Report Says Toyota May Revamp U.S. Operations, Set up Headquarters in New York

The Wall Street Journal is reporting today that Toyota may soon announce a revamping of its operations in the United States, including the unusual step of assigning the new unit to an executive who left the company. A Wharton professor suggests such a move might be to address quality problems in Toyota's U.S. manufacturing plants.

Basing its report on "people familiar with the matter," The Journal says Toyota has asked Yoshi Inaba, 63,to run the U.S. business, which would make its headquarters in New York. Inaba, who left the company in 2007, is currently head of an international airport close to Toyota's headquarters, according to the article.

It was not clear if the overhaul might be a response to Toyota's sales decline in the U.S. Toyota displaced General Motors as the world's largest automaker by sales, but only because its sales didn't decline as precipitously last year as GM's. Toyota's sales and earnings were not as bad as those of U.S.-based automakers in a year that saw the industry limp through a global slump in demand. 

Wharton management professor Lawrence G. Hrebiniak suggests that Toyota might use the sales decline as "cover" for addressing another problem: quality control in its U.S. plants. "There have been some quality problems … especially when you look at what they build in the U.S. compared to what they make in Japan. The U.S. has always lagged behind Japan in quality, and I think that's beginning to grate on them."

In a recent article about the future of Toyota, Wharton management professor John Paul MacDuffie told Knowledge at Wharton that "it is not a surprise that Toyota is not immune to this global slowdown." He noted that after years of conservative growth, Toyota accelerated its expansion over the past decade, making it harder to put on the brakes in the current downturn. "Going from rapid growth to dramatic … shrinkage is a huge challenge" for the company, he said.