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Toyota City in ruins

By Samantha Stevens, 24 Mar 2009 Industry

Toyota City in ruins

Inhabitants of Toyota's home town struggle for work as automotive boom is replaced with economic gloom.

Toyota-shi is a city hit by a global economic shockwave.

The metropolis, about three hours out of Tokyo in a province called Aichi, changed its name from Koromo to Toyota after the Japanese automaker in 1959, and over 80 percent of the inhabitants work for its namesake today.

Actually, make that yesterday....

Toyota hasn't lost a dime in all that time, and has been viewed for many years (by others as well as itself) as an unstoppable force in the automotive industry. But a week away from the Japanese end of financial year, Toyota is on track to announce its first manufacturing loss in half a century - rumoured to be around AU$7.1 billion.

It not only loses its top spot in Japan, and probably the world despite the concurrent woes of Detroit, but market analysts predict it will slide to the very bottom of Japan'sautomakers.

Toyota had reduced plant shifts and closed its 12 domestic plants for a third of each month from January this year, and fired many of its contract workers - 10 percent of its 85,000-strong workforce.

And according to The LA Times, job seekers in Toyota City rose by a massive 130% last month compared to 2007, making Toyota City Japan's most unemployed town.

"There used to be so many jobs we couldn't fill them all, but that all dried up overnight," said Masami Kawajiri, director of a federal job centre in Toyota City.

"Now our only choice is to do our best for job seekers, one by one. To think about them all at once would be too overwhelming."

As a result, city officials are predicting a 96.3% drop in corporate taxes, and the Aichi province will come up AU$1.6billion short in 2009. Rumour has it that private investors are asking for massive interest on the debt; as much as 50 percent.

Unfortunately for the out-of-work residents of Toyota City, it is a long haul to find work and commute to Nagoya or Tokyo. And they have to put fuel in their Toyotas to begin with.

"We know Toyota City has been hit on the chin, and we feel a responsibility to the community," said Paul Nolasco, a Toyota spokesman in Tokyo.

"But here's an indication of how cloudy our situation is: We haven't even come up with a global production and sales plan for this year.

"We usually release that in December, but here it is March and we haven't done it yet. That's the biggest indication that we're still looking for direction."

It is rumoured that plans for new plants in some markets, R&D, and even some future models have been shelved.