

Several technologies have their effects on employment, and some of this technology are Autonomous Vehicles, additive manufacturing, algorithmic decision making, industrial and services robots, blockchain technologies, digital factors, and active assisted living. Each of these technologies is found to possess impacts on the demands of laborers as several laborers could be substituted by the routine activities made by the usage of the technologies.

Autonomous vehicles are the one which substitutes human drivers in private and passenger cars and even in freight traffics. The autonomous driving would substitute the larger number of professional drivers and make them jobless.

Algorithmic decision-making will be substituting the human making of decisions through an algorithm that is linked with bigger sets of data and probability. Algorithmic decision-making expert is taken as the potential tool to substitute a large number of employees working in an office (Basak & et. Al., 2013).

Industrial and services robots are the machines which execute the physical tasks without human interventions and doesn’t even require any manual and routine task and further substitute the workers.

Additive manufacturing is a technology that produces three-dimension arts by adding layer material. The blueprint prevailing in the computer system reveals the final object’s shape. There is several manufacturing units which makes usage of additive manufacturing (Wee &Wu, 2019).

Digital Factory is the new connection of network which is embedded in the equipment of production that permits in exchange for the production data. It customizes the products and integrates the value chain with customers and suppliers (Kageyama, 2011).

Bitcoin and BlockChain technologies are the electronic money which is established by the private firms as per the data which record and safeguard transaction and possess ownership titles. This technology could, however, be an opportunity for new entrants and will be creating issues for traditional banks.

Smart Home and Active Assisted Living is the ICT that gives assistance and supervision to several people who are not able to perform their work and are disabled. The AAL is linked with the automation of home and even in supervision and decision making (Basak & et. Al., 2013).

The Labor markets in EU countries

The labor market of EU member state has faced a global financial recession and crisis in 2008/09 and are recovering slowly from it in a pacer manner. The recession has risen the unemployment rate from 2008 till 2012, and then the rate of risings started declining. In 2013, the rate of unemployment had started declining in almost every member state of the EU. Certain countries were affected largely due to the financial crisis that includes Ireland, Spain, Portugal, and Greece (Liker & Convis, 2011). Unemployment in the EU has declined post-crisis of 10.9% to 9.4% from 2013 to 15 span of time. The unemployment had remained higher in certain countries of Europe, but recovery was also taking remarkably. The rate of unemployment is 2.4 percent higher as compared to unemployment and crisis attained by the EU during 2008. It can be stated that there were, on average, 22.872 million people who got unemployed in the European Union by 2015, wherein the rate of unemployment was highest in Spain, France, Italy, and Germany (Toyota, 2018). The slower rate of recovery was the pacer rise in long-term unemployment. The number of people who were unemployed within one year got doubled directly from 6.1 million people to 12.3 million with 2008-2013. The long-term unemployment had reached 10.9 million people in 2015. When the analysis was made upon the long-term unemployment to total unemployed people, then it was seen that there was a severe increase in the rate, which includes 37% in 2008 to 49.3% in 2014. This has brought a major change to the unemployment rate. Moreover, it is also found that the rate of youth unemployment has increased in a greater manner in EU member countries. Unemployment among people who are less than 25 years of age had increased from 15.9 % in 2008 t0 23.7% in 2013, which subsequently declined to 20.2% in 2015. Countries like the UK and Germany had declined the rate of unemployment, but France, Italy, Greece, and Spain had faced major issues of unemployment in a greater extends (Toyota, 2018).

Economy of the United Kingdom

The United Kingdom possesses the fifth-largest economy in the world, with gross domestic products of $2.85 trillion as per 2018. The country possesses 66 million population and is made up of Scotland, Wales, Northern Ireland, and England. The quality of life of the country is higher and possess a diversified economy. Manufacturing, services, tourism, and construction are the main sectors that have leads to the majority of the GDP of the UK. As per the U.K. Office for National Statistics, the service sectors are the largest and accounts for three-quarters of the GDP (Wee& Wu, 2019). This industry possesses different sectors like finance, business services, as well as customers-based industries such as food and beverages, retail, and entertainment. The manufacturing and production industry contributes to about 21% of the GDP, whereas agriculture leads to less than 0.60% of the GDP of the UK (Liker& Hoseus, 2018). The manufacturing sectors increased by 2.5%, whereas construction sectors increased by 7.1% in 2017. The food products are the largest in the UK manufacturing sectors, which results in 18.3% of UK manufacturing in 2017 and increased by 0.3% by 2018. It is even found that the automobile industry of the United Kingdom has contributed to 22 billion British pounds to the country’s economy in 2016, which declined to 18.6 billion British pounds in 2018. The export of the U.K. had led the company to increase its GDP by 31.1% by the end of 2019, wherein cars were the main products of export (Statista, 2019). Apart from that, tourism is also another moneymaker for the UK, where in the country has earned approximately $28.4 billion on travel and tourism in the UK. The visits of the people in June 2019 had increased by 9%, and overseas visitors had spent 13 % more than the previous year. However, Britain decided to leave the European Union have damaged the growth and lowered the investments over the business. This has even reduced the exchange rate and raised inflation and declined the consumer's income. The consumer's income and spending have not made a greater contribution to the UK” s economy after the exit of the British (Wee& Wu, 2019).

Impact of Technology used in Toyota upon the labor market of the UK

As per Liker (2014), The Toyota Motor Corporation, which is the world’s leading manufacturer of cars, have utilized automation and had replaced humans with robots. Toyota technology The estimated share of jobs that are at risk due to the automated technology of Toyota has reached over 80 percent. Most of the analyses have suggested artificial intelligence and new technologies will be benefitting higher-skilled workers who will have a higher degree of flexibility, strong problem-solving skills, and creativity. The modern technology of Toyota had made more than 80 percent of the middle-skilled employees to be unemployed and jobless. Toyota has taken deliberate steps and replaced humans with robots until 2018.Companies have applied machines as it performs work quickly and at lower costs. The increased automation and technological advancement of Toyota have led to the loss of jobs due to technology redundancy (Woodyard, 2011). There is various report which reveals that more than 3 million jobs would vanish in the UK in the upcoming two decades due to Toyota technology. Although, Toyota’s production principles had a notion that people are indispensable and acknowledge issues, offers a new solution, and make a new suggestion for creative stuff. However, since manufacturing power is calculated more by robotic agility rather than human ingenuity, so most of the companies along with Toyota have made the company to use robots in manufacturing and improve 200% of the productivity of the company. It had been observed that various plants possess more than 1,000 robots and less than a thousand people working on an assembly line (Harris, 2017).

However, Toyota has taken back its step and is replacing automated machines with manual production lines staffed with humans. It has employed 370,870 people in the 2019 fiscal year. The main concept of this strategy of Toyota was to be sure that workers acknowledge the work instead of feeding parts in machines and going helpless. The other motive of the involvement of the employees was to enhance higher quality and be effective. The companies even get worried that automation results in average workers and not master workers (Likerand Meier, 2017). This is the result that the company has started employing those people who can work and improve smarter machines. However, the rapid diffusion of ICTs and other technologies in the workplace has enhanced the demand for skills due to the relation between ICTs and skills (Womack& Jones, 2016). After the Toyota company have introduced and developed the skill-complementary technologies, there are fewer opportunities for middle-skilled people, which demonstrates that Toyota company has impacted the Labor market both negatively and positively.

Role and Importance of technology within the operations of Toyota

It is stated by Liker (2014) that Toyota company has taken the path of development from the initial times of business till the present days and models of Toyota have been emphasizing by the company. Toyota models have showcased each stage of the business from Toyota’s passenger car to truck to progress. The company has attained popularity, comfort, higher speed, the efficiency of fuel, and conservation of the environment. The company has adopted Toyota Production System, which is an information technology system that has supported the business process and assists the company in eliminating the wastage and making its operation without inventory and improvise the production (Womack & Jones, 2016). Technology has played a major role in supporting, permitting, and bringing life on a mass scale. The company has also produced electric vehicles which make the usage of electricity to run the vehicles and are capable of reducing the carbon emission and saving the money of operators. The company has delivered cost-saving vehicles by reducing the consumption of fuels, which made these companies more relevant and sustainable (Amasaka, 2013).

The usage of technology has strived the company to provide quality products and services and have given facilities to the customers. It has also created sustainable growth and has kept its competitors backward through its policies and procedures of innovation. Toyota has even made the adoption of innovative techniques and technology. It has manufactured efficient hybrid cars, Prius, which is one of the energy effective and healthy products for the environment. The Toyota production system, which is technology innovation, has permitted the company to improve its ways of manufacturing products and attain customer satisfaction (Harris, 2017).

According to Liker (2014), It is the technology which has made the company to attain success globally. The motive of the company to provide a high-quality system has made the company adopt different technologies. The adoption to change and innovate has made the company to attain competitive advantage as compared to other manufacturing companies (Liker & Hoseus, 2018). Toyota has made greater investments in technology and innovation and is improving its relationship with suppliers to resulted in good quality products and services. In addition to that, it is observed that since the automobile has affected the society in a greater extends, Toyota company have worked on the development of technology to answer the issues of society like safety measures, resources, and energy-saving measures and also exhausted regulation of gas emissions(Toyota, 2019). The company has also made the usage of preventive safety technology to protect people from any sorts of automobile accidents. There is even the implication of damage mitigation technology, which safeguards the people from accidents and ensures vision and visibility. It can thus be stated that technology has played a major role in the operation of Toyota and have become a contributor to attain success (1Tech, 2019).

Impact Of Toyota Technology In Local Economy Of UK

Rhodes (2019) states the fact that the automotive industry is one of the main economic and industrial forces all over the globe. Near about millions of cars are produced annually, and thus they are accountable for half of the globe’s consumption of the oil. It is identified that the automobile industry tends to recruit near about 4 million people directly or indirectly. Although most of the large companies face issues related to overcapacity as well as low profitability, the automotive industry has a major impact and significance. The automotive industry, such as Toyota, offers good jobs with handsome salaries; it also possesses a huge association with the supplier industries. It has been identified that technology tends to lead to different opportunities, thereby permitting innovations along with the creation of cleaner and efficient vehicles. With the rapid creation of technologies, there have been unprecedented changes in customer expectations. Political changes are also leading to new challenges for Toyota because the UK prepares for its withdrawal from the European Union. The automotive sector is one of the UK’s significant economic pillars that delivers near about £20.2 billion to the treasury and tends to employ 168000 people. Because 200000 people are selected in new car retail, UK based car finance companies such as Toyota tend to employ near about 45000 people and make an economic contribution of near about £12.5 billion.

As per views of Foley & et. al. (1996), when productivity is taken into consideration, it is noted that the automotive industry has led to near about £18.9 billion to the economy of the UK. The UK comprises of the most productive automotive factories in the European Union. In the UK, near about £2.4 billion is invested each year for research and development in the automotive industry. Despite such impressive pictures related to high productivity, huge investment, and growth opportunities, it has been identified that the UK faces major challenges from its competitors in Northern Africa as well as Eastern Europe that proves to be quite competitive. In case the UK wants to continue to flourish, then it is supposed to offer high value-added goods and services and competitively priced vehicles. The economy of the UK can easily attain a huge level of competitiveness using strategic investments in digital manufacturing systems.

Nkomo (2018) reveals the fact that the government policy in the UK, basically for the automotive sector, is dependent upon the industrial strategy. The different industrial strategy comprises of a sector deal for the automotive industry. The Government’s 2018 Road to Zero Strategy tends to demonstrate the way it would endorse the changes to zero-emission road transport and minimize emissions basically from the traditional cars in the period of transition. Different measures are set, such as ambition for near about 70% of the sales of new cars to be ultra-low emission by the end of the year 2030. The government demands the rise in the uptake of EVs and for phasing out conventional petrol along with diesel engine vehicles. The government grants using electric car ownership quite affordable and for offsetting the costs linked with installing different charge points at the driver’s home, on-street sand workplace. It has been identified by Cavallo (2016) that the decline in the technology intensity that takes place from a decline in technology spending forces the labor force to decrease that is visible in productivity. At Toyota, technology investment is rising at a faster pace in comparison to the revenues. It is evident that technologies are significant to successful operation of different companies and it has a major impact on the economy of the UK.

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