VALENCIENNES, France — To long-time automotive journalists, this inauguration ceremony in early June looks like just another flawless startup of aMotor Corp. plant: The assembly line is humming, there are no half-built cars stacked up in the aisles for repair, and demand for the product — the Yaris subcompact — is soaring.
Ho hum, same story, different day when it comes to, the world's third largest automaker. But hold on, this is France, where the government mandated a 35-hour work week in January. Shouldn't workers be stopping to have a glass of wine and a little brie after every car build?
In a word, no. OEMs and suppliers alike admit the new 35-hour mandate is a huge headache, but so far it's been more or less business as usual, with the exception that workers now have 10 more days off per year. That sounds like a lot of time off, and it is. The French now work about 1,575 hours per year compared to about 1,800 in the U.S. Even so, economic development officials argue that French workers still put in more hours than the Germans, (about 1,550 hours per year), and French wages are lower while their productivity is higher.
The stereotype of the French work ethic isn't positive in the U.S., but it doesn't ring true here in gritty northern France, where they know more about mining coal and producing steel than making wine and cheese. Between towns the landscape resembles Northern Ohio, with high-tension power lines criss-crossing rolling farmland. The only mountains visible here in the Nord — Pas de Calais region, a few miles from the Belgian border, turn out to be giant piles of mine tailings.
But once you roll into any of the region's cities, from Valenciennes to the local capital of Lille, the area once again seems very French, loaded with historic buildings. And the food, well, it's a bit better than what you find along the Ohio Turnpike.
Despite the differences, Nord — Pas de Calais suffers from the same ills that plague all older industrial areas. Since the mining, steel and ship repair industries started declining in the late '60s, unemployment has soared and the area has been struggling to attract new development.
It now has turned itself into a major automotive center, with three other major vehicle assembly plants (twoSA and one Peugeot Citroen plant besides Toyota) and more than 150 suppliers in the region. But even with the new Toyota plant, unemployment is 17% (down from 20%).
Some competitive regions complain that Valenciennes won the Toyota plant with excessive grants and economic incentives, but Northern France economic development officials say the region offered incentives equal to about 10% of Toyota's FF5 billion ($685 million) investment, considerably less than what was given some other major facilities in France, such as DaimlerChrysler's Smart car plant.
Economic development officials say Toyota chose the region because of the area's established infrastructure and proximity to suppliers as well as access to major European markets. They also point out that the region has the lowest unionization rate in Europe, and hourly labor costs rank well below Germany, Belgium, the U.S., Japan, The Netherlands and the U.K.
Absenteeism averages between 2% and 2.5% including sick leaves and — counter to the common American misperception — strikes are rare. The general manager of's big plant near Calais, which makes 6 million alternators a year, reports that the plant has lost two days of work to strikes in the past 25 years of operation.
Even though local and national development organizations fought hard to win the new factory, the road to this inauguration ceremony on a drizzly day in June has not been an easy one, even though Toyota Motor Mfg. France SAS officials brag they've managed the fastest production ramp-up in Toyota history.
If you aren't French, building and selling a new small car here is difficult, even if you are Toyota. France may be in the heart of one the world's most competitive vehicle markets, butand Peugeot dominate the landscape, controlling 60% of domestic sales. More than a dozen other automakers, including AG and the Group, fight for the scraps. Nationalistic feelings are strong, and — much as it was in the U.S. 20 years ago — Toyota's announcement in December 1997 that it was going to build Yaris subcompacts in a high-volume factory in Northern France wasn't well received in many quarters.
Despite its manufacturing prowess and sterling reputation for quality, Toyota is a small player in Western Europe. Last year, sales reached 656,000 units, making it the ninth largest automaker. Its goal is 800,000 units by 2005.
Initially, the French automotive press was openly hostile to Toyota's manufacturing iniative: Writers could not believe a Japanese automaker could make a car that would be popular on the streets of Paris.
A lot of attitudes have changed since then. For one, imported versions of the Yaris, which was actually designed at Toyota's European Design Center, won good reviews when it was introduced in 1999. Through April of this year it has sold more than 220,000 units throughout Europe, winning praise even in tough markets such as Italy. The Yaris also won the European Car of the Year award in 1999. First-quarter sales are up 9% in Europe and 33% in France.
Sales are so strong that TMMF announced in May that it would add a second shift and increase production capacity from 150,000 units a year to 180,000 by the beginning of 2003, creating an additional 400 jobs.
But, as usual, Toyota is going its own way in designing the most lean and efficient plant possible. Didier Leroy, TMMF's vice-president of manufacturing, says this new facility isn't just another cookie-cutter plant being transplanted from somewhere else, as is the fashion among many automakers today. Mr. Leroy also says Toyota isn't using a manufacturing strategy that emphasizes the use of big supplier-built modules, like DaimlerChrysler is doing with its SMART minicar plant, also located in France.
Instead, Mr. Leroy says, Toyota started with a clean sheet of paper to develop the leanest, most compact auto plant ever, with almost negligible in-process inventories and sometimes no repair areas. “Compactness” was the word of the day during the inauguration, with some gushing “Très (very) compact.”
The factory itself is designed in what Toyota terms a star shape. The assembly shop is more or less in the middle, with plastic injection molding, engine assembly, welding, metal stamping and paint operations surrounding it. The layout is designed to optimize the flow of parts, vehicles and information and to keep the consumption of water and different forms of energy, ventilation and movement to a minimum, Toyota says.
No suppliers are involved with assembling components inside the plant, nor are paint suppliers involved with the operation of the paint shop, as is the case with many assembly plants.
TMMF currently is working with 12 suppliers in the area, 41 in France, and 70 from other European countries. However, Mr. Leroy says TMMF isn't pressuring suppliers to locate facilities adjacent to the factory to facilitate just-in-time parts delivery.
Production began just 22 months after plant construction started. Job 1 was officially Jan. 31, and the plant has been ramping up production since then at a record pace. The first shift hit target production of 215 units per day in just 2.5 months, and Mr. Leroy predicts he will hit full capacity on the newly announced second shift by September, or 430 cars per day. Tac time — the time it takes for a car to move through each assembly station — will be reduced from roughly 108 seconds now to 72 seconds next year to achieve TMMF's near-term production goal of 150,000 units per year, which will rise to 180,000 units by 2003.
Oddly, he didn't mention breaks for wine and cheese.