Toyota trims production further
The automaker says it may reduce hours at North American plants to cope with 'the worst automotive slump in decades.'
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NEW YORK (CNNMoney.com) -- Toyota Motor Corp. is taking additional steps to scale back production at its North American plants, the automaker said Thursday, in anticipation of worsening auto sales.
Toyota said it will schedule additional "non-production days" in April at certain plants. The company has production facilities in Kentucky, California, Indiana and Texas.
Additionally, there is a "strong possibility" that Toyota will shorten work weeks at certain plants to 72 hours from 80 hours, a program the company calls "work sharing."
"This philosophy of shared sacrifice is the best approach for us, and hopefully will make us a stronger company in the long term," said Jim Wiseman, a Toyota spokesman, in a statement.
Toyota also said it will eliminate executive bonuses and trim some executive salaries, while bonuses for production workers will be reduced.
The company will offer "no wage increases for the foreseeable future" and a "voluntary exit program" will be set up for employees who wish to pursue other opportunities.
Toyota said the new actions "are consistent with the company's philosophy of making every effort to protect jobs during the sales downturn."
The new measures come after Toyota (TM) had previously established a hiring freeze, eliminated overtime and suspended capital spending.
David Cole, chairman of the Center for Automotive Research, said years of over-production in the auto industry make scaling back output a necessity now that demand for new cars has dried up.
"There's no alternative," he said. "They have to balance production with capacity."
Toyota, like most automakers, has high fixed costs that make it hard to absorb a sharp drop in sales, and the credit crunch has made it difficult for willing buyers to finance a new car, Cole said.
"Toyota is a very smart company, but they acknowledge now that they overbuilt, and when you do that, you pay a price," he said.
Last week, Toyota lowered its sales forecast for the current fiscal year to 7.08 million vehicles from an earlier projection of 8.87 million. It also said it expects to suffer a net loss this year for the first time since 1950.
In January, Toyota's U.S. sales fell 32%, compared with a 49% sales plunge for General Motors (GM, Fortune 500) and Ford's (F, Fortune 500) 40% decline. 
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