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Toyota takes the razor to its North American operations

TOYOTA Motor Corp, the world's largest vehicle manufacturer, will freeze wages and offer voluntary redundancy to plant workers in North America for the first time as it widens output cuts to adjust for slumping vehicle demand.

The company will cut pay for factory executives and eliminate bonuses for all salaried employees, Toyota said in an e-mailed statement late yesterday. The Japanese car maker is making further cuts in its assembly schedule for April, and creating a "job-sharing" program to reduce work hours at some plants, said Toyota's United States spokesman, Mike Goss. Since passing General Motors Corp in global sales last year, Toyota has forecast its first operating loss in 71 years as the global recession cripples demand for its Camry sedans and Tundra pickups.

Toyota posted a 32-percent US sales drop in January and has already announced plans to reduce output at its plants in the US, Canada and Mexico.

"Welcome to being No. 1," said US analyst Rebecca Lindland, from IHS Global Insight. "Toyota's profile is now very similar to that of a Big Three US manufacturer, in terms of product. They're running into some of the same issues in the downturn."

Toyota is creating an optional program for employees who wish to leave voluntarily, Goss said. The redundancy offers 10 weeks of pay plus two weeks of pay for every year of service, and a US$20,000 lump-sum payment. Goss said Toyota has no numerical target for the plan.

Under the "work-sharing" program, production employees will work and be paid 72 hours instead of 80 hours during the two-week pay period, Toyota said.

No lay-offs

"We're not laying anybody off," Goss said.

Toyota shares were unchanged at the closing bell on the Tokyo Stock Exchange yesterday.

This month the car maker said its operating loss in the year ending March may total 450 billion yen (US$4.94 billion) after earlier forecasting a 150-billion-yen shortfall. Toyota's incoming President Akio Toyoda plans to replace most of the company's top executives to tackle the auto industry crisis.

"We've taken responsible, step-by-step actions to address this issue in recent months, and we hope the new measures will help us adjust, while protecting jobs," said Jim Wiseman, vice-president of external affairs for Toyota's North American engineering and manufacturing unit.

Toyota has cut its forecast three times in the last four months. It has also been hurt by a stronger yen.


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