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POST OF THE DAY
Macro Economics
Toyota Idles Plants

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By Milligram46
January 27, 2010

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Impacted workers have two choices on the factory shut downs at Toyota. Use vacation or go on unpaid leave. This is also another broken covenant by Toyota who vowed they would never do these kinds of actions with their non-union employees.

Factories in Kentucky, Indiana, and Texas are impacted. If this goes for any period this is going to ripple through the supply network, and engine factories in Alabama. Dealers are already stating deep concern over the inability to sell the core bread and butter vehicles, RAV4, Camry, Corolla, and Highlander.

I've been looking in the "commentsphere," and the public response has been swift, clear, and about 95% negative on Toyota.

Toyota lets this problem drag out way too far, way too long, and took too little action. Their action now is heroic but their core pillar, their whole business was building safe, reliable, trusted, boring cars. They've shattered consumer trust, and even the uninitiated in automotive technology can stand back and go, "wow, they can't get a gas pedal right," and red flags go off.

Macro economic impact? If buyers defer Toyota purchases then of course its not good. Thousands of factory workers idled for any period of time without pay is bad, further the ripple it could have through the entire supply chain. For Toyota directly if the problem is deep within the design of the vehicle, it could be huge to fix. They had a fund set aside for large scale recalls, but that fun is already been eaten through (so says Toyota earlier) on the floor mat "non-issue," as clearly the real issue is far worse.

The car industry doesn't need this. If buyers defect then it isn't as bad on the economy, they keep buying cars. If buyers wait everyone hurts. At a local level if you're a Toyota salesmen and you can't sell four of their five top selling models, that is a huge impact for tens of thousands of workers and just as they are celebrating the (sung to the tune of 12 days of Christmas), "five months of bills," and further already smarting from a weak auto sales market.






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