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Toyota was able to transform itself from a Japanese importer to a leading manufacturer in North America by creating economic impact with its U.S. plants, exercising great corporate social responsibility, listing itself on the New York Stock Exchange, as well as by developing a comprehensive and systematic plan for public and government relations, said Dennis Cuneo, executive advisor and general counsel to Toyota Boshoku America.
“That’s not to say Toyota doesn’t have more work to do,” Cuneo said during a talk sponsored by the Chicago Asia-Pacific Group at Gleacher Center on March 17. “But it’s an interesting case study of how a company in a period of about two decades went from just being an importer to now being a pretty significant part of the U.S. economy.”
Economic impact was the most important of the four pillars, he said. When Cuneo joined Toyota in 1983, the company had one plant, which manufactured truck beds, in southern California, he said. In 2007 Toyota made 1.7 million vehicles in North America and by 2010 will have the capacity to build 2.2 million, Cuneo said.
The company has invested $21.8 billion, created 43,858 direct jobs, and purchased $29 billion in goods from North American suppliers, including some 500 Tier One suppliers in 25 states, he said. “The key to being an insider is that kind of economic impact,” Cuneo said. “Toyota is a major significant manufacturing presence in North America. If you have all of these jobs and suppliers, each with their own supply chain, that helps bring you some political clout.”
Toyota’s CSR activity begins with its reputation as an environmentally sound company, he said. Toyota currently makes six different hybrid models, including the popular Prius, which was its third best-selling car in North America and outsold the Ford Explorer last year, Cuneo said. The company accounts for 78 percent of the U.S. hybrid market and 50 percent worldwide, he said.
About four years ago Toyota created its 21st century diversity strategy with nine initiatives, including procurement, human resources, dealer representation, and an outside diversity board instructed to hold the company accountable for its goal of becoming the industry leader in diversity in America, Cuneo said. Toyota is now one of only 14 members of the Billion Dollar Roundtable, which requires purchasing $1 billion annually from minority firms, and contributes $40 million annually in philanthropy, he said.
Joining the New York Stock Exchange in 1989 forced the company into more financial transparency, Cuneo said. “Toyota had to become basically like an American company in terms of its financial disclosure,” he said. “That drove a lot of transparency within the whole organization.”
Toyota has avoided the ongoing tendency of many Japanese companies to de-emphasize public relations in the U.S., Cuneo said. “If you don’t tell your story, somebody else is going to tell it – maybe somebody you don’t want telling it,” he said. “Positive perception is good for your business, and the corporate image can be as important to your company as product or brand image.”
Because Japanese auto companies know government relations can have a major impact on corporate strategy, for years Toyota has maintained a significant presence in Washington DC, Cuneo said. “Think of the voluntary export restraints requested by President Reagan in early 1980s, the 25 percent truck tariff that still exists today, or other legislation that’s been proposed,” he said. “As a domestic manufacturer, Toyota is now subject to the same regulatory and legislative issues as GM, Chrysler, or Ford.”
--Phil Rockrohr