Teens and education: the key to Toyota's success

In a bare classroom at a school in central Japan, a few dozen teenagers face a whiteboard covered with long mathematical equations as their teacher rattles on about the workings of kinetic energy.

The uniformed 17-year-olds look like typical students going through the motions of dreary school life. But looks can be deceiving - they're employees of Toyota Motor Corp.

A car maker running a high school?

Toyota may be on to something.

Japan's top automaker made more money last year than the combined earnings at Detroit's Big Three - General Motors, Ford Motor and DaimlerChrysler - and is on its way to racking up record profits for a fourth straight year.

As rival automakers in the West watch their earnings slide and market shares erode on their home ground, one question has burned in the minds of industry executives and watchers alike: why is Toyota so successful?

Volumes have been written on the topic - with the focus ranging from Toyota's renowned "lean manufacturing system" to its corporate culture of "kaizen", or continuous improvement. But one answer can be found across town from its oldest car plants, at the Toyota Technical Skills Academy.

The school, which has 300 students aged 15 to 19, plays a unique role at the world's third-largest automaker: It is a breeding ground for an elite corps of future supervisors in the mechanical, machining and other technical fields that are the core of any manufacturing firm.

It is a tradition that is nearly as old as the company itself. Opened in 1938, a year after Toyota Motor was formed, the academy is the brainchild of Toyota's late founder, Kiichiro Toyoda, who believed that education was key to fulfilling his father's dream of building a national car.

Insiders say Toyota's education programmes are the cornerstone of its success in growing from a tiny spin-off of a maker of textile looms into the richest car maker in the world with nearly $8 billion in bottom-line profits.

"The academy is extremely expensive to run, but we look at it as an investment for the future," said Mamoru Sakamoto, the academy's director. "If you compare an academy graduate and a new hire starting from scratch, the difference is remarkable."

The Toyota Technical Skills Academy (TTSA) is one of five remaining vocational high schools run by Japanese companies after the economic downturn forced hundreds to close.

The school accepts about 70 15-year-olds each year, who automatically become Toyota employees upon enrolment. Admission is extremely competitive, with fewer than one in four applicants making the cut, and academic standards are high.

Toyota would not disclose how much it spends on the school, which also admits about 100 high school graduates each year for advanced technical training. But in addition to operating costs, the company dishes out annual stipends of up to $17,400 per student. Tuition is free.

Other automakers have employee education programmes too but none are as extensive or start as early. US giant GM, which makes an average $200 per car versus $1,260 for Toyota, for instance, offers mainly Web-based training to its employees.

"Toyota (educates its workers) differently from any other company," said H. Kent Bowen, a professor at Harvard Business School and co-author of a paper on Toyota's production system.

In keeping with Toyota's philosophy of "genchi genbutsu", or the "go and see for yourself" approach, TTSA students spend a lot of time with their future supervisors training on the job.

"Most of the training is done by one's supervisor, so when a worker needs to learn, the teacher is always there," Mr Bowen said.

Toyota's supervisors take a Socratic approach to teaching - providing answers by asking questions - to encourage workers to develop a mind of their own to improve the work, Mr Bowen said.

"There's a fundamentally different view of people. Making lots of little improvements all the time.... is the key to Toyota's success," he said.

Students learn actual work practices such as the suggestion box system in which employees at all levels and fields make recommendations to improve operations. Good suggestions are rewarded with prize money of up to hundreds of dollars.

The training is not just vocational.

Over the three years, students go through vigorous physical trials including hiking up a 3,000-metre mountain, swimming for two hours in the sea and running a half-marathon.

"The idea is for each student to complete the tasks so they become strong mentally and physically," explains Hajime Sugita, an alumnus who is now general manager of the academy. "We don't want them to be quitters."

As Toyota opens up more plants in countries from China to the Czech Republic, it is taking employee education a step further. Last year, it set up the Toyota Institute, in central Japan, to drive home the importance of the "Toyota Way" for the mostly foreign executives who will be training local staff.

Kazuyuki Kawai, head of Toyota's human resources division, says bridging the cultural gap will be a challenge, with a quarter-of-a-million employees spread out all over the world.

"In America, for instance, people think of their work as being rigidly defined. It's like in a swimming relay: the next person jumps in only once the previous one touches the wall," he said. "But in Japan, the attitude is similar to track-and-field: The area where the baton is exchanged is wider and fuzzier."